Everton have benefited from shareholder loans from Farhad Moshiri but his sale of the club is likely to render any implications from Premier League rule changes as redundant
Changes to Premier League financial rules are unlikely to be problematic for Everton, particularly if the prospective takeover of the club is agreed by January 11.
Clubs today voted for amendments to the rules surrounding Associated Party Transactions – regulations designed to prevent clubs from signing deals that are exaggerated beyond ‘fair market value’ (FMV) with businesses linked to their owners.
It means shareholder loans will now fall under the scope of the APT regulations and assessed according to the FMV test. In essence, it means clubs will no longer be able to exploit the full advantages of taking interest-free loans from their owners rather than turning to commercial lenders.
According to Everton’s most recent set of accounts, the Blues have benefited from around £450m of such lending from current majority shareholder Farhad Moshiri. While there remains some uncertainty about how that lending would be classified under the new regulations, there is an expectation the loans would end should The Friedkin Group complete its takeover of the club – making the issue a redundant one for Everton.
Should those borrowings remain in effect come January 11, a deadline set today, then they would need to be submitted to the Premier League board, which would then assess them to see whether the terms represent FMV. If they are deemed not to, then the club would be able to retain the loans on their existing terms but must adjust their accounts from 2024/25 onwards as if the deals were agreed at FMV.
Crucially for Everton there is no scope for retrospective action that could potentially have led to changes to previous accounts – two sets of which led to points deductions because they breached Profit and Sustainability Regulations.
Everton are understood to have voted in favour of the changes alongside 15 other clubs. The vote followed a ruling made after Manchester City, one of the four clubs that opposed today’s changes, launched a legal case against the APT rules.
City argued shareholder loans should be included within them because if the borrowing carried no, or little, interest then they were not of FMV. The panel agreed, finding the process unlawful and concluding: “The exclusion of shareholder loans from the APT rules distorts competition in permitting one form of subsidy, namely a non-commercial loan but not another, namely a non-commercial sponsorship agreement.”
Following the vote, the Premier League said the rule changes had been drafted in consultation with clubs and experts. It added: “The purpose of the APT rules is to ensure clubs are not able to benefit from commercial deals or reductions in costs that are not at FMV by virtue of relationships with Associated Parties. These rules were introduced to provide a robust mechanism to safeguard the financial stability, integrity and competitive balance of the league.”
The Friedkin Group’s proposed takeover of Everton is currently undergoing regulatory checks and, while no timetable for completion has been provided, there is believed to potential for completion before the end of the year.
