The Financial Fair Play (FFP) rules have been a source of confusion for many football supporters since their inception. The punishments for breaching the rules seem to vary widely, with some clubs receiving outright bans from European competitions, while others only face points deductions. Meanwhile, some clubs seem to ignore the rules with impunity. Recently, Nottingham Forest has been accused of breaching FFP regulations, adding to the overall confusion surrounding the issue.
Premier League’s Profit and Sustainability Rules were recently scrutinized after Everton received a 10-point deduction for aggravated breaches. The outcome of their appeal is yet to be determined.
Meanwhile, another Premier League club could soon join them and no, it’s not Manchester City.
Nottingham Forest are being reported as the side that could be most prone to getting sanctioned as the next round of breaches are about to be announced before the end of the month.
So, what rules are Forest reportedly in breach of, why is that the case, and what could happen next? Here are all the details.
The Profit and Sustainability Rules and Nottingham Forest’s case
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Under the Premier League Profit and Sustainability Rules, clubs are allowed to incur losses of up to £105 million over a three-year period, which would be reduced to £15 million if the owner hasn’t invested a penny of their own into the club.
However, the three-year period being considered here ended in the 2022/23 season. Therefore, Forest were in the Premier League for only one of the three years being counted here. It makes judging their case a bit more tricky.
That is because, for Championship teams, that allowed loss figure is just £13 million per season. Counting that for two seasons, as well as £35 million for one season in the Premier League (35×3=105 million figure for three years), Forest’s allowed loss will be just £61 million instead of £105 million.
Their allowed losses were already way less than an established Premier League team, and their free-spending hasn’t done anything to calm the situation.
Since their promotion at the start of the 2022/23 season, owner Evangelos Marinakis has spent over £200 million on new talent.
In their promotion season alone, Forest spent about £180 million on new signings, with their outgoings amounting to just £3.5 million (Brice Samba to RC Lens).
Forest made a net loss of £176.5 million on their return to the Premier League. Even accounting for amortisation, where a player’s transfer fee is spread over the length of his contract, they were blowing past the £61 million mark for allowed losses in one window alone.
Even when they were in the Championship in the two seasons prior, they were never a profitable club in terms of net transfer revenue, hardly helping their overall situation.
The first window they made a profit in, due to amortisation, was the recently finished one. They bought players worth £115 million, but Brennan Johnson’s sale to Spurs netted them a total income of £65 million. Since Johnson is an academy product, and transfer income is written into the accounts in one go unlike the fee spent, which is amortised, Forest were in net profit.
However, the Premier League aren’t considering this season when looking at their potential breaches. Johnson could have been included in this calculation had he been sold before June 30, when the accounts for the previous three seasons closed.
Nottingham Forest FFP breach: What happens next?
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To prevent cases like that of Everton, where a 10-point penalty for a backdated breach fell onto their heads out of nowhere, the Premier League has introduced a new mechanism where the penalty for the previous three seasons is levied in the season in which it is decided itself.
Therefore, when Forest submitted their accounts for those years before December 31, 2023, a final decision is expected to arrive before January 31, with the penalty, if any, being implemented in the 2023/24 season itself.
An independent commission decides the penalty based on how egregious the breach is and how cooperative the guilty party has been during the process. The latter is not expected to be a problem for Forest, as they have submitted their accounts and plead their innocence through the matter.
A statement from Forest read: “The club has fully complied with its reporting obligations in respect of the Premier League’s revised profit and sustainability rules.
“Promotion to the Premier League will always create challenges, and the treatment of promotion bonuses is just one such example.
“The club approaches all such challenges with its long-term financial sustainability firmly in mind, as the Premier League rules intended.”
However, it is impossible to say how egregious, if at all, the commission finds Forest’s breaches to be. Apart from Everton’s 10-point penalty, there’s no other precedent to look upon when predicting a penalty. Everton’s punishment was considered extremely severe so going with that logic, Forest’s penalty could be a bit lighter, if there is one at all.
How does this impact Nottingham Forest?
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Thankfully for Forest, new manager Nuno Espirito Santo is already off to a sterling start in his bid to save Forest from relegation. With two shock wins in their first two games under Nuno, against Newcastle and Manchester United, they have started to create a cushion between themselves and relegation spots.
Furthermore, Nuno has already said that the squad needs to be trimmed, not expanded. He was famous at Wolves for working with an extremely small group of players, supplemented by the academy. It will come as music to the ears of the Forest board who can’t spend much, if anything at all, in the winter window.
They could be active in the loan market if there pops up a player fit for Nuno’s philosophy but the manager has already proven that the current crop is good enough to survive and shock in the Premier League. Increasing the cushion from relegation spots to prepare for the worst-case scenario is what they need to do because that’s the only thing they control right now.
Meanwhile, the board will hope the commission agrees with their stand on the breaches because in their current financial situation, the prospect of relegation will bring more doom.
