The Premier League’s Associated Party Transaction (APT) regulations have been deemed ‘null and void’ by a tribunal, in a ‘significant’ victory for Manchester City.
Following Newcastle United’s Saudi-led takeover in 2021, the Premier League proposed rules on APTs as they aimed to prevent clubs like the Magpies and Man City from signing inflated sponsorship deals to avoid a financial breach.
Any deal deemed inflated was denied, with the Cityzens taking legal action after sponsorship deals with Etihad Airways and First Abu Dhabi Bank were blocked.
City – who are fifth in the top flight – challenged the rules in court, stating that they were unfair and unlawful.
A report from Mail Sport journalist Mike Keegan on Friday have revealed that Pep Guardiola‘s side have been vindicated after a tribunal declared the regulations entirely void, with clubs who have been blocked deals potentially able to sue the Premier League.
Indeed, the result could spark a ‘crisis’ with the league potentially ‘thrown into chaos’.
The ‘bombshell verdict’ has the potential to ‘trigger a series of giant compensation claims and plunge the competition into crisis’, with an independent panel siding with the champions – whose case was led by Paul Harris KC and Lord Pannick KC of Freshfields.
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The rules, which ran from December 2021 to November 2024, have been declared ‘unlawful in their entirety and were always ‘null and void’.
It is a ‘significant’ defeat for the Premier League as three elements have been deemed unlawful. One was ‘the fact that shareholder loans were not subject to the same fair market value tests included in the APT rules’.
A tribunal agreed with Man City last September, when ‘a row erupted between City and the Premier League’, who claimed ‘a number of tweaks to the rules would suffice’.
After PL chief executive Richard Masters said the case ‘endorsed’ APT rules and that only ‘certain discrete elements…need to be amended’, the club made a ‘blistering response to clubs’, warning the league not to make ‘hasty amendments’ and for ‘those involved to delay any further action until the tribunal had returned a further verdict on whether their previous ruling meant the whole system, rather than certain sections, was unlawful’.
So, yeah… bloody chaos, folks.
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The Premier League were also ‘accused of attempting to mislead its members on the severity of the situation’ and in November, the 20 clubs voted in amendments by a 16-4 majority.
Significantly, the recent verdict has ‘underlined City’s position and may have serious ramifications for the Premier League’. As a result, deals that were thwarted or reduced in the three years ‘could now be subject to hefty compensation claims’.
This means a top-flight club are within their rights to ‘sue’ if they believe ‘its competitive performance was harmed by a decision made under the previous APT system’.
The report adds:
City have also launched a legal challenge against the amended rules voted through in November. The same panel is due to rule on their legality in the near future. Should they deem those unlawful, the league could be thrown into chaos.
None of the above is linked to the 115 charges levelled at City by the Premier League, over alleged breaches of financial rules. While that case has been heard, a verdict remains outstanding.
In a further blow which is unlikely to go down well across the competition, the Premier League may now have to foot not only its own legal bill, but also City’s. The figure of both combined is thought to be close to £20m.
Premier League chief executive Richard Masters made clubs aware of the situation in an email this afternoon.
In it, he acknowledged that the ‘previous rules as a while are void and unenforceable’ but attempted to play down the development.
Attention will now shift to the latest legal challenge. Should the tribunal again find in City’s favour, it may well allow the likes of City and Newcastle to strike significantly higher agreements with current sponsors.
Masters said: ‘The previous APT rules are no longer in place, and new rules were voted into force.
‘The league has previously told clubs that this decision was about the legal status of previous APT rules and would not impact the operation of new rules.’
He also added that the new rules remain in force and that clubs remain required to comply with them.
Mail Sport had access to the 18-piece final award, which stated: ‘In the First Partial Final Award it was declared that the APT Rules and Amended APT Rules were unlawful in three respects.
‘There now arises for decision the question whether those three respects can be severed from the remaining APT Rules so that those remaining APT Rules are valid and enforceable.
‘The three respects in which the APT Rules and Amended APT Rules were unlawful cannot be severed with the result that the APT Rules as a whole are void and unenforceable.’
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