Premier League civil war ramps up as Man City claim APT rule changes are unlawful

Champions write new letter directly to rival clubs ahead of league’s proposed amendments to associated party transaction rules

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Hostilities between Manchester City and the Premier League are intensifying ahead of a crunch vote as they ferociously attack each other’s positions in new leaked letters.
City have written to rivals to tell them they are voting “blind” next week on amendments to associated-party transaction (APT) rules that remain “void” while a tribunal clarifies a 175-page ruling last month.
The league, however, has sent a lengthy letter dismissing the club’s interpretation of findings and taking particular exception to criticism in a prior letter from City regarding its role as a regulator.
“The League rejects in the strongest possible terms the repeated and baseless assertions in your letter 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,” the competition told City in a letter which has also now been circulated to all clubs by the champions.
Letters seen by Telegraph Sport show the two sides are refusing to give an inch as clubs weigh up whether to vote through proposed amendments to APTs on Nov 22.
A tribunal verdict spanning 175 pages saw both the Premier League and City claiming victories last month but the exclusion of shareholder loans – money borrowed from a club’s owner – from APT rules was considered to be in breach of competition law.
The club claim proposed changes in response from the league “entail material legal risk” that could reignite the legal war around restrictions. The league, however, claims City have made “meritless threats”.
An 11-page letter from the competition to City rejects all criticism of the consultation process that has followed the tribunal’s award. “That MCFC does not agree with the process does not provide a credible basis to impugn it,” the league’s response says, rejecting City’s claim that the proposed amendments are “unlawful”.
City, however, said any discussions are moot while the tribunal still considers a request for further clarification from both the league and the champions after its ruling last month.
The City letter to all other clubs on Friday is the second time the club has moved to reinforce its position directly in writing since the outcome of a tribunal this summer. Referring to that correspondence, a league letter to City sent on Nov 15 claims the club included “a tendentious and inaccurate interpretation” of the tribunal’s verdict.
The club, which had raised 20 claims against the league in its arbitration challenge, is particularly concerned that the league’s potential solution is being raised before the tribunal has responded to queries raised by both sides.
The Premier League maintains “discrete elements” of their rules can “quickly and effectively be remedied” when clubs convene on November 22.
But City are fighting league proposals to introduce a “retrospective exemption for shareholder loans for the period from December 2021 until the rules come into effect”.
“This exemption is one of the very things that was found to be illegal in the recent arbitration,” writes Simon Cliff, City Group’s General Counsel, in the new letter. “It is not lawful to re-introduce it into the rules.”
More than half of top-tier clubs have soft loans from owners included in their most recent accounting period. The likes of Everton, who have been propped by loans from outgoing owner Farhad Moshiri, would be in severe danger of breaching spending rules again if an exemption is not introduced.
The introduction of shareholder loans in spending calculations against profit and sustainability rules could also now be consequential for the likes of Manchester United as they plot major development in the Old Trafford area.
“Even going forward, the proposals would create market distortions,” Cliff writes in his letter pleading with clubs not to “rush” through new rules. “For example, whereas clubs have to wait for PL approval before receiving the benefit of commercial transactions, they would be free under the proposals to take the benefit of shareholder loans before PL approval.
Cliff claims the “PL is rushing its consultation”. “The PL and MCFC disagree on the implications of the award and have agreed that the tribunal will determine the issue soon,” he says. “It is essential to have this determination before any rule amendments are voted on because the tribunal’s ruling will be directly relevant to those amendments, and without it, clubs will be voting blind.
“For example, one very possible outcome is that the tribunal will declare that all of the APT Rules are void and always have been. How can the clubs meaningfully discuss amendments to rules without knowing if those very rules even exist?”
Next week’s meeting needs 14 of the 20 clubs to vote in favour of the Premier League for amendments to be ratified. Alterations are a direct result of City challenging APT laws introduced in 2021. The club argued they were “discriminatory and distortive” and “at odds with the whole rationale of PSR (the league’s profitability and sustainability rules).”
The APT rules were introduced as a means to prevent clubs earning increased revenues through inflated commercial deals, with each significant deal having to reflect fair market value (FMV).
“By rushing through its consultation process and tabling the proposed amendments for a vote before the Tribunal has issued its determination, the PL risks further costly legal proceedings, including potential claims for interim relief and damages,” Cliff writes.
The APT row is unrelated to a separate case being heard into 115 alleged financial breaches by City.
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