Manchester City Labels Proposed Premier League APT Rule Changes as ‘Unlawful’

Manchester City, winners of the last four Premier League titles, has communicated with the 19 other top-flight clubs, conveying its “fundamental concern” regarding proposed amendments to rules governing commercial deals by the Premier League, which the club asserts are “unlawful.” This communication precedes a crucial meeting of the clubs scheduled for next week, where a vote on these changes is anticipated. The proposed amendments follow a landmark tribunal ruling last month, which resulted from City’s legal challenge against the Associated Party Transaction regulations (APTs). As the dispute escalated further on Friday, City informed its rival clubs that the league was “rushing through its consultation process.” In a letter reviewed by the BBC, the club articulated its “strong desire is to avoid any future costly legal disputes,” further stating that it is “critical that the Premier League gets it right this time round.” This recent development comes after correspondence sent by the Premier League to City on Thursday, in which the league stated it “rejects in the strongest possible terms the repeated and baseless assertions” the club had directed against it concerning the case, while also outlining its own stance. The league additionally accused City of making “meritless” threats of further legal action. Neither Manchester City nor the Premier League offered comment. In October, both parties declared victory following an arbitration panel’s decision regarding APTs, which are designed to ensure that sponsorships involving companies connected to club owners reflect fair market value and are not artificially inflated. Manchester City saw some of its grievances validated, as the tribunal deemed two specific aspects of the rules unlawful. The tribunal determined that low-interest shareholder loans ought not to be excluded from the rules’ scope, and that modifications introduced in February to strengthen the regulations also violated competition law. Subsequent to the ruling, City asserted that the rules were “void” and criticized the Premier League’s “misleading” implication that they could be promptly amended, indicating potential further legal action should there be a “knee-jerk reaction.” However, after convening its Legal Advisory Group and Financial Controls Advisory Group, the Premier League put forward several amendments for a vote at its upcoming meeting on 22 November. On Thursday, 14 November, the Premier League dispatched an 11-page letter, viewed by the BBC, to Manchester City, stating it “rejects in the strongest possible terms the repeated and baseless assertions” that “either the league or its representatives have acted in any way contrary to the league’s obligations as a regulator, or has ‘misled’ clubs.” It further added, “To the contrary, the league is well aware of, and takes very seriously, its obligations to act fairly and with an open mind.” The league asserted that it has “acted fairly, transparently and responsibly in circulating considered proposals for consultation in a prompt manner.” It proceeded to state: “Throughout the consultation, the league has reflected upon all feedback provided by clubs, including from MCFC, and sought the opinion of leading counsel to consider the proposals.” “That MCFC does not agree with the proposed amendments, or with the timing of the process being undertaken, does not mean the consultation itself is deficient or that the league has failed to comply with its obligations as a regulator,” the letter continued. The letter also included that the fact that City “does not agree with the process does not provide a credible basis to impugn it.” Addressing a suggestion from City’s lawyers about potentially seeking an injunction, the Premier League declared that “such threats are meritless, and advanced without any attempt to articulate a credible ground on which MCFC could seek to restrain the consultation process.” The Premier League further accused City of presenting “a tendentious and inaccurate interpretation” of the minutes from a call conducted with clubs last month. On Friday, Simon Cliff, Manchester City’s most senior lawyer, sent correspondence to the club’s rivals and the Football Association (FA), including legal analysis and asserting that the club views the proposed rules as “unlawful.” Cliff indicated that City is “strongly in favour of robust, effective and lawful regulation,” but argued that due to a disagreement between the two parties regarding whether the tribunal’s ruling had invalidated the existing APT framework, additional deliberation by the panel was “essential.” He further stated: “Common sense dictates that the Premier League should not rush into passing amendments – particularly ones which entail material legal risk – until [it] knows the outcome from the tribunal,” also contending that “clubs will be voting blind.” “It is important that a new regime is grounded in rules that are fair, considered and legal,” Cliff remarked. He reiterated: “Our strong desire is to avoid any future costly legal disputes on this issue and so it is critical that the Premier League gets it right this time round.” Cliff also noted that the proposals “would introduce into the rules a retrospective exemption for shareholder loans,” which he identified as “one of the very things that was found to be illegal in the recent arbitration.” He asserted that it is “not lawful to reintroduce it into the rules” because “the proposals would create market distortions.” This situation arises after English Football League Chairman Rick Parry voiced apprehension regarding “a whole raft of competition law cases which are impacting on the way that we run the game.” He informed BBC Sport, “To be looking over our shoulder all of the time with challenges from clubs if they don’t like rules… the game will grind to a halt unless we find a solution for that.” Parry continued: “I have no problem with us having to be more professional. But it’s the willingness of clubs at the drop of a hat to challenge the whole system.” He concluded, “You have to question how long you can function effectively while that mentality exists, and we have to find a solution to that.”