Manchester City could be heading for another showdown with the Premier League as tensions rise over the recent ruling on Associated Party Transactions (APT) regulations.
The reigning Premier League champions scored a major win last week when an independent panel deemed the current APT framework unlawful. This ruling forces loans provided to clubs by their owners at minimal or zero interest to now be counted in Profit and Sustainability (PSR) calculations. Clubs such as Arsenal, Chelsea, Liverpool, and Everton have been benefiting from these types of loans for years, but only six teams in the Premier League operate without any form of owner loans.
Although the Premier League has suggested that future loans would be taken into account, there is growing pressure, particularly from Manchester City and other clubs, for these rules to be applied retrospectively. Should the league resist these demands, it’s likely that City, along with others, will push for another tribunal to judge whether the Premier League continues to operate outside the law. A second defeat could plunge several clubs into a long-lasting PSR crisis, potentially affecting them for multiple seasons.
Simon Leaf, a partner at law firm Mischon de Reya specializing in sports law, warned of the dangers ahead: “There’s a real risk that the league could descend into a civil war if a fair solution isn’t reached. City have presented the Premier League with a tough challenge, and if the new shareholder loan rules aren’t applied retrospectively, another legal battle is highly probable.”
The list of clubs relying on significant owner loans includes Arsenal (£259m from Stan Kroenke), Everton (£451m from Farhad Moshiri), and Chelsea, who had £1.5 billion written off following Roman Abramovich’s departure.
Leaf added, “It’s a complete mess. Retrospective application of these loan rules might be the only fix, but that won’t sit well with many clubs.”
Compounding the issue, the Premier League could also be facing hefty legal costs after the tribunal’s ruling in City’s favor. Furthermore, the reigning champions may pursue compensation for financial damages after two major sponsorship deals with Etihad and Abu Dhabi First Bank were blocked due to APT regulations.
This legal saga runs parallel to Manchester City’s ongoing battle with the Premier League over 115 charges, accusing the club of failing to provide accurate financial information over a nine-year period. If proven, these more severe allegations could result in City being expelled from the league altogether.
Despite both City and the Premier League declaring partial victories following the APT ruling, City’s general counsel, Simon Cliff, felt compelled to notify the other 19 clubs that Premier League chairman Richard Masters’ decision is deeply flawed. Masters, on the other hand, believes APT issues can be resolved quickly, in time for a vote at an emergency Premier League meeting.
However, Leaf cautioned, “Rushing new rules through could expose the Premier League to further legal challenges. City’s insistence on proper legal advice before voting is valid, as new regulations satisfying 14 clubs still don’t guarantee compliance with the law.”
The next few weeks could see more fireworks between the champions and the league as this ongoing financial and legal drama unfolds.
