Clubs backing the Premier League in its bitter legal dispute over sponsorship believe they have the numbers to narrowly beat Manchester City and Aston Villa in a crucial vote on Friday.
Discussions remain on a knife’s edge as clubs decide on three amendments to associated party transactions proposed after City took the Premier League to arbitration.
However, those in favor of passing the changes are increasingly convinced that their rivals who hesitated during previous APT debates now see danger in further delay.
Following intense club-to-club lobbying, senior Premier League officials appear concerned about the precedent of allowing one club too much influence in shaping the way forward.
The Premier League needs 14 of its 20 clubs to vote in favor of the proposed changes to finally draw a line under a legal challenge by City which has already cost the competition tens of millions of pounds.
An independent panel’s ruling, released last month, ruled that two aspects of the APT’s rules were illegal. The league maintains “discrete elements” of its rules can “be corrected quickly and effectively”, but City says the APT laws introduced in 2021 are “discriminatory and wrong”.
Clubs that sided with the league argued Friday that minor changes are a proportionate response to last month’s 175-page ruling. A vote will take place on APTs at the shareholders’ meeting covering three areas: integrating shareholder loans into APT rules, providing clubs with faster access to a database on commercial transactions and a change to the wording of the fair market value testing regime.
Newcastle United, Nottingham Forest and Chelsea are cited by sources close to the negotiations as most likely to join Villa and City in voting against the proposals.
However, proposed changes to the new application of fair market value criteria to shareholder loans could prove a deterrent to other potential rebels.
Everton likely to change sides
City, who wants the entire vote postponed, believes any amendments on shareholder loans should be applied retrospectively, in line with other APT rules introduced in 2021.
The Premier League, however, is proposing to only implement them from now on, which could come as a relief for Everton, who have received a total of £451 million in shareholder loans injected by outgoing majority owner Farhad Moshiri. With the sale of the club underway, there is a growing belief that Everton will now vote with the Premier League rather than siding with City as they did in the APT vote in February.
The Premier League, City and Villa have all written to the clubs ahead of the meeting. Villa co-owner Nassef Sawiris also warned in a statement to Telegraph Sport that Friday’s vote should be postponed until February to allow the league to present a “united front”.
The league has been consulting clubs for more than a month on the evolution of its rules on APTs. These regulations, effective since 2021, effectively involve the application of fair market value tests to any sponsorship or transfer agreement entered into where a club owner may have a financial interest on both sides of the agreement. City have consistently voted against APTs, including when proposals to bring shareholder loans into the rules were first raised.
What are APTs?
The associated party transaction (APT) regulations were initially introduced in December 2021 following the Saudi-backed takeover of Newcastle United. The rules are designed to curb the amount of money businesses associated with clubs can bring in to them. Supporters of the plan say they promote competitive balance and ensure that owners with deep pockets do not artificially pump in huge sums to blow up any opposition.
Abu Dhabi-backed Manchester City challenged the legality of those rules, initially after warning of arbitration in February as the rules were tightened again. Over the summer, the club challenged two particular sponsorship deals which were judged last year by the Premier League not to be at fair market value – one with Etihad Aviation Group, the other with First Abu Dhabi Bank. Two of 20 separate challenges were upheld by a court in October.
What did the League propose to change?
The Premier League says the court this summer “approved the general objectives, framework and decision-making process of the APT system” but will also remedy the rules to ensure they are consistent with the findings.
The vote at a central London club shareholders’ meeting hinges on three adjustments to the scheme.
The first is to amend the definition of “fair market value”, which is currently described as “the amount for which an asset, right or other subject matter of the transaction would be sold, licensed or exchanged, a liability settled or a service “. between knowledgeable and consenting parties engaging in an arm’s length transaction under normal market conditions. In what could be seen as a possible easing of restrictions, it is proposed to change the definition from “would” to “could”.
The second amendment is to repeal the exclusion of shareholder loans from the APT rules.
The third is that clubs benefit from faster access to a “data bank” of commercial deals during the league review process.
Why are Man City against this?
The city declared the APT rules “void” after the court’s findings were released last month. The club has since written twice to its rivals asking them to postpone the vote. In the most recent letter on Friday, City told their rivals they were voting “blind”, including expressing concerns that the league’s potential solution was being raised before the court had responded to the questions raised by both parties.
A “retrospective exemption of shareholder loans for the period from December 2021 until the rules come into force” is also problematic, the club claims. “This exemption is one of the things that was found to be unlawful in the recent arbitration,” writes Simon Cliff, general counsel for City Group, in the new letter. “It is not legal to reintroduce it into the rules.” Cliff claims the “PL [Premier League] rushes his consultation.”
Which clubs took sides?
Aston Villa became the first club to publicly voice their support for City’s postponement request this week. In a statement sent to Telegraph Sport, Nassef Sawiris, the club’s owner, has warned the “struggling” Premier League that its turbulent legal battle is costing the competition dearly. “In our view, a vote in 90 days on amended terms taking into account the court’s findings will be much more likely to secure the unanimous support of all 20 Premier League clubs,” he said in a statement.
It is also known that there has been some private support for City in recent months from Nottingham Forest, Chelsea and Saudi-owned Newcastle United.
Is the APT line linked to the City 115 charge sheet?
No, but City’s attempts to undermine the league’s regulatory role in the APT dispute will be part of the club’s strategy to fight separate accusations of spending violations.
“The reason why Lord Pannick [the leading KC representing City] and a group of Man City lawyers are claiming a victory on this point because they will think it is helpful to their wider claim that the court has recognized that the Premier League is in a dominant market position in terms of concerns its ability to exercise control and, ultimately, dominance over its member clubs,” Marc Shrimpling, partner in the UK competition and commercial practice at Osborne Clarke, previously said. Telegraph sport.
Shrimpling’s interpretation is that City will argue in its spending violation case that “you can’t just apply a general rule” around various spending methods.
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