All 20 Premier League clubs are set to vote on a proposed amendment to its Associated Party Transaction (APT) rule, following a tribunal verdict that sided with Manchester City’s legal challenge. The meeting, scheduled for November 22nd, will require a majority vote of 14 out of 20 teams for the rule change to become a formality.
In 2021, the APT rules were introduced in order to stop certain teams from inflating their revenue numbers through sponsorships or deals that would give these teams an unfair advantage in their spending power. In addition, these rules aimed to support the Premier League’s Profitability and Sustainability Rules (PSR), which meant that clubs were required to maintain financial fairness and parity.
Manchester City argued against this rule, saying that APT was ‘discriminatory’ as they did not account for interest-free loans from owners. By excluding these specific loans, City argued that the league’s regulations were distorting fair competition and were not consistent with the PSR framework. If these interest-free shareholder loans were ignored, then it would undermine fair competition and allow clubs with such loans to appear more financially sound than they really are.
Following this, the Premier League has stated that they can make ‘discrete’ changes to these rules in compliance with competition laws. However, for it to succeed, it must be voted on by the majority of Premier League clubs.
Critics of this move argue that allowing shareholder loans to be factored in could widen the wealth gap between clubs, and enabling clubs with more resources to receive more interest-free loans, and widen the gap between the top and bottom clubs. The league claims it will still apply a fair market value to ensure loans and other financial transactions don’t distort competition. The effectiveness of this approach remains to be seen, especially in an era where teams like Manchester City, Newcastle United, and Chelsea have been spending beyond their means despite the financial parity rules in place.
