International Soccer

Nottingham Forest’s PSR breaches – explained

Nottingham Forest’s battle to stay in the Premier League during the 2023/24 season got a lot harder in March as they were deducted four points for breaching the Premier League’s profitability and sustainability rules (PSR).

They are the second team in the Premier League to suffer a points deduction this season after Everton were docked 10 points in November 2023. That was later reduced to six points.

Having been deducted the four points on March 18, Forest have seven days from that date to notify whether they intend to appeal against the ruling. Losing four points has dropped Forest into the relegation zone.

Here are all the details on what Forest did wrong, and what the next steps are for both the club and the Premier League.

FBL-ENG-FACUP-NOTTINGHAM FOREST-MAN UTD

Forest owner Evangelos Marinakis is not happy with the ruling / OLI SCARFF/GettyImages

It first became clear that Nottingham Forest could be in some financial trouble in January 2024, when they were referred to an independent commission for reporting losses that exceeded the allowed amount over the three-year reporting cycle ending in the 2022-23 season.

The Premier League statement announcing the points deduction explained: “Nottingham Forest was referred to an independent commission on January 15, following an admission by the club that it had breached the relevant PSR threshold of £61m by £34.5m.”

PSR is what replaced Financial Fair Play for Premier League clubs and the rules are in place to stop clubs recording huge losses that make them unsustainable. Typically, clubs are allowed maximum losses of £105m over a three-year rolling period. The limit is actually only £15m but can be stretched to £105m if the club’s owners are in a position and willing to cover £90m. This extra investment can only come in the form of owners expanding their portfolio of shares in the club rather than simply loaning the money.

However, Forest were made to operate to restrictions of just £61m in losses over the three-year period as they spent two of those years in the Championship. They were found to have exceeded the threshold by £34,536,000.

Brennan Johnson

Forest knew they could get a big fee for selling Brennan Johnson / Nathan Stirk/GettyImages

In a purely sceptical sense, many fans had expected Forest to fall foul of financial rules given their remarkable spending habits in recent seasons. Since getting promoted from the Championship in May 2022, they have signed more than 40 players. Around £250m has been spent to ensure they stay in the Premier League.

Forest felt they had operated within the rules by making enough money from player sales, and the real crux of the situation was Brennan Johnson’s move from Forest to Tottenham. That went through on September 1, 2023, for £47.5m.

Throughout the commission’s report on Forest’s case, there is reference to ‘Player A’, which is Johnson. He was central to Forest’s defence. Johnson is a Forest academy graduate and with it clear that they could sell him for a complete capital gain, he was viewed as the reason why Forest did not need to be concerned about PSR as his departure would offset the losses from their heavy spending.

The problem is that they sold him after the reporting period for this charge ended on June 30. That £47.5m is essentially irrelevant to the situation. Forest admitted to turning down lower bids from Brentford earlier in the summer, but they eventually got £15.5m more for the player than they would have done if they accepted Brentford’s first offer of £32m. It also emerged that Forest turned down a £42.7m offer from Atletico Madrid on June 30. They asked for more, and the negotiation broke down.

As far as Forest are concerned, this saga involving Johnson should have been given much greater weight in the investigation. Their statement read: “Even after the club had missed the PSR reporting deadline, it still took steps to ensure Brennan Johnson was sold before the end of the transfer window. That was a clear demonstration of our respect and support for PSR.

“There will be occasions when a player transfer cannot be completed in the first half of a transfer window and can only be completed at the end of that window. This should not be a reason for the condemnation of a club.”

Their version of events is that Forest had every intention of selling Johnson, but they held on for a bigger fee with the sustainability of the club’s finances in mind. The Premier League decided this was not as significant a factor as Forest felt it was.

Naturally, Everton fans are wondering why they got an initial ten-point deduction for falling foul of the same rules as Forest. On the face of it, you can see their point when you consider that Everton’s breach was £19.5m and Forest’s was £34.5m.

Both breaches were considered ‘significant’ by the Premier League and can broadly come with the same points deduction. The fact that Everton’s case had already taken place is thought to have played a big part in Forest’s as there was material and precedence available to the commission that was not previously there.

The kicker for Everton is that they provided incorrect information to the Premier League which is what brought them a six-point deduction. Forest were found not to have provided any incorrect information, but they were still expected to get a six-point deduction like Everton. This was knocked down by two points as Forest’s conduct was “above the level reasonably expected” as they entered an early plea and gave full cooperation to the process. Fronting up and helping the investigation seems to have saved Forest two points.

Nottingham Forest have been near the bottom of the Premier League table for much of the 2023/24 season and while not amongst the immediate favourites to go down, they have been in the conversation.

They were sitting in 17th with nine games to play when the ruling came. Now, they are inside the bottom three and are a point behind Luton Town who are 17th. The situation is certainly salvageable, but the task would be a lot less daunting with four extra points that would have them level with Everton in 16th. Everton have played one game fewer than most of the teams around them.

Position

Team

Played

Points

Goal difference

15th

Brentford

29

26

-13

16th

Everton

28

25

-10

17th

Luton

29

22

-18

18th

Nott’m Forest

29

21

-16

19th

Burnley

29

17

-34

20th

Sheffield Utd

28

14

-50

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