This week, Manchester City reached a settlement with the Premier League with regards to their dispute over the rules for associated party transactions (APTs).
The Citizens had been involved in a legal challenge against the rules, which are in place to ensure deals between clubs and entities linked to their ownership are not above a fair market value.
However, the two parties have now settled an agreement out of court and, under the settlement, Manchester City accept that the current rules governing APTs are “valid and binding”.
But what does this mean for City, and how much money could they make from it?
Manchester City News spoke to Adam Williams, GRV Media’s Head of Football Finance and Governance Content, about what the case means and how much City could be set to earn in the wake of the outcome.
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Khaldoon Al Mubarak, Chairman of Manchester City, and Pep Guardiola, Manager of Manchester City, watch on following the team's victory in the Premier League match between Manchester City and West Ham United at Etihad Stadium on May 19, 2024
Photo by Michael Regan/Getty Images
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What the case involving Manchester City, the Premier League and the APTs is all about
‘The first thing to say that this outcome is officially separate to the 115 charges situation, although it is related in the sense that it is emblematic of the schism at the top of the Premier League in terms of how it should be run,’ Williams exclusively told Manchester City News.
‘This new development is a settlement between the Premier League and Manchester City based on the club’s challenge to a set of rules that were introduced in November last year, an event which itself was a reaction to City’s legal challenge to an earlier version of the same rules.
‘They are called Associated Party Transaction Rules, or APT Rules, and they were voted through by a majority of Premier League clubs after the Saudis took over Newcastle United in 2021.
‘The Premier League already had a set of rules pertaining to what they call Related Party Transactions [RPTs], which is when a club signs a sponsorship deal with a company which is directly linked to their owners or board.
‘The difference with the APT Rules is that they apply to sponsors and partners who are more loosely related to the ownership or board. ‘Materially influenced by the same party as the Club’ is probably the key difference in the definitions of APTs vs RPTs here.
‘Under both systems, commercial agreements are screened by the Premier League for ‘Fair Market Value’. Basically, this is a way of ensuring that owners aren’t able to strike artificially inflated sponsorships with owner-linked companies in order to circumvent FFP or PSR.
‘Man City successfully argued that elements of the APT Rules introduced in 2021 were unlawful, which led to a lot of hand-wringing about clubs like themselves and Newcastle being able to strike whatever commercial deals they wanted and, by extension, massively outspend the rest of the Premier League.
‘However, it wasn’t as simple as that. The tribunal ruled that certain elements were unlawful and therefore that the system as a whole shouldn’t be allowed to stand – but that didn’t mean that every element of the APT Rules would be struck down. Crucially, the Fair Market Value screening still remained.
‘So the Premier League re-wrote the rules and put them to a vote among its clubs, which passed 16-4, I believe.
‘The changes were mainly about low-interest shareholder loans, which would now have a nominal rate of interest applied for the purposes of PSR. There were also some bits about the transparency of the Fair Market Value screening.
‘City wanted these rules, especially the bit about shareholder loans, to be applied retroactively, so they again prepared to challenge the legality of the whole APT system in the arbitration courts.
‘But now, the two sides have settled before the case went to tribunal, which is common in commercial disputes.
‘Basically, City have accepted that the rules as they exist at the moment are lawful – but they have likely received something from the Premier League in exchange.’
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Manchester City fans might have to wait until 2026 to find out
Williams continued: ‘The suggestion is that might mean their shirt sponsorship and naming rights deal with Etihad, which was initially adjusted by the Premier League in line with what they perceive to be Fair Market Value, has now been allowed to proceed at the rate they originally wanted.
‘That’s going to be well in excess of £1bn, potentially closer to £2bn, over the course of the next decade or so.
‘But this is not confirmed at this stage, as the details of the settlement are private.
‘Reports have suggested that the Etihad deal will now go through at the original value, but we’re not going to know that for sure for quite some time.
The FIFA World Club Champions badge is seen on the shirt of Manchester City during the Premier League match between Manchester City and Sheffield United at Etihad Stadium on December 30, 2023
Photo by Chris Brunskill/Fantasista/Getty Images
‘Regardless of whether City are able to backdate the new version of the sponsorship to when it was initially meant to start, which I believe was 2023-24, it might only be known for certain whether or not the Etihad deal was part of the settlement when they release their next set of accounts.
‘They won’t explicitly say it was part of the settlement, but they might confirm a new deal on significantly improved terms.
‘The thing is, because a version of the deal has already been passed, albeit at a lower rate, the partnership is already underway, so would they re-announce it before then with a big marketing splash? I don’t know.
‘It may also be possible that it’s a condition of the settlement that they don’t make an immediate song and dance about.
‘If so, we might not know for certain until the accounts come out in 2026, which could theoretically be after the first 115 verdict is released, after which the landscape shifts.’