Manchester City’s efforts to block changes to Premier League sponsorship rules failed on Friday.
Sixteen top-flight teams voted in favour of the amendments to the associated party transaction (APT) rules, which were forced on the league by a legal challenge from City earlier this year.
The rules assess whether commercial deals between clubs and entities linked to their ownership have been done for fair market value. They are considered by their backers as key to ensuring competitive balance in the league by preventing those with the deepest pockets artificially inflating the value of such deals.
Aston Villa, Nottingham Forest and Newcastle joined City in calling for a delay, but former City executive Omar Berrada – now the chief executive at Manchester United – was one of those who spoke in favour of the amendments at Friday’s clubs meeting in central London.
The outcome represents a success for Premier League chief executive Richard Masters, because a defeat on these amendments threatened to throw the rules and the league into chaos.
City’s original legal submission challenging the rules, according to The Times, included a reference to the league’s voting structure, describing it as a “tyranny of the majority”.
Chelsea were reported to be a club who might back City, but in the end their general counsel James Bonington joined Berrada in speaking in defence of the changes at the meeting.
Last month an arbitration panel found aspects of the APT rules were unlawful, among them the exclusion of shareholder loans.
City’s general counsel Simon Cliff wrote to clubs last week warning any attempt to rush through changes before the same panel had provided further guidance around the implications of its findings risked a fresh legal challenge being launched.
Villa owner Nassef Sawiris told the Daily Telegraph earlier this week that concern over additional legal costs was one reason why his club supported a postponement.
The Premier League told its clubs in September it had spent over £45million last season in legal fees to uphold its rules, with the biggest case of all centred on more than 100 alleged breaches of financial rules by City, charges the club strenuously deny.
City declined to comment on Friday in response to the vote but their position remains unchanged from that outlined by Cliff last week, and they await word from the panel.
Their view is that all the rules are void in the interim.
Sources close to City also believe this is less of an endorsement of Masters than it might appear, and say some clubs only supported the amendments at Friday’s meeting because they were worried what would happen if shareholder loans were included retrospectively in the rules.
Instead, the amended rules will only look at what is a fair market rate of interest on existing and future loans, and will allow a grace period to convert such loans to equity.
Other changes approved on Friday roll back amendments introduced in February and introduce the right for clubs to access databank information – used by the Premier League board to make a fair market assessment – at an earlier stage.
The Premier League’s view was that the arbitration panel upheld the principle of the APT rules and only required discrete elements to be remedied – something it will feel it has now achieved.
The vote on Friday followed more than a month of consultation with clubs and lawyers on the changes.
