The Rules concerning Associated Party Transactions (APTs) and Fair Market Value (FMV) Assessments were first introduced in December 2021 and were subsequently amended in March 2024 and November 2024 (see Rules E.56-E.82). These Rules were introduced with the aim of safeguarding the financial stability, integrity, and competitive balance of the League.
The initial APT Rules and the amendments to the Rules were the subject of extensive consultation with Premier League Clubs and, as with all Premier League Rules, were introduced following the requisite majority of Clubs voting in favour of them.
In each case, the League (with the assistance of a specialist and experienced group of Club executives, the Legal Advisory Group (LAG), and the Financial Controls Advisory Group (FCAG), and in consultation with external leading Competition Law experts) produced a detailed set of recommendations to be discussed with all Clubs before being formulated into detailed Rules for Club approval. As with all amendments to the Rules, The FA also approved the APT Rules and the 2024 amendments.
During the consultation on the initial APT Rules, Clubs and the League recognised that the system in place at the time needed to evolve in order to protect the integrity of the Profitability and Sustainability Rules (PSRs) set out in Rules E.50-E.55. Under that system, "related party transactions" could only be considered by the Board if disclosed as such by the Club or its auditors in the Club’s accounts (which could be many months after the transaction had been completed and the revenues received). Clubs introduced the APT Rules as a necessary tool in maintaining the effectiveness of the PSRs by ensuring the veracity of the costs and revenues reported by Clubs for the purposes of compliance.
The APT Rules are intended to strike a fair, reasonable and proportionate balance between competing interests for the long-term benefit of the League, its Clubs and other stakeholders in our game, including fans, by encouraging a competitive level playing field that is underpinned by financial responsibility.
They seek to ensure:
- long-term financial sustainability of Clubs by limiting reliance on enhanced commercial revenues received from entities linked to the Club’s ownership.
- fairness amongst Clubs, so that Clubs are not able to derive an unfair advantage over domestic competitors by increasing revenues or reducing costs via arrangements with entities linked to a Club’s ownership that are not at FMV.
Each APT must be submitted to the Board and the Board must conduct an FMV Assessment of it.
What constitutes an Associated Party of a Club is set out in detail in the Premier League Rules (Rule A.1.25) and includes third parties that are in the same group of companies as a Club, have common ownership or board members with a Club, or are materially influenced by the same party as a Club. So as to ensure no circumvention, in addition to the standard submission of APTs, all Club deals with non-Associated Parties with an average annual value of over £1 million or, if lower, 5% of the Club’s annual turnover (known as "Threshold Transactions") must also be submitted to the Board for an assessment as to whether they are APTs or otherwise have not been conducted at arm’s length. If so, the deals must be subject to an FMV Assessment.
The Rules establish a clear, detailed and transparent process that the Premier League Board is required to follow when conducting FMV Assessments of APTs.
Rule A.1.102 states that when undertaking an FMV Assessment, the Board must consider:
- An assessment of the value of the transaction produced by an independent expert (save in certain circumstances specified in the rule).
- Any relevant information provided by the Club.
- Comparable evidence of the values of similar transactions as is appropriate, relevant and readily available to it. In practice, this comparable evidence is obtained from the “Databank” created in 2021, into which all Clubs must submit all commercial transactions with an average annual value of over £100,000.
The Rules governing the FMV Assessment process (E.66 to E.69), also provide the timeframes in which the FMV Assessments should be undertaken and the steps Premier League Clubs must take if a transaction is found not to be at FMV. Those Rules provide that the timeframes provided for will not apply where:
- The Board reasonably requires further information and/or documentation from the Club, or additional analysis to be undertaken to conclude its FMV Assessment; or
- The Board requires more time to conclude the FMV Assessment due to exceptional circumstances.
If the Premier League Board determines that an APT is not at FMV it has the power to require the Club to "restate" or vary the terms of the APT to reflect FMV. In that case, the Club is prohibited from concluding the deal above the "restated" value.
The process the Board follows when undertaking FMV Assessments for certain types of transactions is set out in detailed protocols contained in the appendices to the Rules:
- Full details of FMV Assessment protocols for commercial rights agreements are at Appendix 18 – page 645 of the Premier League Handbook.
- Full details of FMV Assessment protocols for player registrations (being both temporary and permanent transfers) are at Appendix 19 – page 651 of the Premier League Handbook.
- Full details of FMV Assessment protocols for the supply of goods and services are at Appendix 20 – page 657 of the Premier League Handbook.
The League has followed the processes provided for in the Rules in respect of every APT submitted under the initial APT Rules and the subsequent amended APT Rules.