“Nottingham Forest’s Financial Fair Play Situation: A Closer Look at the Current Spotlight on Finances”
Nottingham Forest’s January transfer window has taken on new significance as their finances have come under scrutiny.
On the field, the Reds have made a strong start to new head coach Nuno Espirito Santo’s tenure with back-to-back victories. However, recent stories have focused on Forest’s personal condition.
According to a report in The Times this week, the Reds are among the clubs at risk of violating the Premier League’s Profitability and Sustainability criteria. Here’s a rundown of everything we know so far.
According to sports finance specialist Kieran Maguire, Forest are “close to the limit” of Financial Fair Play standards. And if that is the case, it is possible that it could result in sanctions being imposed.
“Nottingham Forest were very much at the limit of their Financial Fair Play allowance when they were promoted to the Premier League, and that investment in new players continued in their first season, when they signed players on high wages,” Maguire, a lecturer at the University of Liverpool Management School, told The Times. If you are searching for clubs near to the limit, they would be at the top of my list.”
After gaining promotion to the Premier League in 2022, Forest were forced to restructure their squad. Last season, they made 29 acquisitions across two transfer windows. Last summer saw another dressing room change, this time with 13 new faces.
A lawyer has been appointed.
According to the Telegraph, the Reds have hired a top sports lawyer to help them plead their case, despite the fact that they have “fully complied” with their commitments. Nick De Marco, a KC with Blackstone Chambers in London, is believed to have a track record in football law, particularly Financial Fair Play.
“The club has fully complied with its reporting obligations in respect of the Premier League’s revised profit and sustainability rules,” a Forest spokeswoman told the Telegraph. The treatment of promotion incentives is only one illustration of how promotion to the Premier League will always provide complications. As the Premier League rules intended, the club addresses all such issues with a solid focus on long-term financial viability.”
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What Are the Regulations?
Under accelerated procedures, Premier League clubs were required to submit their 2022/23 accounts by December 31. Any violations will be disclosed by January 14, and clubs found breaching the rules will have a two-week window to respond. An independent commission must conclude a subsequent hearing by April 8. Alleged points deductions and imposed sanctions are expected to be enforced by the end of the season.
According to Premier League guidelines, clubs are permitted a maximum loss of £105 million over a rolling three-year period, or £35 million per season. Newly promoted teams face a reduced cap, meaning Forest is limited to losses of £61 million over the last three campaigns—£13 million for the two Championship seasons before promotion, plus £35 million for the last season.
As reported by The Times: “Forest incurred a loss of £45.6 million in 2021-22, the promotion season, and £15.5 million the preceding season. In both years, the club’s wage expenditure doubled their turnover. Despite the income boost of approximately £90 million from Premier League promotion, Forest invested heavily in transfers, leading to a significant rise in their wage bill.
What’s Been Discussed?
Following The Times’ article, Maguire provided additional insights into the matter. Responding to a fan on X (formerly Twitter), he clarified, “The Times asked me which club was closest to the limit, and based on Forest only being able to lose £61m over three years and their spending last season, they don’t have a lot of wiggle room. Not the same as saying they have breached the limit, though.”
He continued: “Based on figures from the final Championship season, I estimate that Forest sneaked in just under the £39 million limit for the three seasons (as averaged out for 2019/20 and 20/21). A lot will depend on wages and amortization for 22/23 as to whether they are below the £61m max.”
Johnson’s Situation
A crucial element of Forest’s defense reportedly revolves around the club-record sale of Brennan Johnson to Tottenham for £47.5 million on the transfer deadline day last summer. The Telegraph notes: “Forest spent £177 million in the season after their Premier League return, putting them in danger of exceeding the total allowed losses of £105 million over three seasons. But the club argues they had accounted for the sale of Brennan Johnson, which falls outside the time frame in question but would push them back into permitted losses.”
Football finance journalist Dave Powell explained, “Forest is understood to be confident that they have remained compliant with Premier League PSR, but the heavy spend could see them fly quite close to the allowed limit. They do have one significant deal to use in their defense, however. The sale of Brennan Johnson to Tottenham Hotspur in September will be key to Forest’s defense if they are to face the glare of the Premier League’s spotlight over their transfer activity. The sale was important for Forest in terms of what they were able to spend. As a graduate of Forest’s academy, the sale of Johnson was one that was pure profit for the club, with that £47.5 million able to be booked straight away.”
“The issue for Forest is that the deal to sell Johnson happened outside the allotted time period that is assessed, up to June 30. However, with Forest having rejected bids of around £30m for his services during the period of assessment, there is the hope that any issue over the deal could be argued as requiring some leeway.
“It is claimed that Forest were in dialogue with the Premier League over the matter during the period, but in terms of how the League would view the deal should they come under scrutiny remains to be seen, with Everton having also been in regular dialogue with the Premier League over transfer business and cost management before they were hit with a charge last year.”
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