What is APT, why do they want to disappear and which clubs support them?

Manchester City have taken legal action against the Premier League in the hope of changing the rules they believe are “discriminatory”. But what does it all mean?

Even with 115 charges of alleged breaches of financial rules hanging over them, the city of Manchester they go on to take the fight to the Premier League.

The eight-time champions launched legal action against the league with a number of complaints of their own, ranging from rules on related-party transactions and multi-club ownership, with a two-week tribunal starting on June 10 to find a result.

These are the answers to the key questions so far.

What are the Premier League rules on related party transactions?

Related party transactions are any transactions, from sponsorships to transfers and payments to individuals such as players, managers or senior officials, that are entered into between a club and a related party.

The Premier League has established numerous criteria to determine who or what qualifies as a related party, based on “the substance of the relationship and not just the legal form”; they don’t have to be simply an owner sponsoring the club through one of their other businesses.

Factors considered include ownership, financial interest, pre-existing business relationships and “material influence” such as family ties.

Rather obviously, the related party criteria include when a club and an entity “are directly or indirectly controlled, jointly controlled or significantly influenced by the same government, public or state-funded body or by the same party”.

Details of any APT must be submitted to the Premier League, who will then carry out a fair market value assessment to ensure its legitimacy.

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When and why did they enter?

While rules on Related Party Transactions existed before, the Saudi Public Investment Fund’s takeover of Newcastle in October 2021 triggered a monumental change and the guidelines were tightened due to fears that the new owners could exploit loopholes with lucrative business deals and favorable to strengthen their spending power. giving them an unfair advantage.

An emergency meeting was called in November 2021, at which 18 Premier League clubs voted through legislation to temporarily block commercial arrangements involving pre-existing business relationships.

Newcastle voted against changing the rules; Manchester City abstained, according to reports at the time, “based on legal advice that the process was illegal”.

The deal lasted for a month before being finalized in December 2021. The rules were amended and further tightened in early 2024 to include guidelines on possible sanctions, with the Premier League handbook indicating that clubs had agreed to them ” as a necessary tool for maintaining effectiveness”. of the Profitability and Sustainability Rules, by ensuring the veracity of costs and revenues reported by clubs for compliance purposes.’

It added that the rules aim to ensure the “long-term financial sustainability of clubs by ending reliance on commercial growth.
income received from entities related to the club’s property; and fairness between clubs so that clubs cannot gain an unfair advantage over domestic competitors by increasing revenue or reducing costs through agreements with entities related to the ownership of a Club.

These measures prompted Manchester City to threaten legal actionwhich have now been fulfilled.

What is Manchester City’s complaint?

Manchester City believe the rules are “discriminatory” against both clubs with Middle Eastern links and those that are part of a multi-club ownership group and are seeking “compensation for the losses they have suffered as a result of the illegality of the FMV . rules”.

They, as explained in a 165-page document obtained by The Times, want the APT rules scrapped because they believe they are “intended to stifle the commercial freedoms of certain clubs in certain circumstances and thereby restrict competition economic”.

Manchester City recorded commercial income of £341.4m for the 2022/23 season – higher than Manchester United (£302.9m), Real Madrid (£277m), Liverpool (£240m) and any other club. Their trading revenue has grown 50% since 2019 and now accounts for 48% of their total revenue.

Four of their top ten sponsorship deals are with UAE-based companies: Etihad Airways, Etisalat, Abu Dhabi Tourism and Emirates Palace.

Among the 115 charges he still faces for breaching Premier League regulations over nine seasons between 2009/10 and 2017/18, the first alleges Manchester City signed inflated sponsorship deals with affiliated parties.

Manchester City believe that even if sponsors are linked to club owners, as many of theirs are, they should still be allowed to decide for themselves how much they want to pay, regardless of any independent assessment sanctioned by the Premier League.

They also want to remove the rule that requires 14 out of 20 Premier League clubs to agree on a particular motion for it to pass, hence the “tyranny of the majority” line.

Do any of their Premier League rivals agree?

At least three clubs are believed to be backing Manchester City’s position in some way.

They include Newcastle, who have agreed a multi-year front shirt sponsorship deal worth £25m a year with Saudi Arabia’s leading events firm Sela.

So are Chelsea. Their front sponsor is Infinite Athlete, a company that counts Blues co-owners Todd Boehly and Behdad Eghbali among their investors. But Chelsea’s problem appears to be more about the multi-club ownership aspect of City’s legal challenge.

Perhaps more surprisingly, Aston Villa have been named as the other Premier League club who believe Manchester City’s concerns are valid. Their co-owner, Egyptian billionaire Nassef Sawiris, believes the spending restrictions are too prohibitive and is believed to be close to City chairman Khaldoon Al Mubarak.

Everton have also been mentioned as potentially backing Manchester City.

What is a fair market value appraisal?

When Premier League clubs make an APT, they must submit details to the Premier League along with a “director’s statement” that they believe it is at fair market value, with documentation to prove it.

The Premier League will then carry out an assessment of the FMV, with a conclusion issued within no more than 10 clear working days.

The Premier League Board will obtain advice from independent experts and consider evidence to determine whether or not the relevant transaction was concluded at FMV.

Premier League regulations state FMV is what would have been sold or exchanged “between informed and willing parties engaging in a non-compete transaction under normal market conditions”.

There are numerous “non-exhaustive factors” considered when assessing the FMV of a transfer, including the player’s age, position, contract terms, nationality and injury record, as well as the level of competition a club faces from other teams when signing the contract . player and even the terms of the transfer window in which they were signed.

For sponsorship and similar offers, clubs must show that “there is an adequate commercial justification for the terms and conditions
transaction” or that “there were one or more competing contractual counterparties and/or bidders whose bids evidence a competitively determined price”.

In both cases, consideration will be given to similar historical agreements where the club has entered into and the value of similar football transactions.

The burden of proof is on the club to demonstrate that a business is FMV.

What if the Premier League deems a deal not fair market value?

If the relevant transaction is deemed not to be at FMV but has not yet been completed, it will not be allowed until the numbers are adjusted to represent FMV in accordance with the Premier League’s assessment.

If the relevant deal has already been completed before the Premier League decides it does not represent FMV, the club must “close the deal” within seven days and return any money received as part of it; or ‘vary the deal’ to achieve what the Premier League deems to be FMV – they must make up the shortfall or return any excess money paid, depending on whether the market value is deemed to be low or inflated.

What if clubs want to challenge a Premier League ruling on FMV?

If the Premier League determines that a deal does not represent FMV, but the club concerned wishes to challenge the decision, it can initiate arbitration with an FMV dispute.

Independent arbitrators, outside legal counsel and independent outside experts will then be used to resolve the dispute within 30 days.

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