Manchester City have doubled down on their position that associated party transactions are now “void” in a letter claiming clubs are voting “blind” on proposed Premier League amendments next week.
The club claims proposed changes to sponsorship rules to be raised at a shareholder meeting “entail material legal risk” that could reignite the legal war around restrictions.
England’s top tier has also written to clubs in recent days setting out the full detail of proposed changes which it hopes will help heal the civil war between clubs in recent months.
However, City said any discussions are moot while the tribunal still considers a request for further clarification from both the league and the champions after its ruling last month.
The City letter to all other clubs on Friday is the second time the club has moved to reinforce its position directly in writing since the outcome of a tribunal this summer. A tribunal verdict spanning 175 pages saw both the Premier League and City claiming victories last month but the exclusion of shareholder loans – money borrowed from a club’s owner – from APT rules was considered to be in breach of competition law.
The club, which had raised 20 claims against the league in its arbitration challenge, is particularly concerned that the league’s potential solution is being raised before the tribunal has responded to queries raised by both sides.
The Premier League maintains “discreet elements” of their rules can “quickly and effectively be remedied” when clubs convene on November 22.
‘This exemption is one of the very things that was found to be illegal’
But in a new letter to clubs, City take exception to the league’s proposals to introduce a “retrospective exemption for shareholder loans for the period from December 2021 until the rules come into effect”.
“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 a letter seen by Telegraph Sport. “It is not lawful to re-introduce it into the rules.”
More than half of top-tier clubs have soft loans from owners included in their most recent accounting period. The likes of Everton, who have been propped by loans from outgoing owner Farhad Moshiri, would be in severe danger of breaching spending rules again if an exemption is not introduced.
The introduction of shareholder loans in spending calculations against profit and sustainability rules could also now be consequential for the likes of Manchester United as they plot major development in the Old Trafford area.
“Even going forward, the proposals would create market distortions,” Cliff writes in his letter pleading with clubs not to “rush” through new rules. “For example, whereas clubs have to wait for PL approval before receiving the benefit of commercial transactions, they would be free under the proposals to take the benefit of shareholder loans before PL approval.”
Cliff claims the Premier League “is rushing its consultation”. “The PL and MCFC disagree on the implications of the award and have agreed that the tribunal will determine the issue soon,” he says. “It is essential to have this determination before any rule amendments are voted on because the tribunal’s ruling will be directly relevant to those amendments, and without it, clubs will be voting blind.
“For example, one very possible outcome is that the tribunal will declare that all of the APT Rules are void and always have been. How can the clubs meaningfully discuss amendments to rules without knowing if those very rules even exist?”
‘PL risks further costly legal proceedings’
Repeating his warning of further potential legal action, Cliff added: “By rushing through its consultation process and tabling the proposed amendments for a vote before the tribunal has issued its determination, the PL risks further costly legal proceedings, including potential claims for interim relief and damages.
“Clubs will be aware in this regard that there have been several recent high-profile cases (not least MCFC’s challenge to the APT Rules) in which football regulators have been found to have abused their dominant position in their regulatory roles. With that context in mind, and for the reasons set out above, common sense requires that the PL should simply wait the short period until the tribunal has issued its determination before deciding on next steps.”
Next week’s meeting needs 14 of the 20 clubs to vote in favour of the Premier League for amendments to be ratified. Alterations are a direct result of City challenging APT laws introduced in 2021. The club argued they were “discriminatory and distortive” and “at odds with the whole rationale of PSR [the league’s profitability and sustainability rules].”
The APT rules were introduced as a means to prevent clubs earning increased revenues through inflated commercial deals, with each significant deal having to reflect fair market value (FMV).
