The Premier League will ask its 20 clubs to vote on proposed changes to sponsorship rules later this month following the successful legal challenge from Manchester City.
City took the Premier League to a tribunal this summer and an independent panel’s judgment, published last month, found that regulations surrounding associated party transactions (APT) were considered unlawful.
The Premier League have maintained that “discrete elements” of their rules can “quickly and effectively be remedied” with minor alterations but that will require the backing of a two-thirds majority of clubs when they convene on November 22.
The shareholder meeting will include a vote on the proposed changes to the APT rules and need 14 of the 20 clubs to vote in favour if the Premier League are to solve a potentially damaging problem.
The enforced alterations are a direct result of City challenging APT laws introduced in 2021. It was argued they were “discriminatory and distortive” and “at odds with the whole rationale of PSR (the league’s profitability and sustainability rules).”
An eventual 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 with little or no interest charged, from APT rules was considered to be in breach of competition law.
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). The independent panel, importantly, accepted that the exclusion of shareholder loans was “a clear distortion of competition between clubs” due to the accounting benefits they offered.
The Premier League are proposing that shareholder loans will now be included in APT rules in order to comply with the tribunal’s verdict, a change that will impact the majority of the division. Fourteen of the 20 clubs had soft loans from owners included in their most recent accounting period but the Premier League will hope the issue can be resolved as smoothly as they promised in the wake of the verdict.
The Premier League declined to comment.
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