Clubs backing the Premier League in its bitter legal dispute over sponsorship believe they have the numbers to defeat Manchester City and Aston Villa narrowly in a crunch vote on Friday.
Discussions remain on a knife-edge as clubs decide on three amendments to associated-party transactions proposed after City took the Premier League to arbitration.
However, those in favour of voting through the changes are increasingly confident that rivals who wavered during previous APT debates now see danger in further delay.
Following intense club-to-club lobbying, senior Premier League figures are understood to have concerns about the precedent of allowing a club too much influence in shaping the way forward.
The Premier League needs 14 of its 20 clubs to vote in favour of its proposed changes to finally draw a line under a legal challenge from City that has already cost the competition tens of millions of pounds.
An independent panel’s judgment, published last month, found two aspects of APT rules were unlawful. The league maintains “discrete elements” of its rules can “quickly and effectively be remedied”, but City claim APT laws introduced in 2021 are “discriminatory and distortive”.
Clubs siding with the league on Friday maintain that minor amendments are a proportionate response to the 175-page ruling last month. One vote will be held on APTs at the shareholder meeting covering three areas: integrating shareholder loans into the APT rules, providing earlier club access to a databank on business dealings and an amendment to the wording of the fair market value testing regime.
Newcastle United, Nottingham Forest and Chelsea are cited by sources close to talks as most likely to join Villa and City in voting against the proposals.
However, proposed changes relating to the new application of fair-market-value tests to shareholder loans may prove a factor in putting off other potential rebels.
Everton likely to swap sides
City, who want the entire vote postponed, are understood to believe any amendment on shareholder loans should be applied retrospectively in line with other APT rules introduced in 2021.
The Premier League, however, is proposing only to apply them from now on, which may be a relief for Everton, who received a total of £451 million of shareholder loans injected by outgoing majority owner Farhad Moshiri. With the sale of the club in progress, there is a growing belief that Everton will now vote with the Premier League rather than siding with City as they did during a vote on APTs in February.
The Premier League, City and Villa have all written to the clubs in advance of the meeting. Nassef Sawiris, the Villa co-owner, 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 for more than a month with clubs on changes to its rules on APTs. Those regulations, in place since 2021, effectively involve fair-market-value tests being applied to any sponsorship or transfer deals struck where a club owner may have financial interest on both sides of the deal. City have voted against APTs throughout, including when proposals to integrate shareholder loans into the rules were first raised.
What are APTs?
Associated Party Transaction regulations (APTs) were originally introduced in December 2021 after the Saudi Arabia-backed takeover of Newcastle United. The rules are designed to put a brake on how much companies associated with clubs can feed money to them. Those in favour say they promote competitive balance and ensure that owners with bottomless pockets do not artificially inject huge sums to blow away 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 that were judged last year by the Premier League to not be fair market value – one with Etihad Aviation Group, the other with First Abu Dhabi Bank. Two of 20 separate challenges were upheld by a tribunal in October.
What has the League proposed changing?
The Premier League says the tribunal this summer “endorsed the overall objectives, framework and decision-making of the APT system” but it will also remedy the rules to ensure they comply with the findings.
A vote at a shareholders’ meeting of the clubs in central London is based on three tweaks to the regime.
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 provided, between knowledgeable, willing parties engaging in an arm’s length transaction in normal market conditions”. In what could be seen as a potential easing of the restrictions, it is proposed that the definition is amended from “would” to “could”.
The second amendment is that the exclusion of shareholder loans from APT rules is reversed.
The third is that clubs are given earlier access to a ‘databank’ on commercial arrangements during the process of scrutiny by the league.
Why are Man City against this?
City declared the APT rules “void” after last month’s tribunal findings were published. The club have twice written to rivals since saying the vote should be postponed. In the most recent letter on Friday, City told rivals they are voting “blind”, expressing particular concerns that the league’s potential solution is being raised before the tribunal has responded to queries raised by both sides.
A “retrospective exemption for shareholder loans for the period from December 2021 until the rules come into effect” is also problematic, the club claim. “This exemption is one of the very things that was found to be illegal in the recent arbitration,” writes Simon Cliff, City Group’s General Counsel, in the new letter. “It is not lawful to re-introduce it into the rules.” Cliff claims the “PL [Premier League] is rushing its consultation”.
Which clubs have taken a side?
Aston Villa became the first club to go public with their support for City’s demand for a postponement this week. In a statement sent to Telegraph Sport, Nassef Sawiris, the club’s owner, warned the “embattled” Premier League its turbulent legal fight is costing the competition dear. “In our view, a vote in 90 days on amended terms taking into consideration the tribunal’s findings will have a significantly greater chance of securing the unanimous support of all 20 Premier League clubs,” he said in a statement.
There is also known to be some support for City privately in recent months from Nottingham Forest, Chelsea and Saudi-owned Newcastle United.
Is the APT row linked to the City 115 charge case?
No, but City’s attempts to undermine the league’s role as a regulator in the APT dispute will be part of the club’s strategy to fight separate spending breach charges.
“The reason Lord Pannick [the leading KC representing City] and assembled montage of Man City lawyers are claiming a victory to this is because they will think it is helpful to their wider claim that the tribunal have recognised that the Premier League is in a dominant market position in respect of its ability to exercise control and ultimately dominance over its member clubs,” Marc Shrimpling, a partner in UK competition and trade practice at Osborne Clarke, has previously told Telegraph Sport.
Shrimpling’s interpretation is that City will make the point at their spending breach case that “you can’t just apply a blanket rule” around various spending methods.
