Nottingham Forest docked four points for breaching Premier League financial rules

Nottingham Forest were docked four points for breaching the Premier League’s Profitability and Sustainability Rules (PSR).

Forest referred it to the independent commission in January after reporting losses exceeding the allowable amount during the three-year reporting cycle ending in the 2022-23 season.

Under the guidelines, they can be fined or have points deducted for breaches of the rules, and their four points now leave them 18th in the Premier League.

They are the second Premier League team to be docked points for a PSR breach this season, following Everton’s 10-point deduction in November. This was later reduced to six points following a three-day appeal. Everton could face a second points deduction this season after being accused of breaching PSR rules again in January, along with Forest.

Forest now have seven days to notify whether they intend to appeal the sanction. The Premier League itself can also appeal the decision made by the independent committee to increase the penalty. This will be determined by the league’s board of directors in consultation with its legal team.

The Premier League has set May 24 as a support date for appeals following the end of the season on May 19. The date comes before the league’s annual general meeting.

What does the Premier League say?

A statement read: “The Independent Commission has immediately deducted four points from Nottingham Forest Football Club for breaching the Premier League’s Profitability and Sustainability Rules (PSR) towards the end of the 2022/23 season.

“Nottingham Forest admitted its PSR threshold of £61m was exceeded by £34.5m and submitted it to the independent committee on January 15.

“The threshold is lower than £105m because clubs have spent the two-season assessment period in the EFL Championship. The case is being heard under new Premier League rules, which provide a fast-track timetable for PSR cases to be heard in Complaints are resolved within the same season as they are issued.

“The independent committee decided on the sanctions following a two-day hearing this month, where the club had the opportunity to detail a range of mitigating factors.

“The committee found that the club had shown ‘extraordinary co-operation’ in its dealings with the Premier League throughout this process.”

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What did the forest say?

A club statement read: “Nottingham Forest is extremely disappointed with the committee’s decision to impose a four-point sanction against the club with immediate effect.”

“We are extremely dismayed by the tone and content of the Premier League’s submission to the committee,” it added. “After many months of engagement with the Premier League and excellent cooperation throughout, this is unexpected and undermines our trust and confidence in the Premier League.”

Club statement.

— Nottingham Forest (@NFFC) March 18, 2024

The club also called the Premier League’s initial starting point of eight points “completely disproportionate” and pointed to some of the “unique circumstances” involved and the mitigating measures they proposed.

They also said the committee’s decision “raises issues of concern for all aspiring clubs” and that the rationale that clubs should only invest in player development profits after achieving profits “undermines the liquidity of the football pyramid” and will lead to “stagnation” Our national competition. “

The statement added: “We believe that the high level of cooperation shown by the club during this process, confirmed and documented in the committee’s decision, has been met with a lack of response from the Premier League.”

How did we get here?

Forest were referred to the Premier League committee in January for alleged breaches relating to the calculation of the PSR for the three-year reporting period ending in the 2022-23 season.

Forest said they would “continue to co-operate fully with the Premier League on this matter and are confident that the matter will be resolved quickly and fairly”.

Forest have signed more than 40 players since promotion in May 2022, with owner Evangelos Marinakis approving a transfer spend of around £250 million ($318 million) to help the club compete at the top level Stand firm in the league.

Forest believe they are working within the rules when it comes to losses allowed, with many of the issues centering around the sale of Brennan Johnson to Tottenham Hotspur.

Johnson’s sale to Tottenham Hotspur is key to Forest’s argument (Michael Regan/Getty Images)

The argument put forward by the club in conversations with the Premier League is that they could have sold Johnson earlier in the transfer window, but doing so at that point would have meant accepting a significantly lower price. It was not until September 1, shortly after the end of the financial year, that he sold for £47.5 million.

New guidance aimed at fast-tracking PSR decisions has been introduced to ensure that any underlying breach of regulations is dealt with promptly so that penalties, such as points deductions, can be imposed in the same season in which the allegation was made.

All clubs must submit their accounts for the 2022-23 season by December 31, rather than in March as previously, with any breaches and subsequent charges being confirmed 14 days later.

What are profitability and sustainability rules?

All Premier League clubs are assessed annually on their compliance with the competition’s profitability and sustainability rules.

Their compliance with the above rules is assessed based on the club’s PSR calculation, which is the sum of adjusted pre-tax profits for the relevant assessment period.

Under the PSR, clubs can lose up to £105m over three seasons (or £35m per season) but can deduct certain costs such as investment in youth development, infrastructure, community and women’s football.

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There are also special coronavirus-related perks, and to help clubs, the league has combined the two pandemic-affected seasons into one, turning a three-year accounting period into a four-year one.

Forest’s allowed losses were below the £105m limit because the club was in the Football League for part of the accounting period. Instead, their top figure is £61m, with £13m earned during the 2020-21 and 2021-22 Championship seasons, plus £35m from last season, which saw them return to the top flight for the first time.

Are there other similar cases?

Forest are the third club to face such penalties after Everton committed two breaches this season and were subsequently docked points, while Manchester City were hit with more than 100 charges in February last year.

The outcome of the Manchester City case has yet to be announced Competitor Reports say a ruling, which can be appealed, could take quite some time.

Last year, Chelsea’s new owners self-reported incomplete financial information related to transactions that occurred during former owner Roman Abramovich’s management from 2012 to 2019.

Deals made under Abramovich remain under investigation (Paul Gilham/Getty Images)

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

There have been several precedents in the English Football League in recent years, but penalties for breaches of PSR in England’s top flight are unprecedented before Everton.

In fact, there have only been two occasions in the history of the Premier League where a club has been penalized points.

Middlesbrough were docked three points in the 1996-97 season for failing to complete a game, while Portsmouth were penalized nine points after entering administration in January of the 2009-10 season.

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‘Forest are frustrated and disappointed’

Analysis by Nottingham Forest reporter Paul Taylor

Nottingham Forest were left frustrated and disappointed as they found themselves stuck in the Premier League relegation zone after being docked four points for breaching profit and sustainability regulations.

Over the weekend, it was suggested within the club that four points was the penalty level they would consider appealing. They have 14 days to appeal, so they have time to digest the verdict before rushing to a decision. But they probably will.

The fact that it would drop them into the bottom three would rub a little more salt in the wound.

Indeed, throughout the process, Forest felt they had gone to great lengths to co-operate with the Premier League – admitting they had breached the rules but explaining the circumstances they felt could mitigate the penalty – mainly surrounding the sale of Brennan Johnson Johnson, late in the window.

But amid the frustration – and at a time when Forest have been stung by a series of controversial refereeing decisions – there is also an understanding that the punishment could have been harsher.

And, even with the possibility of an appeal, Forest now at least know what they are facing as they look to secure a third season in the top flight under Nuno Espirito Santo.

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