Premier League proposes rule changes following Manchester City legal challenge

The Premier League has communicated with its member clubs, outlining proposed revisions to its regulations. This action follows the publication last month of a significant arbitration panel verdict in a legal dispute with Manchester City concerning rules governing commercial agreements. Both Manchester City and the Premier League asserted victory after this ruling. Should these amendments be approved, they have the potential to facilitate more profitable deals by relaxing existing restrictions designed to uphold competitive balance. Both parties claimed success after the arbitration panel’s decision, which came after City contested the league’s associated party transaction (APT) regulations. These regulations aim to ensure that sponsorships involving companies linked to club owners reflect fair market value and are not artificially inflated. Manchester City saw some of its objections upheld, with two aspects of the rules deemed unlawful by the tribunal. Specifically, the tribunal stated that low-interest shareholder loans should not be excluded from the APT rules’ scope, and that modifications made in February to strengthen these regulations also violated competition law. Following the judgment, City declared the rules “void” and expressed “concern” regarding the Premier League’s suggestion that new APT rules might be adopted quickly. The club indicated the possibility of further legal action if there were a “knee-jerk reaction.” Nevertheless, after consultations by its Legal Advisory Group and Financial Controls Advisory Group, the Premier League has now formally written to all 20 clubs, putting forward several amendments for consideration before their meeting on 22 November. The letter, which BBC Sport has reviewed, informs clubs that these proposed changes are also based on legal advice received from a barrister. One suggested modification pertains to the definition of ‘fair market value’. The current APT rules define this as “the amount for which an asset, right or other subject matter of the transaction would be sold, licensed or exchanged, a liability settled, or a service provided, between knowledgeable, willing parties engaging in an arm’s length transaction in normal market conditions.” In what could be interpreted as a potential relaxation of the restrictions, it is proposed that this definition be altered to “the amount for which an asset, right or other subject matter of the transaction could be sold, licensed or exchanged, a liability settled, or a service provided, between knowledgeable, willing parties in an arm’s length transaction.” If approved, the change from “would” to “could” and the removal of the phrase “in normal market conditions” could potentially grant clubs greater flexibility in arranging commercial deals with associated parties. Furthermore, it is also proposed that the previous exclusion of shareholder loans from APT rules be reversed. It remains uncertain whether the suggested amendments will secure the necessary two-thirds majority vote for approval. Both Manchester City and the Premier League declined to provide a comment.