Premier League clubs have voted to toughen rules on associated party transactions, but face the threat of arbitration from one of their own clubs, believed to be Manchester City.
Chief executive Richard Masters informed clubs this week of the potential legal battle with the club in question arguing the rules may be in contravention of competition law. The league insist they are fully compatible with the law.
The Premier League has declined to comment on the identity of the club and didn’t reveal it in their email to members this week or in a shareholders’ meeting on Friday, but Sky News reported that there has been speculation it is Manchester City, and The Athletic has also independently verified that the club is believed to be City. City themselves are declining to comment on the matter.
Clubs failed to vote down a proposal to fast-track a ban on loans between associated clubs in the January transfer window in November, while a proposal to block wider affiliate transactions also fell short of the 14 votes required to pass.
It is understood the clubs who voted against the temporary ban on January loans were Burnley, Chelsea, Everton, Newcastle, Nottingham Forest, Manchester City, Sheffield United and Wolves.
However, at a meeting of member clubs on Friday it is understood two reversed course allowing the motion to pass and change what is and isn’t permitted.
A statement from the league confirmed “a series of amendments” had been agreed “to further enhance the efficiency and accuracy of the system.”
Manchester City’s relationship with Abu Dhabi-based companies has come under scrutiny for much of the past decade while Newcastle United’s majority owner, Saudi Arabia’s Public Investment Fund (PIF)’s control of four clubs in the Saudi Pro League sparked the vote on potential transfers late last year.
Another of the top flight’s leading clubs, Chelsea, operate as part of a multi-club model while the prospective new owners at Manchester United (INEOS) and Everton (777 Partners) also hold stakes in other football clubs.
In October 2021, Premier League clubs passed a temporary amendment to ban commercial opportunities involving pre-existing business relationships before in the following December, it was ruled that clubs must submit all sponsorship deals worth over £1million ($1.26m) to them to decide on the possibility of an “associated party transaction”.
(Kevin C. Cox/Getty Images for Premier League)
That meant the Premier League would conduct a “fair market value assessment” of any transaction which its board suspects of being from an “associated party” to determine whether there was any valuation inflation.
The league claims its judgements are based on the “substance of the relationship and not merely the legal form” with the definition including when a club and an entity are “directly or indirectly controlled, jointly controlled, or materially influenced by the same government, public or state-funded body or by the same party”.
In November of last year, clubs — alongside the backing of the Premier League — saw a proposal to block loan deals between associated clubs gain 12 votes, while a plan to block wider affiliate transactions attracted 13, both falling just short of the 14 votes required to pass.
Any legal battle will only add to the Premier League’s already stretched caseload.
The Athletic reported earlier this week that the league has been forced to utilise extra legal help in a bid to get through several ongoing cases before the deadlines outlined in their own regulations.
Everton’s appeal hearing took place last week, with a decision from the independent commission expected by mid-February — but further Profitability and Sustainability Rules (PSR) cases against both Everton and Nottingham Forest are subject to strict timeframes which the Premier League is not allowed to breach.
In addition, Tuesday represented the one-year anniversary of Manchester City being charged with 115 breaches of financial rules, a highly-complex case whose timeline is governed by the independent commission.
An ongoing investigation into Chelsea over possible breaches of financial regulations and negotiations over the proposed English Football League ‘New Deal’ is only adding to the workload.
Premier League teams whose owners have stakes in other clubs
- Arsenal — Colorado Rapids (U.S.)
- Aston Villa — Vitoria Guimaraes (Portugal)
- Bournemouth — Lorient (France), Auckland (New Zealand)
- Brighton & Hove Albion — Union Saint-Gilloise (Belgium)
- Chelsea — Strasbourg (France)
- Crystal Palace — John Textor: Botafogo (Brazil), Lyon (France), Molenbeek (Belgium) – David Blitzer: Alcorcon (Spain), Den Haag (Netherlands), Augsburg (Germany), Real Salt Lake (U.S.), Waasland-Beveren (Belgium)
- Manchester City — Bahia (Brazil), Girona (Spain), Lommel (Belgium), Melbourne City (Australia), Montevideo City Torque (Uruguay), Mumbai City (India), New York City (U.S.), Palermo (Italy), Sichuan Jiuniu (China), Troyes (France), Yokohama F Marinos (Japan)
- Newcastle United — Al Ahli, Al Ittihad, Al Hilal and Al Nassr (all Saudi Arabia)
- Nottingham Forest — Olympiacos (Greece)
- Sheffield United — Al Hilal United (UAE), Beerschot (Belgium), Kerala United (India), Chateauroux (France)
- West Ham United — Sparta Prague (Czech Republic)
* Prospective new owners at Everton (777 Partners) and Manchester United (INEOS) hold stakes in other football clubs
(Oli Scarff/AFP via Getty Images)
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