An ‘Associated Party Transaction’ (“APT”) is defined as any transaction, whether direct or indirect, between a club (including its players or senior officials) and an entity closely associated with the club (an “Associated Party”).

APTs are subject to approval from the Premier League to ensure they are conducted at fair market value (“FMV”). Clubs may seek approval prior to execution of the APT or, alternatively, clubs may execute the APT before receipt of approval from the board of the Premier League (the “Board”). If a club takes the second approach, it must ensure that money received as part of the APT is subject to the Board approving the transaction. Any sums received must also be excluded from the club’s books for the purposes of its reporting to the Premier League, until the APT has been approved.¹

How is “fair market value” measured?

The current version of the APT Rules state that a transaction is considered to be at FMV where a club would otherwise have been able to secure the same terms in an arm’s length transaction under normal market conditions.² The burden is on the club submitting the transaction for review to prove that it meets the FMV standard (and the club is required to submit various declarations, documents and submissions as to the transaction’s FMV).³

It is important to note that some aspects of the FMV test were brought in with amendments made to the rules in March 2024.⁴ However, as set out in further detail in the final section of this guide, the tribunal in the Manchester City case decided that these amendments were unlawful. As a result, these aspects of the rules will need to be revised in the next iteration of the APT Rules.

The Board has access to a database of anonymised historic data from past transactions (the “Databank”, as defined in the rules).⁵ Clubs are required to submit details of any transaction they undertake, including those not involving associated parties. This data is used as a benchmark in the Board’s assessment of the transaction’s FMV.⁶

Under the current iteration of the APT Rules, clubs are not given access to the Databank material reviewed by the Board before the Board makes its assessment. However, as set out in further detail in the final section of this guide, the tribunal in the Manchester City case decided that this restriction was procedurally unfair and unlawful. This is another issue that the next iteration of the APT Rules will need to address.

The Board’s assessment

The Board is required to conclude its FMV assessment within 10 working days of receipt of the APT.⁷ However, in exceptional circumstances, or where it requires further documentation, the requirement to conclude the assessment within 10 working days will not apply.⁸

Where the assessment is made before the APT has been concluded, the club can only proceed at the value specified by the Board as representing FMV.⁹ Where the transaction has been concluded, the club has the option of terminating the transaction (except where the APT is a player transfer) or varying the transaction in order that the total consideration paid represents FMV.¹⁰ This aspect of the Board’s powers was criticised by Manchester City in the arbitration, but the tribunal did not uphold this criticism. We therefore expect this aspect of the Board’s power to remain in the next iteration of the APT Rules.

Consequences for Non-Compliance

Clubs (and, in some instances, directors of clubs) face the risk of sanctions if they fail to comply with the Premier League Rules, including those related to APTs. In particular, clubs will be in breach of the Premier League Rules if they fail to:

• Submit an APT in accordance with the APT Rules.¹¹
• Use all reasonable care to ensure that an APT was at FMV.¹²
• Provide accurate or complete information in connection with the APT¹³, or use all reasonable care to ensure that the information provided is accurate and complete and not misleading.¹⁴
• Execute the transaction based on the Board’s determination of its FMV.¹⁵

Additionally, the APT Rules place an additional duty on all parties (including officials, directors and member clubs) to act with ‘utmost good faith.¹⁶ The Guidance to the Premier League Rules clarifies that any club which misrepresents what is, in reality, an APT as being the product of a genuine commercial transaction commits a sanctionable breach of the good faith obligation.¹⁷

Where a breach of the Premier League Rules (including the APT Rules) is alleged, the Board has the authority to take disciplinary action against the accused party, enter into a settlement with a club in which the club accepts a sanction, or refer the matter to an independent commission.¹⁸ Because the sanctions that may be imposed by the Board are less severe than those which may be imposed by an independent commission, for significant breaches the Board is generally expected to refer such breaches to an independent commission for a formal dispute procedure. The accused club is then given an opportunity to make submissions in its defence, submit documentary evidence, and potentially make oral representations at a hearing.¹⁹

The APT Rules do not specify fixed sanctions or tariffs to be applied if they are breached. If appointed, an independent commission has discretion to decide the most appropriate penalty amongst a range of specified powers.²⁰ Depending on the severity of the offense, possible sanctions range from an unlimited fine to a points deduction for the season and, in the most extreme cases, expulsion from the Premier League. Clubs may appeal the independent commission’s decision to an appeal board.²¹

Arbitration takes centre stage as the main mechanism for dispute resolution under the Premier League’s Rules. The rules create an arbitration agreement between the Premier League and each club, between the Premier League and each director of each club, and between clubs, requiring them to resolve all disputes by arbitration.²² The outcome of arbitration is final and binding on the concerned parties.

There are two key ways in which arbitration features in relation to the APT Rules:

Challenging a FMV Assessment

First, if a club disagrees with the Board’s decision regarding its FMV assessment, it may challenge the decision through arbitration²³ on the following grounds:²⁴

1. The decision falls outside the Board’s jurisdiction.
2. No reasonable Board, properly considering the issues, would have made such a decision.
3. The decision is the result of fraud, malice, or bad faith.
4. The decision is contrary to English Law.

Whichever ground (or grounds) is relied on, the club petitioning for a review must also demonstrate that its interests were directly and foreseeably prejudiced by the decision and that it suffered losses as a result.

Challenging sanctions

Second, in relation to any sanctions imposed for breaches of the APT Rules, if the club is dissatisfied with:

• the independent commission’s determination;
• the Board’s exercise of its discretion; or
• the decision of an appeal board,

it may petition for a review through arbitration.²⁵ However, similar to challenging a Board decision regarding its FMV assessment, the permissible grounds for review are limited.²⁶

Manchester City challenged the lawfulness of the APT Rules under competition and public law. Although the arbitration tribunal did not accept several of Manchester City’s challenges to the APT Rules, it found in Manchester City’s favour in relation to:

Shareholder loans: the tribunal decided that the exclusion of shareholder loans from the framework of the APT Rules is unlawful.

Amendments to the APT Rules in March 2024: the tribunal decided that certain amendments to the APT Rules earlier this year (as described above and in footnote 4) are unlawful, because their effect was to increase the risk of “false positives” (i.e. transactions determined by the Board as above FMV, when they ought not be).²⁷

Access to Databank data: as explained above, the tribunal decided that restricting access to Databank data before the Board determines whether a transaction is at FMV is unlawful.²⁸ As a result, the tribunal’s findings are significant in clarifying – and extending – the scope of information that clubs may be entitled to consult (and which the Premier League will be expected to disclose).