Nottingham Forest are hit with FOUR-POINT deduction for breaking Premier League financial rules, dropping them into the relegation zone with just nine games remaining

By William On Mar 18, 2024

Nottingham Forest have been hit with a four-point deduction after breaching the Premier League’s winning and sustainability rules.

The penalty sees Forest drop into the relegation zone as they now sit 18th in the Premier League with 21 points, one point behind Luton in 17th. An appeal will likely follow.

Forest were accused of breaching spending rules in January 2024, along with fellow Premier League side Everton, with the Toffees receiving a 10-point deduction earlier this season.

That penalty was later reduced to six points, but Forest have now suffered a similar fate at a crucial point in the campaign.

It is believed the six-point hit dealt to the Toffees is seen as something of a standard penalty, but Forest have been awarded two fewer points.

Nottingham Forest have been hit with a points deduction for breaching Premier League spending rules

Forest move into the relegation zone after being awarded the penalty, falling behind Luton Town

Forest now find themselves in the relegation zone below Luton after deducting four points

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Prior to the announcement, Forest were just three points ahead of Luton in 18th, while the Hatters earned a late 1-1 draw against Nuno Espirito Santo’s side on Saturday to stay within striking distance.

A hearing took place to decide what punishment the club would face on Thursday and Friday, ahead of Saturday’s match.

Forest’s spending since returning to the English top flight in early 2022-23 has been extremely lavish.

From that summer onwards, no less 43 players have come to the City Ground for more than £250 million.

Asked about the impending ruling after Saturday’s match against Luton, Espirito Santo said the club would ‘keep going and fighting’ in a bid to overcome defeat.

“Everton FC and Nottingham Forest FC have each confirmed to the Premier League that they are in breach of the League’s Profitability and Sustainability Rules (PSR),” the Premier League said in a statement in January when the charges were announced.

‘This is the result of incurring losses above the permitted thresholds for the assessment period ending in the 2022-2023 season.

‘In accordance with Premier League rules, both cases have now been referred to the chairman of the judicial panel, who will appoint separate committees to determine the appropriate sanction.

‘Committees are independent of the Premier League and its affiliated clubs. The procedure will be heard behind closed doors and the Commission’s final decisions will be made public on the Premier League website. Until then, the League will make no further comment.”

Meanwhile, Mail Sport reported in January that part of Forest’s defense could include selling Brennan Johnson to Tottenham for £47.5 million in August.

Nuno Espirito Santo’s side now face an uphill battle to stay in the Premier League for another year

This deduction puts Forest at greater risk of relegation if they end up in the bottom three

Because FFP calculations are made over a three-year period ending June 30, the Johnson deal will count towards the 2021-24 settlement rather than 2020-23 as it was completed on deadline day.

Clubs are allowed to incur financial losses of £105 million over three years, with Forest reporting an annual loss of £45.6 million in their latest accounts.

Another complication comes from Forest being a Premier League team for only one of those three seasons; Championship clubs have losses of up to £13m per season, meaning their cap was effectively £61m.

Forest say they could have sold Johnson to Brentford in June for around £30m, which would have put them in a healthier financial position for the 2020-2023 period, but almost £20m out of pocket in total.

Question and answer

WHO IS SUBJECT TO FFP RULES AND HOW MUCH CAN THEY LOSE?

In England, all Premier League clubs must comply with the Profit and Sustainability Regulations (PSR), which state that they cannot lose more than £105 million in a three-year period. In the EFL, the rules differ depending on the division a club is in. In the Championship, Profit and Sustainability (P&S), the rules stipulate that clubs can lose up to £39 million over three years. In Leagues One and Two, clubs follow the Salary Cost Management Protocol (SCMP), which states that each club may only spend a fixed percentage of its revenue on wages. That limit could also be affected by capital injections or net transfer expenses.

ARE ALL CLUB EXPENSES AND INCOME PART OF FFP CALCULATIONS?

Income yes. No spending – and this is where the complications come in. Clubs are allowed to spend money on infrastructure, women’s teams and academy fees and not see it go towards their bottom line. In Everton’s previous 10-point sanction, which was reduced to six after appeal, there was a controversial point over interest on loans the club said were linked to their new stadium, which the Premier League disputed.

WHAT DID BOS DO WRONG?

Given their promotion from the Championship, Forest had to play by different rules and their allowable losses were at a lower level of £61 million. In fact, their top-tier campaign came with a fee of £35 million, with £13 million for each of the two seasons in the second tier. Forest have famously signed 43 players since winning the play-off final in May 2022.

WHY IS THERE A RECENT PICK IN COSTS?

P&S came into action during the 2015-2016 season. The simple answer is that the ‘spike’ has happened now because it has only recently emerged that the three clubs involved – if you include Manchester City – have broken the rules.

WHAT IS THE APPEAL PROCESS, DO THE DEDUCTIONS APPLY THIS SEASON AND WHAT DEFENSES CAN CLUBS HAVE?

A club has 14 days to respond and the hearing must be completed by early April – before any appeal is heard. If an appeal is lodged, the process could take until the end of May – after the end of the season. Due to the subjectivity involved, clubs can rely on a number of areas. With Forest it is expected that they will claim that they sold Brennan Johnson to Tottenham on deadline day in August for a higher fee (a club record £47.5 million) than they would have received in June – before the end of the financial year. although it remains to be seen whether that would work.

WHAT IS THE BIGGEST PUNISHMENT A CLUB CAN RECEIVE IF FOUND GUILTY?

There is no sanctions policy or fixed penalty. Instead, any punishment is in the hands of the independent committee appointed by the Premier League, and the rules of the game are ‘open’. It is likely that the harshest punishment would come in the form of a heavy points deduction, which could make relegation a formality for an offender.

By Mike Keegan

For the club’s sustainability, they claim that accepting almost £50 million for Johnson in August was better than £30 million earlier in the summer.

A Forest spokesperson said: ‘Nottingham Forest acknowledges the Premier League’s statement confirming that the club has today been charged with breaching the competition’s profitability and sustainability rules.

“The club intends to continue to cooperate fully with the Premier League in this matter and is confident of a quick and fair resolution.”

The indictment against Manchester City in February for 115 alleged infringements is an ongoing case.