A new legal row could erupt between Manchester City and the Premier League if amendments to top-flight sponsorship rules are voted through today.
City warned last week against rushing through changes to rules on associated party transactions (APTs) after they challenged them on competition law grounds.
It was announced last month that an arbitration panel found aspects of the rules to be unlawful, and City argue that to make amendments ahead of further guidance being given by the panel leaves the rules open to further challenges.
However, the Premier League’s bosses are understood to be confident the changes are lawful after more than a month of consultation, and crucially believe the amendments will be accepted by a majority of clubs.
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— Manchester City (@ManCity) October 7, 2024
The PA news agency understands Wolves are set to support the league at Friday’s shareholders meeting in central London.
That is contrary to reports earlier this week that they were one of six clubs who could back City and therefore prevent the league 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 backer of City, given they supported the Premier League when the four-in-a-row champions first launched its legal challenge against the APT rules earlier this year.
Everton are also reported to be preparing to vote with the Premier League. Sources close to the Merseyside club did not give PA a clear indication of which way they would vote but did say the club were supportive of anything which protects the integrity of the league.
City definitely have the public support of Aston Villa to vote for a postponement and PA understands Nottingham Forest will also join them.
Villa cited the risk of further legal costs to the league as one of their reasons for supporting a delay, with the league having told clubs in September that over £45m was spent on upholding its rules last season.
Both the Premier League and City are understood to have been contacting clubs this week to find out which way they intend to vote.
Chelsea, Leicester and Newcastle could also support City but that would still leave the champions falling just short of a big enough bloc to halt the Premier League’s plans.
The Times reported earlier this year that City’s original legal submission against the APT rules referenced the league’s voting structure, calling it a “tyranny of the majority”.
The Premier League has consulted its clubs for more than a month on APT rule changes since an arbitration tribunal found aspects of them unlawful following City’s challenge.
The league vowed to move “quickly and effectively” to remedy the unlawful elements but City accused the Premier League of “misleading” clubs in its interpretation of the tribunal findings and said all the rules should be considered “void”.
The APT rules assess whether commercial deals done between clubs and entities linked to their ownership represent fair market value (FMV).
The tribunal found it was unlawful to exclude shareholder loans from the rules, so these will now be added in if the amendments are passed.
The effective rate of interest charged on existing and future shareholder loans will be assessed for FMV, which would vary from club to club depending on factors such as a club’s credit score.
Clubs are set to be given a grace period of 50 days to convert such loans to equity if they wish.
Other amendments will be made to roll back changes to the APTs introduced in February. One involves replacing “would” with “could” in the wording of what constitutes FMV within the rules, which should have the effect of providing more wriggle room to clubs.
Clubs are also set to be given access to the databank used by the Premier League to determine FMV before a decision is made, rather than afterwards, if the amendments are approved.
