Key Takeaways
- A hearing on the 7th October confirmed sections of the Premier League’s APT rules are “unlawful.”
- Three clubs – Chelsea, Newcastle and Everton – acted as witnesses for Man City during the process.
- Chelsea could benefit from a rule change, as they look to secure a front-of-shirt sponsor.
On the 7th October, Manchester City announced that they scored a huge victory in their legal battle as the Premier League’s sponsorship rules were declared ‘unlawful’. Aspects of the league’s Associated Party Transaction (APT) rules were deemed unlawful by a tribunal after the Citizens had two major sponsorship deals blocked due to the change in regulations.
They were put in place following Newcastle’s takeover by the Saudi Arabian Public Investment Fund, with the rules intended to stop clubs from inflating sponsorship deals with companies with direct relations to owners. The hearing said: “The Premier League was found to have abused its dominant position. The rules were found to be discriminatory in how they operate because they deliberately excluded shareholder loans.”
The Premier League has also outlined that they won sections of the case during a messy and complicated procedure. During the hearing, eight clubs supported the Premier League’s voice, but three were in favour of Manchester City. We have outlined the three clubs in detail and why they did so.
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Premier League APT Rules Explained
The controversial rules have been in place since 2021 and are the subject of a legal battle launched by Manchester City.
Chelsea
They may be impacted positively
Chelsea have been at the centre of financial controversy ever since Todd Boehly took over the club. They’ve spent heavily – the most in the league – and continue to evolve the club. At first, it didn’t seem like they had a plan, but now the jigsaw pieces are connecting and the Blues look well on track to qualify for the 2025/2026 Champions League.
However, they’ve always been under the threat of points deductions due to their heavy spending. Profit and Sustainability Rules have been analysed precisely in west London – and, as it stands, they are set to pass measures. The ruling involving Man City may only help them as well.
Chelsea are currently without a front-of-shirt sponsor after they failed to find an agreement with any company willing to pay a sufficient price. It means they have missed out on millions recently, but they believe it is better than entering a ‘poor deal’. The change in rules will naturally take time to implement, but more doors have now opened.
Clubs will still be judged to commit to ‘fair market value’, which is against a club’s revenue and historical performance. Chelsea have revenue of over £500m, so – technically – they could now bring in a Todd Boehly or Clearlake-funded company to put on the front of the shirt and pay the sort of value that they’ve been holding out for, which is reflective of what they’re worth. Some may call it a ‘classic loophole’, but it’s easy to see why they supported Man City when it may help them massively.
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Why Man City’s Win in APT Case Could be Bad for Arsenal and Liverpool
Manchester City’s early victory in a series of court hearings could come at a cost to Arsenal and Liverpool, among other Premier League clubs.
Newcastle
The Magpies kickstarted the APT chaos in 2021
Newcastle were mentioned heavily during the case between Man City and the Premier League. Their Saudi Arabian-backed takeover in 2021 kickstarted the APT chaos in 2021, with the competition bringing in rules to stop the Magpies from inflating deals to climb up the table.
They remarkably rose to the Champions League without it, with the likes of Alexander Isak quickly considered one of the best strikers in their history. The ruling confirmed by the Premier League will have a positive impact on Eddie Howe’s side as well once the changes are confirmed.
With it increasingly likely that the 2021 amendments will be removed, it will be easier for Newcastle to bring in Saudi Arabian sponsors. The hurdles they always had to jump over will be removed, even if they will still have to prove fair market value. When they acquired their front-of-shirt sponsor, it came after months of tiring efforts by the club to prove they ticked every box needed.
Fair market value will still remain – it’s not being scrapped entirely – but the tweaks to the rules will make certain elements easier after they were declared unlawful. “Newcastle won’t benefit from this as extensively as they might otherwise have, because the fair market valuation calculation is still important,” football finance expert Dr Rob Wilson told the i.
“You determine that in part based on historic success, and the likes of Newcastle and Chelsea will need to demonstrate value at whatever rates they decide to sign their deals against.” Elsewhere, the Magpies do not need to worry about interest-free director loans now being included in APT calculations, thus having a PSR knock-on effect. Newcastle do not have any director loans on the books, whilst their rivals – including Arsenal – do.
Everton
The Toffees are now in a race against time to secure a change of ownership
Finally, Everton seem to be in a race against time to see if they will be impacted by the knockout effect of the APT trial. As previously mentioned, the independent panel decided that interest-free director loans should be considered as part of the APT calculations, which nine clubs rely on to stay inside PSR.
Everton are one of those nine clubs, as the Blues have benefited from around £450m of such lending from current owner Farhad Moshiri. Therefore, any future rule change could impact the club, especially if they were to fall within calculations around Profit and Sustainability Rules.
However, Sean Dyche’s side could avoid any potential problems caused by a rule change around Premier League financial regulations if the club’s takeover goes through. Football finance expert and co-host of The Price of Football Podcast Kieran Maguire said: “That should mean Everton have little to worry about if the takeover of the club by The Friedkin Group goes ahead without issue.” Dyche – who may leave the club if The Friedkin Group takes over – will be hoping the club can confirm the takeover quickly, but, after years of near-misses, it is far from guaranteed.
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