Forest docked four points for financial rules breach

Last updated on 18 March 202418 March 2024.From the section Nottm Forest

Nottingham Forest have been docked four points for breaching Premier League profit and sustainability rules.

An independent commission found Forest’s losses to 2022-23 breached the threshold of £61m by £34.5m.

The immediate loss of points means they drop below Luton Town into the Premier League’s relegation zone.

Forest said they are “extremely disappointed” with the decision, which they say “raises issues of concern for all aspirant clubs”.

A club statement read: “After months of engagement with the Premier League, and exceptional cooperation throughout, this was unexpected and has harmed the trust and confidence we had in the Premier League.”

Forest are the second top-flight team to be penalised for PSR breaches after Everton lost 10 points in November, which was reduced to six on appeal.

The City Ground club, who are likely to appeal against the ruling, had a hearing on 7-8 March.

Premier League clubs can lose £105m over three seasons – £35m per campaign – but Forest’s maximum loss was only permitted to be £61m because they spent two years of the assessment period in the Championship.

The Premier League initially suggested Forest should “before mitigation” be docked eight points, with a reduction to six, because of this breach being 77% larger than in Everton’s case.

Forest said this starting point was “utterly disproportionate when compared to the nine points that [the Premier League’s] own rules prescribe for insolvency”.

The commission found Forest demonstrated “exceptional cooperation” with the Premier League during the process.

However, Forest said that level of cooperation was “not reciprocated” by the Premier League.

The reasoning for the four-point deduction has been outlined in the commission’s written findings.

Forest were set to be hit with a six-point deduction – three points for the initial breach and a further three for the size of the breach – but their “early plea” and “cooperation” meant that was reduced to four points.

The league’s rules state any appeals process should “conclude no later than and if possible some time before 24 May” – five days after the season finishes.

Forest lost an average of £3m across 2020 and 2021 with a further £40m loss in 2022 and £52m in 2023, amounting to a total of £95m.

They were promoted in May 2022 and signed a British-record 22 new players that summer and made five loan signings. Their net transfer spend over the 2022-23 season was £142.8m.

In terms of outgoings, Forest sold two players for a fee, loaned out nine and released two.

Forest were charged in January and the Premier League said in a statement that both they and Everton “confirmed that they are in breach of the league’s profitability and sustainability rules”.

The Johnson sale

Forest, who hired leading sports lawyer Nick de Marco to defend them, based their case around six points of mitigation but all six were disputed by the Premier League.

The sale of Brennan Johnson to Tottenham Hotspur in September was seen as the “golden mitigation” by Forest.

The move, worth more than £45m, took place after the accounting deadline but Forest argue selling Johnson at a later date allowed them to earn a higher fee than if they had sold him by 30 June.

The written reasons state Forest received an offer from Atletico Madrid of 50m euros (£42.7m) for Johnson on 30 June and counter-offered with 65m euros (£55.6m) on the same day, after which discussions “did not progress further”.

Forest subsequently rejected three offers for Johnson from Brentford of £32.5m, £35m and £40m in July and August.

The forward, who came through the club’s academy, was not keen to join the Bees at that point, while Tottenham also had to bide their time to make their move, which impacted Forest’s position.

His transfer was ultimately linked to Harry Kane’s move to Bayern Munich, with Spurs able to move for a replacement once the England skipper left for Germany in his own move, reportedly worth an initial £82m.

The commission concluded the timing of when Johnson was sold was a business decision and not a mitigating factor.

Forest also argued they were in a “unique position” as they had spent the previous two years in the EFL so had a lower threshold but also had not benefitted from parachute payments.

Again, the commission did not see this as a mitigating factor and ultimately only gave Forest credit for their early plea and cooperation.

After the charge two months ago, Forest said they were “confident of a speedy and fair resolution”.

Everton are waiting on a potential second punishment, relating to the assessment period ending with their 2022-23 accounts.

Manchester City were also referred to an independent commission in February 2023 after more than 100 alleged rule breaches.