EPL wants to change sponsorship rules - City argue amendments are insufficient

The Premier League will vote later this month on changes to the sponsorship rules deemed unlawful following a legal challenge from Manchester City.

As English football’s civil war rages on, top-flight sides will head to a crunch summit in Central London for a November 22 showdown on Associated Party Transactions (APTs).

A 14-page document outlining proposed amendments and seen by Mail Sport has been sent to clubs ahead of what promises to be a potentially volatile meeting at the swanky Nobu Hotel in Portman Square. The proposals appear to open the door to the possibility of bigger deals between clubs and parties linked to their owners.

However, City have argued that amendments alone are not sufficient and that all the rules should be deemed null and void after an independent tribunal deemed parts of them ‘unlawful’.

City took legal action after the rules were tightened in February. An independent, expert panel subsequently identified a number of areas which needed to be changed, with the lack of the inclusion of shareholder loans to a Fair Market Value (FMV) test found to be a key omission.

The addition of those loans – monies lent to clubs at low interest rates from those with stakes of five per cent or more in them – is one of three changes being proposed across the document.

The other two focus on access to a databank of commercial deals used by the Premier League to reach a verdict on whether a proposed sponsorship is at FMV and the reversal of a number of changes brought in earlier this year.

The definition of FMV has been changed from whether the amount involved ‘could’ be paid rather than ‘would’ be, between willing parties. And in what may prove to be a key development, the words ‘in normal market conditions’ have been removed from the rules, along with three lengthy paragraphs outlining its definition by the Premier League.

There is an argument that in exceptional circumstances companies linked to countries in the midst of huge drives for exposure, such as Saudi Arabia, would be willing to pay a premium and thus normal market conditions should not apply.

Indeed, City’s challenge was triggered when the system blocked a wide-ranging new deal between themselves and Abu Dhabi-based Etihad Airways.

Of further significance is the return to the rules of the word ‘evidently’ when it comes to deeming whether a deal is of FMV. While seemingly minor, that change raises the bar for the top flight to be able to prove a deal is artificially inflated.

One issue the competition may face is a reluctance from those who benefit from shareholder loans to vote for the changes. And clarity has been sought from the tribunal panel on whether the amendments, rather than a complete overhaul, satisfy their requirements.

In the document, the Premier League say the changes have been drafted following consultation with the clubs and the assistance of ‘Leading Counsel, Daniel Jowell KC’.

City took the legal route after amendments to the rules – which shifted the burden of proof to a club to show that a transaction was at FMV – were passed in February.

Original restrictions on FMVs were introduced shortly after the Saudi-led takeover of Newcastle in 2021.

Twelve clubs voted for the changes at the time, with two abstentions and six votes against. Should the amendments attract the votes needed, they will be effective immediately.

The Premier League declined to comment.