Forest were deducted four points for breaching Premier League financial rules

Nottingham Forest have been given a four-point deduction after breaching the Premier League’s Profitability and Sustainability Rules (PSRs).

Forest were referred to an independent committee in January after the club reported losses that exceeded the allowed amount during the three-year reporting cycle ending in the 2022-2023 season.

Under the guidelines, they could have been fined or deducted points for the breach, and their four-point deduction now sees them drop to 18th in the Premier League.

They are the second Premier League team this season to have points deducted for a PSR breach after Everton gained 10 points in November. This was later reduced to six points after a three-day appeal. Everton could face a second points deduction this season after being accused, along with Forest, of a further breach of PSR rules in January.

Forest now has seven days to indicate whether it plans to appeal the sanction.

The Premier League has set May 24 as a reserve date for any appeal after the end of the season on May 19. This date is before the league’s annual general meeting.

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What did the Premier League say?

A statement said: “An independent committee has made an immediate deduction of four points to Nottingham Forest FC for breaching the Premier League’s Profitability and Sustainability Rules (PSRs) for the period ending the 2022/2023 season.

“Nottingham Forest was referred to an independent committee on January 15 after the club admitted it had exceeded the relevant PSR threshold of £61 million by £34.5 million.

“The threshold was lower than £105 million because the club spent two seasons of the assessment period in the EFL Championship. The case was dealt with in accordance with the new Premier League rules, which provide an accelerated timetable for the resolution of PSR matters in the same season in which the complaint is made.

“The independent commission determined the sanction following a two-day hearing this month, during which the club was given the opportunity to set out a range of mitigating factors.

“The committee found that the club had shown ‘exceptional cooperation’ in its dealings with the Premier League throughout the process.”

What did Bos say?

A club statement said: “Nottingham Forest is extremely disappointed with the committee’s decision to impose a four-point sanction on the club, which must be implemented with immediate effect.”

“We were extremely appalled by the tone and content of the Premier League’s submissions to the committee,” it added. “After months of involvement in the Premier League and exceptional cooperation throughout, this was unexpected and has damaged the confidence we had in the Premier League.”

Club statement.

— Nottingham Forest (@NFFC) March 18, 2024

The club also called the Premier League’s initial starting point for an eight-point sanction “completely disproportionate” and pointed to a number of “unique circumstances” involved and the mitigation measures they put forward.

They also said that the committee’s decision “raises concerns for all aspiring clubs” and that the rationale that clubs should only invest after making a profit from the development of their players “destroys mobility in the football pyramid” and will lead to “the stagnation of our national game.”

“We believe that the high level of cooperation shown by the club during this process, which has been confirmed and recorded in the committee’s decision, was not reciprocated by the Premier League,” the statement said.

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How did we get here?

Forest were referred to the committee by the Premier League in January over the alleged breach, which relates to the PSR calculation for the three-year reporting period ending with the 2022-2023 season.

Forest stated that they would “continue to cooperate fully with the Premier League on this matter and are confident of a quick and fair resolution”.

Forest have signed more than 40 players since securing promotion in May 2022, with owner Evangelos Marinakis approving a transfer fee of around £250 million ($318 million) to help the club establish itself in the top flight.

Forest believed they had worked within the rules when it came to the losses allowed, with much of the issue centering on the sale of Brennan Johnson to Tottenham Hotspur.

The club’s argument – which they put forward in talks with the Premier League – was that they could have sold Johnson earlier in the window, but at that point this would have meant accepting a significantly lower price. His sale did not go through until September 1, long after the financial year had ended, for £47.5 million.

New guidelines have been introduced aimed at accelerating PSR decisions to ensure that fundamental regulatory breaches are addressed in a timely manner so that penalties, such as points deductions, can be imposed in the same season in which charges are brought.

All clubs were required to submit their 2022-2023 accounts by December 31 – instead of in March as previously – with any breaches and subsequent charges confirmed a fortnight later.

What are rules for profitability and sustainability?

All Premier League clubs are assessed every year on their compliance with the league’s profitability and sustainability rules.

Their compliance with these rules will be assessed against the club’s PSR calculation, which is the total of the adjusted pre-tax income for the relevant assessment period.

Under the PSR, clubs can lose a maximum of £105 million over three seasons (or £35 million per season), but certain costs can be deducted, such as investments in youth development, infrastructure, community and women’s football.

There were also specific allowances related to COVID and to help clubs the league combined the two pandemic-affected seasons into one, changing the accounting period from three years to four years.

Forest’s allowable losses are lower than the £105 million limit because the club played in the Football League for part of the period under review. Their top fee is instead £61m, which equates to £13m for the 2020-21 and 2021-22 seasons when they were in the Championship, plus £35m for last season, their first return to the top flight.

Have there been more cases like this?

Forest are only the third club to face such action, following Everton’s two separate breaches and subsequent points deductions this season, while Manchester City faced more than 100 charges last February.

The outcome of City’s case has not yet been announced The Athletics report that it will likely take quite some time before an appealable verdict is reached.

Last year, Chelsea’s new owners self-reported incomplete financial information relating to transactions that took place during the stewardship of the previous owner, Roman Abramovich, between 2012 and 2019.

European governing body UEFA has fined them €10 million for the historic breach in July, while the Premier League and English FA continue to investigate.

There have been several precedents in the English Football League in recent years, but a penalty involving PSR breaches at the top flight of English football was unprecedented before Everton.

Only twice in the history of the Premier League has a club been awarded a point penalty.

Middlesbrough were given three points for not playing a match in the 1996-97 season, while Portsmouth were given a nine-point penalty in January of the 2009-10 season after going into administration.

‘Frustration and disappointment for Forest’

Analysis by Nottingham Forest correspondent Paul Taylor

There is frustration and disappointment at Nottingham Forest as they find themselves in the Premier League relegation zone with a four-point deduction for breaching profit and sustainability rules.

And this weekend it was suggested from the club that four points would be the penalty they would consider appealing. They have 14 days to appeal, so they have time to digest the verdict before rushing to a decision. But it’s likely they will.

The fact that he drops them in the bottom three will rub a little extra salt in the wound.

As does the fact that throughout the process Forest feel that they have done their utmost to work with the Premier League – to accept that they have broken the rules, but to explain what they believe were extenuating circumstances – which largely revolved around sales. by Brennan Johnson, late in the window.

But amid the frustration – at a time when Forest have felt badly hit by a number of controversial refereeing decisions – there will also be an insight that the punishment could perhaps have been harsher.

And despite the possibility of an appeal, Forest at least now knows what they are dealing with as they look to secure a third season of top-flight football under Nuno Espirito Santo.

(Top photo: Jon Hobley/MI News/NurPhoto via Getty Images)