Premier League clubs approve changes to associated party sponsorship rules

Premier League clubs voted on Friday to amend sponsorship rules, despite calls from some clubs, including champions Manchester City, to delay the decision.

City had challenged the league’s Associated Party Transaction rules earlier this year on competition law grounds. These rules assess whether sponsorship deals between clubs and entities linked to their ownership reflect fair market value.

Since Sheikh Mansour bin Zayed Al Nahyan, Vice President of the United Arab Emirates, took over Manchester City in 2008, the club has become a dominant force in English football. However, rivals have often questioned the legitimacy of sponsorship contracts from companies linked to Abu Dhabi.

This APT case is separate from the 115 Premier League charges City face for alleged historical breaches of financial regulations.

An arbitration panel deemed some aspects of the APT rules unlawful, sparking disagreements between City and the league over the next steps.

The Premier League stated that City were “unsuccessful in the majority of their challenge” and emphasised that the tribunal found the APT rules necessary and legitimate.

However, City argued that the tribunal declared the league had abused its dominant position under competition law.
A key amendment to the rules includes treating shareholder loans as APTs, requiring them to comply with fair market interest rates.

City received support for postponement from Aston Villa, whose owner Nassef Sawiris suggested a delay to achieve unanimity. Nottingham Forest and Saudi-backed Newcastle United also opposed the changes. However, the rule amendment passed with a 16-4 majority.

“The amendments address the findings of an arbitration tribunal following Manchester City’s legal challenge earlier this year,” the Premier League said in a statement.

“The purpose of the APT rules is to ensure clubs do not benefit from commercial deals or cost reductions that are not at fair market value due to relationships with associated parties. These rules safeguard the league’s financial stability, integrity, and competitive balance.”

While City’s success was established before stringent APT and financial sustainability rules, Newcastle have expressed frustration over restrictions impacting their ambitions to challenge at the top following their Saudi Public Investment Fund-backed takeover in 2021.

AFP