Concerns have been raised to the Premier League that proposed new rules on shareholder loans will hand a further advantage to the top flight’s wealthiest clubs.
A challenge to the league’s associated party transaction (APT) rules by Manchester City has forced it to include a fair market value assessment of such loans in amended rules to be put before clubs at a meeting later this month.
Club owners and other shareholders were previously able to put in interest-free loans, but it is now proposed an effective rate of interest will be applied to them which will vary from club to club depending on their credit score.
The PA news agency understands some clubs have questioned the charging of variable rates – arguing it hands an advantage to clubs with the deepest pockets.
Club statement
— Manchester City (@ManCity) October 7, 2024
However, the league is understood to have advised clubs who pushed back that the rate could not be the same across all clubs for legal reasons.
An arbitration panel found the APT rules were unlawful because they excluded shareholder loans.
The rule amendment will not require fair market value interest charges to be backdated to the time the loan was first issued. However, it is understood the proposed amendment would mean an effective interest rate would be applied to any existing loan going forward after a grace period – not just to new loans.
During the grace period, club owners and shareholders who have put in loans will have the option to convert them to equity if they wish, though doing so makes taking their money out less straightforward.
Clubs are set to vote on a number of APT rule amendments at a meeting in London on November 22.
One involves replacing “would” with “could” in the wording of what constitutes fair market value within the rules, which should have the effect of providing more wriggle room to clubs.
