Arsenal set to face Man City accusation in emergency Premier League meeting

Manchester City has accused the Premier League of “misleading” other teams over the sponsorship rule, but they are unlikely to convince any competitors after the judgment found issue with interest-free loans offered to Arsenal and Brighton, among others.

Manchester City has written to the other 19 top-flight teams, claiming that the Premier League is “misleading” them. However, the champions are unlikely to win over many rivals after many were drawn into their legal struggle over sponsorship restrictions.

Both City and the league claimed victory on Monday afternoon after an arbitration panel ruled that although Associated Party Transaction laws are a necessary piece of governance, other aspects of the present restrictions are unconstitutional.

However, the panel’s judgment, relayed to clubs via a 175-page report, has pulled Arsenal and Brighton, among others, into the controversy due to a disagreement about loans between owners and shareholders.

A section of the complicated conclusions drawn by three retired judges contained the following: “MCFC alleges that there is a potential for distortion in this market by reason of the fact that the APT Rules do not apply to shareholder loans and will therefore incentivise shareholders to make loans as opposed to purchasing new equity, which favours clubs with better access to loans from shareholders.”Those incentives might cause a significant distortion, considering that shareholders make £1.5 billion out of £4 billion in total borrowings (37%) to clubs, including all of Arsenal’s borrowing and practically all of Brighton’s borrowing.”

This is expected to make next week’s club board meeting, which will debate proposals for reworking APT regulations, even more unpleasant.

The Premier League stated that “these elements can be quickly and effectively remedied by the league and clubs” – although it is unclear how the modified APT would appear.

It has been suggested that if shareholders lend money to their clubs in the future, they would need to charge interest rates equal to ordinary lenders (now 8-10%), which will have a significant impact on clubs’ position under the Profit and Sustainability Rules.

However, previously negotiated loans are likely to be unaffected because there is no precedence for new restrictions to be imposed retrospectively.So, rather than paying future interest on pre-existing borrowing, which totaled £259 million as of the end of 2023, Arsenal are more likely to be barred from accepting fresh loans from the club’s owners.

This adds another dimension to the antagonism between the teams, which nearly erupted last month during a fiery 2-2 tie. The Premier League is further complicated by the requirement that 14 of its teams agree to each new regulation before it can be enacted.The tribunal brief also highlighted the existing division between clubs. Everton, Newcastle, and Nottingham Forest were mentioned as being on City’s side of the debate, while Arsenal, Brighton, Liverpool, and Manchester United presented evidence for the Premier League. Of those who have not been announced, the great majority are anticipated to support the league.