[Albion] Associated Party Transactions (APT) ruling

[Hiheidi]

https://archive.ph/hU8cK#selection-1551.0-1551.153

Did we side with City or abstain altogether? Either would surprise me given City's attack on clubs that borrow from their owners.

 

[drew]

The court ruled that APT rules should extend to interest-free loans made by club owners, which could mean us being charged commercial rates, with all the accompanying consequences for our PSR standing.

But I'm pretty sure they wouldn't be able to back date that ruling.

In addition, it would be relevant as to what the loan was spent on as there are exemptions for P&SR calculations.

 

[drew]

The court ruled that APT rules should extend to interest-free loans made by club owners, which could mean us being charged commercial rates, with all the accompanying consequences for our PSR standing.

Where does it say that they have to be charged at commercial rates? Surely all they are saying is that the loans, along with APTs should be considered the same. City's case was that the APTs don't have to be at commercial rates and therefore why would commercial rates apply to loans?

 

[pigmanovich]

Which supports the Times' reporting but contradicts the BBC's.

 

[pigmanovich]

Where does it say that they have to be charged at commercial rates? Surely all they are saying is that the loans, along with APTs should be considered the same. City's case was that the APTs don't have to be at commercial rates and therefore why would commercial rates apply to loans?

I didn't say they will necessarily be charged at commercial rates, only that it's a possibility. From the Times' article:

An independent panel of three retired judges concluded that the rules were unlawful because they did not take into consideration interest-free loans which shareholders lend to clubs. The decision will spark huge concern among a number of City’s Premier League rivals — who rely heavily on such loans — and is likely to lead to the rules being changed. The panel states that, of the £4billion in total borrowing across the Premier League, £1.5billion is in loans from club owners and shareholders. If the rules are altered and commercial loan rates are now applied to these interest-free loans and have to be included in a club’s profitability and sustainability calculation, many clubs could find they are in breach of Profitability and Sustainability Rules (PSR). City had argued that such payments were unfair and not at market value because they were interest-free and, in some cases, did not have to be repaid at all. For a club such as Arsenal, with borrowing of more than £200million made up entirely of shareholder loans, that is a potentially seismic development.

 

[drew]

I didn't say they will necessarily be charged at commercial rates, only that it's a possibility. From the Times' article:

But isn't City's argument that the rules stated that APT have to be at market rates but not shareholder loans. City shoot themselves in the foot if they are suggesting the shareholder loans have to be at market rates because then that would then also apply to APT which is not what they want. I think the Times are jumping to conclusions and haven't taken into account what the money has been used for.

 

[pigmanovich]

City shoot themselves in the foot if they are suggesting the shareholder loans have to be at market rates because then that would then also apply to APT which is not what they want.

Sure but both sets of transactions being subject to PL scrutiny could become an unintended consequence of City's challenge and besides it's not out of the question that City are prepared to cut off the nose to spite the face given one of the clubs most vulnerable to restrictions on shareholder loans are Arsenal. Recall that City explicitly alleges that the APT rules are designed to stifle its performances on the pitch.

 

[Uh_huh_him]

I'm really confused..


Are we now saying that We have to account for 5% interest on the £400m we owe to Tony in our PSR calculations?
i.e £20m per season for 3 seasons?

Meaning we only have £45m losses allowed (£15m per season).

Is that it?

 

[trueblue]

Surely old loans must be grandfathered? And I don't think more loans in the near future is the plan anyway - the TB&PB has said the club want to be self-financing and this may well be the case now given the value of this gigantic squad. Or am I missing something?

No expert knowledge of this but it would seem extraordinary if Albion could be penalised under PSR when it has abided by the rules as they exist. The club has operated in a manner that has been widely lauded as an exemplary model for smaller clubs. Hopefully you're right - no backdated issues and no need for big loans going forward.

 

[The Fifth Column]

City now resorting to Putinesque levels of propaganda trying to make out they won this case when in fact theh largely lost it. They are cementing their place as footballs pariahs all because one group of Arab owners wants to upstage the other groups by spending as much as they like on their club in order to win stuff they can then goad the others with. They have zero interest in football and are happy to apply their own cultural standards which essentially means dping what the hell they want by throwing money at every problem, its 100% corruption in action.

 

[Uh_huh_him]

No expert knowledge of this but it would seem extraordinary if Albion could be penalised under PSR when it has abided by the rules as they exist. The club has operated in a manner that has been widely lauded as an exemplary model for smaller clubs. Hopefully you're right - no backdated issues and no need for big loans going forward.

Changing the way the rules are enforced would surely leave the Premier League open to further legal action ( which is exactly what City want).

 

[Triggaaar]

A win for Man City against the PL.

That's how Man City want to spin it, but the PL are also claiming the win, saying there are a couple of technicalities the need to tie up in the wording of the rules.

 

[Triggaaar]

This isn't good news for BHA. It is very problematic for clubs relying on shareholder loans.

Not really, Tony would just convert the loan to equity.

 

[trueblue]

To a certain extent, I just don't get this. Surely a competition can set its own rules and if you don't like them, don't bother being in it? I really wonder whether one day the Super League will come about when all but 6 or 7 clubs say 'good luck, off you go, enjoy playing each other 4 times a season and see how interesting that is'.

 

[Uh_huh_him]

I assume any part of the loan for infrastructure is exempt?

Pretty sure we were nowhere near £105m over 3 years.

So the £30 -£60m we might be liable for probably wouldn't be an issue, even if they were able to back date it.

 

[Cheshire Cat]

Literally reading back the headline on the SSN ticker.

Well don't.

 

[AZ Gull]

I assume any part of the loan for infrastructure is exempt?

Pretty sure we were nowhere near £105m over 3 years.

So the £30 -£60m we might be liable for probably wouldn't be an issue, even if they were able to back date it.

I believe that is an ongoing issue between Everton and the Premier League (that wasn't addressed when Everton received their points deduction last season).

 

[warmleyseagull]

Initial spat seems to be a draw.

Man City and Premier League claim victory over commercial deals after independent panel verdict

Manchester City have claimed partial victory in a legal fight with Premier League over commercial rules governing clubs; Premier League says tribunal endorsed overall objectives of Associated Party Transactions (APT) system

www.skysports.com

 

[trueblue]

I assume any part of the loan for infrastructure is exempt?

Pretty sure we were nowhere near £105m over 3 years.

So the £30 -£60m we might be liable for probably wouldn't be an issue, even if they were able to back date it.

That thought occurred to me too. The common outside misconception is that Tony Bloom has spent a fortune on the team when, in fact, he was rebuilding an entire club virtually from scratch. While he was subsidising the playing side in the Championship years, hopefully almost all transfer spending in the Premier League has been funded by TV money and the sale of players. The argument you’d think will be how much exactly has gone on infrastructure.

 

[Coldeanseagull]

One penalty and an own goal?