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On Tuesday 22nd October, Premier League clubs are set to meet for crucial talks about amending the league’s financial regulations following Manchester City’s legal confrontation with the official body.
The summit will discuss how shareholder loans should factor within the league’s associated party transaction (APT) rules.
This discussion comes on the back of an arbitration panel ruling that excluding such loans breached competition laws.
This summit marks the first time the clubs have met since the panel’s decision was disclosed on 7th October.
Manchester City labelled the league’s reaction to the hearing as “misleading”, stating that the decision signifies that all APT rules are invalid.
Meanwhile, the four-time consecutive champions voiced their views that the verdict invalidated the entire suite of APT regulations.
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The Premier League is pressing ahead with resolving the areas of the legislation that are deemed illegal and is seeking further understanding from the arbitration panel for the repercussions of its ruling.
The APT rules aim to ensure that commercial agreements between clubs and entities linked to their owners reflect the true market value of the deal, preventing artificial inflation to heighten revenue.
Ahead of the meeting, Premier League clubs have been asked to present the league with details regarding their current arrangements of shareholder loans vs loans converted into equity, with the details being backdated for the last three years.
It’s understood that the consensus amongst the clubs is that only new shareholder loans could be evaluated for fair market value.
A fair market value assessment might consider the interest rate that would be charged on such a loan in the open market, which could differ from club to club based on their credit score.
Importantly, this interest cost would then need to be factored into a club’s calculation under the profitability and sustainability rules (PSR) and could potentially put more clubs at risk of violating those rules.
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