Manchester City have been dealt a major blow as part of their ongoing legal battles with the Premier League.

Premier League clubs have officially voted by the two-thirds majority needed to approve changes to Associated Party Transaction (APT) rules.

The rules themselves place a limit on how much companies associated with clubs can feed into the club itself, such as through sponsorship deals.

There has been the accusation that some clubs had been inflating these deals ‘above market value’ to allow themselves to spend more and pay higher wages whilst still complying with the Premier League’s profit and sustainability rules.

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A statement released by the Premier League read, “The amendments to the rules address the findings of an arbitration tribunal following a legal challenge by Manchester City to the APT system earlier this year.

“The purpose of the APT rules is to ensure clubs are not able to benefit from commercial deals or reductions in costs that are not at fair market value by virtue of relationships with associated parties. These rules were introduced to provide a robust mechanism to safeguard the financial stability, integrity and competitive balance of the league.”

The statement explained further what the changes were, saying, “[The changes] relates to integrating the assessment of shareholder loans, the removal of some of the amendments made to APT rules earlier this year and changes to the process by which relevant information from the league’s ‘databank’ is shared with a club’s advisers.”

What does this actually mean for Man City?

One of the major accusations as part of City’s ongoing legal battles was that they had used APT rules to ‘inflate’ the income the club has received through sponsorships by companies owned by the Abu Dhabi government, of which City Chairman Khaldoon Al Mubarak is a member.

The legal challenge that City launched that has directly led to these rule changes came because the Premier League rejected a huge new sponsorship deal by Etihad Airways – the national airline of the UAE, of which Abu Dhabi is a constituent member – that the League deemed as not being of fair market value.

The vote itself was seen as a significant moment in the Premier League’s ability to place limits on itself, with 13 of the 20 clubs needing to approve the changes for them to pass and hand City a major defeat.

If the vote failed to pass, critics feared that it would give free rein for clubs whose owners have a wide range of associated companies to raise income through these sponsorship deals to high levels without any scrutiny.

What are the implications?

It is reported that Newcastle United, Aston Villa, and Nottingham Forest were the clubs that joined City in voting against the APT rule changes.

City are awaiting the ruling of a tribunal against the Premier League that alleged aspects of the existing APT rules were unlawful. They wrote to the other clubs in the Premier League earlier this month saying any amendments to the rules should be delayed until a response from the tribunal panel was delivered.

That was clearly not listened to by the rest of the league.

The implications of this rule change are undefined. It would limit any club’s ability to inflate any deals. It is less likely that it can be retrospectively applied to charge Man City with unlawfully inflating sponsorship deals, but could allow for the admission that the deals were above what they should have been.

Whether this will lead to any direct punishment for City is yet to be seen. The Premier League hit City with 115 charges relating to alleged financial wrongdoing in February 2023.

City visit Anfield next Sunday 1st December in what will be a crucial title clash following Pep Guardiola’s extended deal as City manager.

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