Manchester City suffer defeat in legal challenge against Premier League rules

Only four clubs including City voted against, the remaining 16 clubs were in favour of the changes

Manchester City have suffered their first legal defeat against Premier League rules following a Shareholders meeting this morning.

Premier League clubs have voted through associated party rule amendments, 16 votes to four, meaning the new rules will now factor in Shareholder loans.

A Premier League statement read: "At a Premier League Shareholders’ meeting today, clubs approved changes to the League’s Associated Party Transaction (APT) rules.

"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 Premier League has conducted a detailed consultation with clubs - informed by multiple opinions from expert, independent Leading Counsel - to draft rule changes that address amendments required to the system.

"This 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 advisors.

"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 (FMV) 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 amendments mean Shareholder loans entered into after the effective date will be required to be submitted as an APT and subject to an FMV assessment.

Shareholder loans entered into after 14 December 2021 but before the effective date, and remaining in effect on 11 January 2025, must be submitted as an APT and undergo FMV assessment.

If the Premier League Board determines the loan is not at FMV,  the club is permitted to retain the Shareholder loan on existing terms, but adjustments must be made to its Annual Accounts for 2024/25 onwards.

Any Shareholder loan that was entered into prior to 14 December 2021 and remaining in effect on 11 January 2025 must be submitted as an APT and be subject to an FMV assessment upon any drawdown taking place after the effective date.

It is understood the clubs who opposed the new rules were Manchester City, Aston Villa, Newcastle and Nottingham Forest.

Everyone else was said to have voted in favour including Chelsea and Everton who had been key targets for the rebel group.

The Premier League will hope to draw a line under this costly legal battle that has divided the league however City have previously warned of more potential action.