On Monday, both Manchester City and the Premier League claimed victory following the release of the Arbitration Panel's judgement on a legal challenge against the Associated Party Transactions (APT) rules.

The term "Associated Party Transactions" refers to sponsorship agreements between a club and other entities that may be connected, such as the sponsorship deal between Manchester City and the United Arab Emirates' Etihad Aviation Group.

The case, which is unrelated to the hearing into the 115 charges for allegedly breaching the Premier League's financial rules, saw City claiming that the rules were discriminatory against Gulf ownership and that they were unlawful.

The club stated that it had "succeeded with its claim," although the Panel only upheld two of City's complaints, pertaining to shareholder loans and the assessment of Fair Market Value (FMV); all other challenges were unsuccessful. City's request to entirely alter the APT and FMV system was denied, with the Panel asserting that it was essential to the Premier League's profit and sustainability regulations.

The following are the principal points of the Panel's judgement:

The Premier League's APT system constitutes a fundamental component of the competition's organisational structure.

• Certain elements of the regulations are in contravention of the law and must be reconstructed. Consequently, the rulings on the two Manchester City transactions have been overturned and must be reconsidered.

• Man City's case was supported by evidence from Newcastle United, Chelsea and Everton; the Premier League presented written evidence from Arsenal, Manchester United, Liverpool, Tottenham and West Ham.

In regard to one particular aspect, the Panel has determined that the regulations are "unlawful" due to their exclusion of shareholder loans from their purview. This introduces the issue of interest-free loans, amounting to millions of pounds, which have been provided to football clubs by wealthy sponsors. It is reported that Everton, Brighton & Hove Albion, Arsenal and Chelsea have benefited from loans amounting to hundreds of millions of pounds.

In contrast, City has no such financial obligations and asserted that it was inequitable for other clubs to gain a competitive advantage by excluding such loans from FMV assessments, which may determine interest payable.

The second count addressed the manner in which the Premier League determines fair market value (FMV) when assessing an APT. The Panel ruled that it was "unlawful" for a club to be unable to comment on the data used by the Premier League before a decision is reached. Furthermore, the procedure was deemed unfair, City were not afforded the opportunity to challenge the judgement, and the process took an excessive amount of time.

Furthermore, the Panel asserted that it was inequitable to impose the onus of proof on the club when substantiating the fair market value, and that this responsibility should be borne by the Premier League.

The Premier League has previously declined two proposed APTs, namely those involving Etihad and First Abu Dhabi Bank. These have now been formally rejected. A reassessment of the APTs will be required once the Premier League has conducted a review of its APT regulations.

Nevertheless, the most significant outcome of the proceedings was the endorsement of the concept of APTs in principle. If the Panel had ruled the system entirely unlawful, it would have permitted City, along with other clubs under comparable state ownership, such as Newcastle United, to negotiate sponsorship agreements at any valuation.

In a statement, the Premier League expressed its support for the Tribunal's findings, which endorsed the overall objectives, framework, and decision-making processes of the APT system. The Tribunal upheld the necessity of the APT system in its entirety and rejected the majority of Manchester City's challenges. Furthermore, the Tribunal determined that the Rules are indispensable for the effective implementation of the League's financial controls.

The decision represents a comprehensive and meticulous evaluation of the APT Rules, which serve to prevent clubs from deriving benefits from commercial transactions or cost reductions that are not at Fair Market Value (FMV) due to their relationships with Associated Parties. The aforementioned regulations were implemented with the intention of providing a robust mechanism to safeguard the financial stability, integrity and competitive balance of the League.