Nottingham Forest has indeed been penalized with a four-point deduction for surpassing the Premier League’s profit and sustainability rules (PSR) threshold. The club’s losses for the 2022-23 season exceeded the allowed limit by £34.5 million, leading to the immediate points deduction and their fall into the relegation zone, just one point away from safety.
This makes them the second Premier League team to face such a penalty this season, following Everton’s initial 10-point deduction, which was later reduced to six points on appeal. Nottingham Forest has expressed their “extreme disappointment” at the decision, which they believe could have a detrimental impact on the club’s future.
In a lengthy club statement they said: “Nottingham Forest is extremely disappointed with the decision of the Commission to impose a sanction on the Club of four points, to be applied with immediate effect.
“Notwithstanding our disappointment, we thank the Commission for agreeing to deal with this matter on an expedited basis. The Club considers it to be essential for the integrity of the league to have charges resolved in the season in which they are issued.
“We were extremely dismayed by the tone and content of the Premier League’s submissions before the Commission.
“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.
“That the Premier League sought a sanction of eight points as a starting point was utterly disproportionate when compared to the nine points that their own rules prescribe for insolvency.”
Indeed, Premier League clubs are typically allowed to incur losses of up to £105 million over a three-year period, which breaks down to £35 million per season. However, for Nottingham Forest, the permitted loss was capped at £61 million due to the club spending two of the assessment years in the Championship.
The independent commission acknowledged Nottingham Forest’s “exceptional cooperation” during the investigation into their financial activities. As a result of this cooperation and their early admission of the breach, the club’s potential six-point deduction was reduced to four points. This deduction has significant implications, placing Forest in the relegation zone, one point away from safety.
Nevertheless, the statement continued: “We were also surprised that the Premier League gave no consideration at all to the unique circumstances of the Club and its mitigation. In circumstances where this approach is followed by future PSR commissions, it would make it extremely difficult, if not impossible, for newly promoted clubs without parachute payments to compete, thus undermining the integrity and competitiveness of the Premier League.
“Whilst the Premier League may have called into question the Club’s business plan, the Club maintains that it responsibly balanced compliance with PSR with important investment into the squad to give us the ability to compete in the league for the first time in over 20 years.
“Even after the Club had missed the PSR reporting deadline, it still took steps to ensure Brennan Johnson was sold before the end of the transfer window. That was a clear demonstration of our respect and support for PSR.
“The Commission’s decision raises issues of concern for all aspirant clubs. The player transfer market is a highly specialised trading environment that cannot be compared to the sale of normal products and services.
“There will be occasions when a player transfer cannot be completed in the first half of a transfer window and can only be completed at the end of that window. This should not be a reason for the condemnation of a club. For this not to be recognised by the Commission or the Premier League should be a matter of extreme concern for all fans of our national game.
“Of wider concern for all aspirant clubs is the disturbing effect this decision will have on the operation of the player trading model. This is the only model by which clubs outside of the small group at the very top end of the Premier League can realistically advance up the football pyramid.
“The rationale of the Commission is that clubs should only invest after they have realised a profit on their player development. This reasoning destroys mobility in the football pyramid and the effect of the decision will be to drastically reduce the room for manoeuvre for all such clubs, leading to the stagnation of our national game.
“We believe that the high levels of cooperation the Club has shown during this process, and which are confirmed and recorded in the Commission’s decision, were not reciprocated by the Premier League.”