Manchester City, both of the Premier League, claimed victory after the APT verdict

Both Manchester City and the Premier League are claiming victory after the league's Associated Party Transaction (APT) regulations were revealed.

The ruling said the Premier League's APT rules and amendments, which were introduced in December 2021 and February this year respectively, were “unlawful” and a breach of UK competition law because they deliberately excluded debt to shareholders – when a club borrows money from its owners. Group, usually interest-free.

The case is separate from more than 100 allegations City have made against them alleging breach of the Premier League's Profitability and Sustainability Regulations (PSR), which they deny.

In this case, City claimed that the league's APT rules – which aim to increase revenue streams and allow for higher spending by using sponsorship deals with companies linked to their clubs with their owners – are illegal and against competition laws. The league insisted that the rules were fully consistent with the law.

A statement from City on Monday said the Premier League had been “found to have abused its dominant position” by the tribunal. City also noted that the panel ruled two of the league's decisions regarding the club's sponsorship deals – those relating to Emirates Air Group and First Abu Dhabi Bank – should be set aside.

The Premier League, meanwhile, said it “welcomed” the ruling. The League acknowledged that the ruling identified “a small number of isolated elements” of the APT that did not comply with competition law but claimed that it “supports the overall purpose, structure and decision-making of the APT system”.

The Premier League added that the tribunal found the APT rules “necessary” as a means of ensuring the effectiveness of the league's Profitability and Sustainability Regulations (PSR), “thereby supporting and delivering the integrity and sustainability of sport in the Premier League”.

The Premier League said it would continue to operate the APT system “taking into account the findings” of the tribunal. It added that elements that do not comply with competition laws can be rectified “quickly and effectively”.

The ruling was handed down by a three-person arbitration panel and came after City challenged the league's APT rules. The case was heard in June.

An amendment to the current APT rules was discussed at the Premier League's shareholders meeting on Thursday but was prematurely removed from the agenda.

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A key part of Monday's ruling deals with the shareholder debt issue.

The tribunal decided that loans to shareholders as well as sponsorship deals should be subject to the APT rules. Many of these loans are interest-free, which benefits the club as they will owe less later on. Arsenal, for example, has borrowed more than £200m ($262m) in shareholder debt until the end of 2022-23.

Historically, interest-free shareholder loans have been excluded from the APT rules, which the City claims is unfair. Their argument is that this distorts the profitability and sustainability (PSR) calculation because interest-free debt cannot be a fair market value. The tribunal agreed with them.

In theory, this means that if interest-free shareholder loans are included in the PSR, many clubs will need to balance their books to avoid breach.

In June, a 165-page legal filing seen by British newspaper The Times showed City argued they suffered “discrimination” as a result of the league's APT rules, alleging they were “tyranny of the majority”. Premier League rules dictate that a majority of the 14 clubs must agree to implement the new regulations.

Premier League clubs have voted through temporary arrangements regarding the APT in October 2021. It came after Saudi Arabia's Public Investment Fund (PIF) took control of Newcastle United earlier that month. In December 2021, clubs must submit all sponsorship deals worth £1 million ($1.26m) to the Premier League to decide on the possibility of an APT, despite opposition from City and Newcastle.

Those rules were strengthened in February 2024 after another vote among clubs, who voted in favor of a framework that sees all APTs subject to a fair market value test, meaning any deal must be financially fair for all parties.

Earlier there were concerns that the ownership could use multiple companies under their jurisdiction to strike sponsorship deals that would artificially inflate their own revenue and circumvent PSR rules.

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However APT rules ensure that Newcastle have their sponsorship deals with PIF-linked events company Sella and e-commerce company Noon subject to a market value test.

It also applies to any sponsorship deals between City and other groups with links to the City Football Group (CFG) ownership of the club. City have always voted against or abstained from introducing APT rules at Premier League meetings.

In 2022–23, City posted a Premier League record revenue of £712.8m (now £953m), almost half of which — £341.4m — was commercial income.

Most of the City's revenue comes from companies affiliated with CFG. Etihad, the state airline of the United Arab Emirates, is the main sponsor of both City's shirts and the stadium.

Leicester CTO is bound by APT regulations. Their chief executive and chairman Ayawat Srivadhanaprabha also controls the King Power Company, which is the main sponsor of the club's jerseys, stadium and training kits.

However, City and Newcastle's close links with state investment offer them a wider network of related companies — which is why rival Premier League clubs have come together to close the gap.

UEFA also has its own fair-market value test. City's legal case does not address those laws and the club must still comply with them in European competition.

The Athletic brings you a complete breakdown of the decision and its implications in the near future.

(Top image: Visionhouse/Getty Images)