The Rules concerning Associated Party Transactions (APTs) and Fair Market Value (FMV) Assessments were first introduced in December 2021 and amended in March 2024 (see Rules E.55-E.76). These Rules were introduced with the aim of safeguarding the financial stability, integrity, and competitive balance of the League.
Both the initial APT Rules (December 2021) and the Amended APT Rules (March 2024) 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 assistance of a specialist and experienced group of Club executives, the Legal Advisory Group (LAG), 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 those recommendations were 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.
As part of that consultation, Clubs and the League recognised that the system in place at the time, whereby the value of "related party transactions" could be considered by the Board only if declared by a Club’s auditors and only when the Club’s accounts were published (which could be many months after the transaction had been completed and the revenues received) needed to evolve, so as to protect the integrity of the Profitability and Sustainability Rules (PSRs). This is reflected in the Premier League Rule Book (p135). 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.
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 Associated Party Transaction must be submitted to the Board and the Board must conduct a Fair Market Value Assessment of it.
What constitutes an Associated Party of a Club is set out in detail in the Premier League Rules (Rule A.124, page 81). It includes third parties that are in the same group of companies as a club, has common ownership or board members with a club, or where the third party and the club are materially influenced by the same party. So as to ensure no circumvention, in addition to standard submission of APTs, all Club deals with a value of over £1million, no matter the counter-party (known as "Threshold Transactions") must also be submitted to the Board to a review as to whether or not they have been conducted at arm’s length or should otherwise be considered to be APTs. Whether either applies, the deal must be subject to an FMV Assessment.
The FMV Rules establish a clear, detailed and transparent process that the Premier League Board is required to follow when conducting FMV assessments of transactions between Clubs and associated parties.
The Rules (Rule A.1.98) state that when undertaking a FMV Assessment, the Board must consider:
- An assessment of the value of the Transaction produced by an independent expert.
- 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 last limb is achieved via the creation of a "Databank" in 2021, into which all Clubs must submit all commercial transactions over £100,000.
The Rules governing the FMV assessment process (E.65 to E.68), 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 Clubs is prohibited from concluding the deal above the "restated" value.
The process the Board follows when undertaking FMV Assessments for different 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 621 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 629 of the Premier League Handbook.
- Full details of FMV assessment protocols for the supply of goods and services are at Appendix 20 – page 635 of the Premier League Handbook.
The League has followed the processes provided for in the Rules in respect of every APT submitted under the APT Rules (and subsequently the Amended APT Rules, since their introduction).
