A new legal row could erupt between Manchester City and the Premier League if amendments to top-level sponsorship rules are passed today.
City last week warned of a hasty change to the rules on associated party transactions (APTs) after challenging them on competition law grounds.
It was announced last month that an arbitration panel had deemed aspects of the rules illegal, and City say making changes before the panel gives further guidance leaves the rules open to further challenges .
However, Premier League leaders appear convinced that the changes are legal after more than a month of consultation, and above all believe that the amendments will be accepted by a majority of clubs.
The PA news agency understands Wolves are expected to back the league at Friday’s shareholders’ meeting in central London.
This contradicts reports earlier this week that they were one of six clubs who could back City and thus prevent the league from reaching a 14-club majority in Friday’s key vote.
Sources close to the Black Country club were surprised to be listed as a potential City backer, given they backed the Premier League when the four-consecutive champions first launched their legal challenge against the club’s rules. ‘APT earlier this year.
Everton are also reportedly preparing to vote with the Premier League. Sources close to the Merseyside club did not give PA a clear indication of how they would vote, but said the club supports anything that protects the integrity of the league.
City definitely have the support of the Aston Villa public to vote in favor of a postponement and PA understands Nottingham Forest will also join them.
Villa cited the risk of additional legal costs for the league as one of the reasons it supported a delay, with the league telling clubs in September that more than £45 million had been spent enforcing its rules last season.
The Premier League and City are understood to have contacted clubs this week to find out which way they intended to vote.
Chelsea, Leicester and Newcastle could also back City, but that would leave the champions just short of a big enough block to halt Premier League plans.
The Times reported earlier this year that City’s initial complaint against the PTA rules referred to the league’s voting structure, calling it a “tyranny of the majority”.
The Premier League has been consulting its clubs for more than a month on changes to the APT rules since an arbitration tribunal ruled some of the changes illegal following City’s challenge.
The league pledged to act “swiftly and effectively” to address the illegal material, but City accused the Premier League of “misleading clubs” in its interpretation of the tribunal’s findings and said all rules should be considered “null”.
The APT rules assess whether commercial transactions entered into between clubs and entities related to their ownership represent fair market value (FMV).
The court ruled that it was illegal to exclude shareholder loans from the rules, so these will now be added if the amendments are adopted.
The effective interest rate applied to existing and future shareholder loans will be assessed based on FMV, which will vary from club to club depending on factors such as a club’s credit rating.
Clubs will be given a 50-day grace period to convert these loans into equity if they wish.
Further changes will be made to reverse the changes to APTs introduced in February. The first is to replace “would” with “could” in the wording of what constitutes FMV in the rules, which should have the effect of giving clubs more leeway.
Clubs should also have access to the database used by the Premier League to determine FMV before a decision is made, rather than after, if the amendments are approved.