EXPLAINED: Why the Premier League shouldn't risk an APT2 gamble
The time for a conciliatory approach and commercial mediation is now
Both The Times and Daily Mail have received a copy of City’s 88 page, confidential, statement of claim relating to the ongoing Associated Party Transaction (APT) arbitration, APT2. When I first wrote this piece, I’d assumed a short hearing was possible before Easter 2025. But such is the life of a barrister and the snail’s pace of every dispute, we now know a two week hearing is pencilled in for October 2025. Even then, City have had to sub in Tony Singla KC. We may not now have a decision this side of 2026 if this goes the whole way, which in many way reinforces my whole point in this piece.
The outcome of APT2 is fraught with uncertainty following the outcome of the initial arbitration proceedings. In reality, City have little to lose - it is a strategic “free hit” even with a cash cost of, perhaps, £2m in legal fees. They would not admit it, but City can live with the APT rules as they now look - I doubt they really care about the whole shareholder loan issue. It has, though, been the key trigger for City to undermine the APT regime and some of the contradictions of the Premier League rulebook. In the words of Jim Bowen: "you've won that, that's safe."
For the Premier League, it is a risk too far to let this follow-on claim go to a tribunal. The APT1 tribunal members have been appointed to consider the APT2 case to expedite matters. Those individuals have already clearly expressed their views on shareholder loans, competition law in this context and the need for their inclusion in the APT rules. The Premier League’s lawyers will have a good understanding as to what the tribunal will think about APT2.
APT1 was a partial victory for City - so it was a partial win for the PL too
The Premier League won meaningful points in the original APT hearing - they were largely found to have acted reasonably and were not found to have discriminated specifically against certain Middle Eastern owners. Somehow, the tribunal did not even conclude that the introduction of APT was down to Newcastle’s PIF takeover. The need for an ex ante APT regime of some description was endorsed, at least, to an extent.
The criticisms of the Premier League’s processes were limited although the tribunal was not impressed by the manner by which it extended the APT regime by subtly, but knowingly, changing the drafting and burden of proof of the fair market value (FMV) regime.
Ultimately, the APT1 tribunal concluded that elements of the original APT rules, introduced in 2021, and the amended versions from February 2024 were unlawful on competition law and public law grounds. The tribunal specifically identified the exclusion of shareholder loans from the FMV requirement and certain pricing changes as breaches of competition law. Furthermore, the inability of clubs to comment on comparable transaction data relied upon by the Premier League before a decision on FMV was deemed a breach of procedural fairness.
City warned the Premier League to slow down…
Following the initial partial decision, the Premier League tabled amendments to fix the unlawfulness of the APT Rules.
City’s GC Simon Cliff wrote to clubs and the FA (the FA Board has to ratify PL rule changes) to argue that “clubs [would] be voting blind”. City had already sought a further determination from the tribunal that the effect of the declarations issued in the first judgment meant that the original APT Rules and the Amended APT Rules (from February 2024) were void and unenforceable as a whole.
“Common sense dictates that the Premier League should not rush into passing amendments…until (it) knows the outcome from the tribunal…It is important that a new regime is grounded in rules that are fair, considered and legal. Our strong desire is to avoid any future costly legal disputes on this issue and so it is critical that the Premier League gets it right this time round.”
The Premier League responded that: “In circumstances where the tribunal has found limited aspects of the APT rules to be distortive of competition, the need for efficient and prompt action to deliver good governance is self-evident.”
So, on 22 November 2024, the new rules were passed 16-4 (“November 2024 Rules”) when some clubs switched sides.
On 13 February 2025, City’s pre-November 2024 stance was vindicated. The APT1 tribunal concluded: “that the three respects in which the APT Rules and Amended APT Rules were unlawful cannot be severed with the result that the APT Rules as a whole are void and unenforceable.”
And so to APT2…
The APT1 tribunal explicitly stated that whether its determination of voidness was meaningful would depend on APT2 - by then, a fresh arbitration commenced on 20 January 2025 specifically challenging the validity of the November 2024 Rules.
We now know from The Times and the Daily Mail that City’s key APT2 arguments relate to:
Discriminatory rules (in the competition law sense): City argue that the Premier League's treatment of historic shareholder loans at rival clubs (eg Arsenal’s £259m, Brighton’s £406.5m, Everton’s £450m, and Leicester’s £265m) is inconsistent with how sponsorship deals linked to club owners have been treated. City claim this differential treatment distorts competition and violates principles of transparency, objectivity, and proportionality.
Unlawful rule changes: City assert that the Premier League amended (and did not replace) the APT rules after the tribunal declared them void. City contend that these amendments are therefore also void since they stem from already voided rules.
Flawed implementation of shareholder loan FMV assessments: the November 2024 Rules rely on a different process to assess FMV compared to sponsorships. This includes relying on unqualified part-time board members to assess FMV instead of independent experts. Clubs were also given a 50-day grace period to convert shareholder loans into equity. City say this leads to procedural flaws.
Impact on competition: City say that these differences, rule changes and exemptions distort economic competition among member clubs by favouring certain financial practices like shareholder loans.
Legal and procedural concerns: City reiterate that the Premier League rushed rule changes without proper consultation or adherence to procedural fairness.
City’s arguments are at least winnable
Given we have a good insight into the tribunal’s thinking (and way of thinking) on these issues from APT1, it is hard to conclude that City do not have a good, arguable case. Whether the odds of winning are more than 50% is hard to assess without even seeing the Premier League’s reply. But these are clearly not hopeless arguments.
The Premier League's legal spend for the 2023/24 season appears to be over £100m. Those costs may be even higher in the current season. Moreover, what have they got to show for it? The Premier League may well prove their case against City but that will not be a wholly positive outcome given the dramatic and far reaching consequences. Aside from City and APT, the Everton and Nottingham Forest cases were expensive and damaging even though both clubs admitted their breaches in full.
The Leicester lacuna loss was embarrassing as has been the Premier League’s strident reaction and attempt to appeal it’s own Appeal Board despite the panel including Rt Hon Sir Stanley Burnton and the Rt Hon Sir Maurice Kay, both reputed former Court of Appeal judges. Chelsea have been under investigation for more than two years despite admitting “financial irregularities” whilst being permitted to sell hotels, property and the Women’s team to fellow subsidiaries. Trust in the Premier League’s processes is at an all time low.
Far reaching disclosure requests
On 29 April 2025, we also learned that City were pursuing an extensive disclosure application against a number of third parties i.e. those clubs with shareholder loans. City’s lawyers have asked the Premier League to force Arsenal, Everton, Brighton, Leicester and others to reveal the fine print of hundreds of millions in owner-funded loans. They’re encouraging the Premier League to use Rule B.18: “clubs must comply promptly with any request for information.”
It is not clear if this will be considered a proper use of Rule B.18 in the midst of arbitration or how this power gives City (as the claimant in a Rule X arbitration) the right to see such documents even if successful. Either way, it does appear that those details (if not the full documents) are material and will need to be disclosed in the matter one way or the other (the arbitration panel can be asked to get involved in making an order for disclosure).
City will want to understand details such as:
Interest rates payable (what proportion is 0% or below LIBOR/SONIA type rates) Security (or lack of)
Repayment horizon
Covenants
Use of funds restrictions (if any)
Any preference share/conversion rights
This is likely to be assist City in demonstrating "distortion" and to disprove the idea that the shareholder loan exclusion was purely to “encourage investment” which was the rationale that justified distinction from other APTs.
The Premier League leadership is exposed
Even those who believe that the Premier League has acted correctly on all the conflicts with clubs so far are not impressed with the state of Premier League regulation. The APT battle is meant to be confidential but is being leaked and played out publicly, blow by blow. The actual cash costs of all of these legal skirmishes are enormous.
The Premier League can’t afford another loss.
A second adverse APT ruling would not only invalidate the November 2024 Rules, it would risk complicating the re-implementation of a lawful APT regime. It would raise general questions of the Premier League’s governance and commercial judgement and it would entrench the hostility between a number of clubs. Most of all, it would throw into confusion the applicable related party and APT regime in place not just going forward, but also since 2021.
War? What is it good for?
In any event, are the parties really very far apart? The Premier League appear to be happy with the November 2024 Rules - they should be, they are their own proposal to fix the identified unlawful deficiencies. City are, presumably, prepared to accept the November 2024 Rules but with shareholder loans treated exactly the same way as other APTs. City are surely not motivated by a desire to recalculate the historic PSR compliance of Everton and Leicester (Brighton and Arsenal are irrelevant either way given they have lots of PSR capacity historically). So for City, much of the dispute now is about principle, PR and giving its enemies a bloody nose.
I should add for completeness that I am aware of a number of the usual convoluted theories about how this case impacts the 115 case more directly but I simply don’t buy any of them.
Therefore, we have asymmetric risk for the Premier League. The risk of losing APT2 is substantial but the reward of winning, limited to a recovery of a percentage of costs.
Ceasefire now?
The parties will shortly have clear visibility of each other’s legal arguments. The quality of the lawyers on both sides means that both sets of pleadings and submissions will be compelling. That is not the point.
The APT dispute is no longer about the law, it is time for a commercial negotiation.