Man City's reported legal challenge sets up tense AGM for PL club executives

Man City's reported legal challenge sets up tense AGM for PL club executives

Top-flight club executives will convene on Thursday for their first meeting since The Times reported details of Manchester City's legal challenge against Premier League financial rules.

The league's annual general meeting, which will be held at a hotel near Harrogate in North Yorkshire, is taking place at a particularly tense juncture, with between 10 and 12 top-flight clubs reported to be supporting the Premier League in defending itself against City.

The champions are reported to be challenging the validity of the Premier League's associated party transaction (APT) rules which dictate that all commercial deals must be independently assessed as being for fair market value, with an arbitration hearing set to begin on Monday.

Clubs were told in February that one of their number had issued a legal threat concerning the APT rules - with City reported at the time to be the club concerned. That did not deter clubs voting to strengthen APT rules at that point.

The Times reports that City's claim argues they are subject to "a tyranny of the majority" as a result of the rules, which were introduced in 2021 after a majority vote in favour.

A successful challenge by City would effectively give clubs free rein to set up commercial deals free from independent oversight of their true value, and could even completely undermine the Premier League's majority vote system of governance.

The PA news agency understands clubs will be asked at the AGM to agree to trial new financial regulations in shadow form next season.

One part of that is a measure called anchoring, which if fully introduced would amount to a Premier League spending cap.

Regardless of how much revenue they generate themselves, under the anchoring proposal clubs would be limited to spending a multiple of the central television and prize money revenue earned by the league's bottom club.

The measure is intended to safeguard competitive balance in the Premier League in the future, should big gaps open up between those involved in international competitions and those who are not.

City were one of three clubs - along with Manchester United and Aston Villa - who voted against plans to progress with a legal and economic analysis of anchoring back in April.

A more significant hurdle than club opposition, though, is the need to convince the Professional Footballers' Association that anchoring does not amount to a salary cap. The union is understood to have hired top sports barrister Nick De Marco - who helped it overturn an EFL salary cap in 2021 - to make its legal representations on this matter to the Premier League.

Clubs will also be asked to trial new squad cost rules in shadow form. These rules are understood to require clubs to spend no more than 85 per cent of revenue on squad costs.

The purpose of trialling the squad cost rules and anchoring is to iron out any flaws prior to one or both being adopted fully for the 2025-26 season.

In the meantime, the profitability and sustainability rules (PSR), under which Everton and Nottingham Forest were docked eight and four points respectively last season, will remain in force for 2024-25.

It is understood clubs will also consider two possible amendments to PSR for next season. The first would allow an English club in Europe to claim any difference between what they earn from UEFA's coefficient calculation and the amount earned by the Premier League club with the highest coefficient ranking as an allowable loss for the purposes of PSR.

The second, arguably simpler, proposal is to increase the maximum permitted losses over the three-year PSR assessment period from the current £105million. 

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