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6 months ago
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Nottingham Forest have lost their appeal against a four-point deduction for breaching the Premier League's financial rules, according to reports.
The decision, as per The Athletic, deals a blow to their hopes of avoiding relegation to the Championship as the club would have been hoping to get some of the points back. Forest currently sit 17th, just three points above the relegation zone.
The club were penalised for failing to stay in line with the Premier League's profitability and sustainability regulations. Forest, whose legal team was led by Nick De Marco KC, had said they were 'extremely disappointed' to be hit with a four-point sanction.
Premier League clubs can lose £105million 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.
Forest exceeded their PSR threshold by as much as £34.5m in the relevant period, the Premier League said.
Nottingham Forest were credited with an early admission of guilt and cooperation
The four-point deduction has left them perilously close to the relegation zone (pictured May 7)
The club's early admission of guilt and collaboration with the Premier League contributed to the club receiving a lesser sanction than Everton, who were initially docked 10 points before the punishment was reduced to six on appeal.
The Premier League had suggested two points be deducted from the penalty imposed on Forest, while the club pushed for a one-third reduction – which would have taken the sanction down to three points.
The Commission ultimately determined not to deduct a third point for an early plea, instead deciding to deduct two points for the early plea and cooperation.
Forest were hit with a four-point penalty as a result.
Part of Forest's defence had involved the sale of Brennan Johnson to Tottenham for £47.5million in August.
As PSR calculations are made over a three-year period ending on June 30, the Johnson deal will count towards the reckoning for 2021-2024 rather than 2020-23 as it was completed on deadline day.
Clubs are permitted to make financial losses of £105m over a three-year period, with Forest reporting an annual loss of £45.6m in their last accounts.
Following the decision to deduct them four points, Forest said in a statement: 'We were extremely dismayed by the tone and content of the Premier League’s submissions before the Commission.
Forest owner Evangelos Marinakis will be disappointed with the decision of the appeal panel
'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.
| Entry point for a significant breach | 3 |
| Circumstances and scale of the admitted breach | +3 points |
| Less: Mitigation | -2 points |
| Total sanction | 4 points |
'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.
'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.'
Under-pressure Forest boss Nuno Espirito Santo previously called the situation 'a mess'.
'It can affect the integrity of the competition,' said Nuno. 'All these things must be solved as soon as possible.'
POINTS DEDUCTION – Q&A
WHO IS SUBJECT TO FFP RULES & HOW MUCH CAN THEY LOSE?
In England, all Premier League clubs have to comply with Profit and Sustainability Regulations (PSR) which state they cannot lose more than £105m in a three-year period. In the EFL, rules differ depending on the division a club is in. In the Championship, Profit and Sustainability (P&S) rules dictate clubs are permitted to lose up to £39m over three years. In Leagues One and Two clubs follow the Salary Cost Management Protocol (SCMP) which states each club can only spend a fixed percentage of its revenue on wages. That limit can also be impacted by equity injections or net transfer spend.
IS ALL CLUB SPENDING AND INCOME PART OF FFP CALCULATIONS?
Income yes. Spending no – and this is where complications come in. Clubs are allowed to spend money on infrastructure, women’s teams and academy costs and not see it go towards their figure. In Everton’s previous 10-point sanction, which they saw reduced to six after appeal, a contentious area was over interest due on loans the club said were related to their new stadium, which the Premier League disputed.
WHAT HAVE FOREST DONE WRONG?
Given their promotion from the Championship, Forest had to play by different rules and their permitted losses were at a lower level of £61m. Effectively their top-flight campaign had an allowance of £35m, with £13m for each of the two seasons in the second-tier. Forest have, famously, signed 43 players since they won the play-off final in May 2022.
WHY HAS THERE BEEN A RECENT SPIKE IN CHARGES?
P&S came into play during the 2015-16 season. The simple answer is that the ‘spike’ has happened now because the three clubs involved – if you include Manchester City – have only recently been found to have allegedly broken the rules.
WHAT IS THE APPEALS PROCESS, WILL THE DEDUCTIONS APPLY THIS SEASON AND WHAT DEFENCE CAN CLUBS HAVE?
A club has a fortnight to respond and a hearing must be completed by early April – before any appeal is heard. Should an appeal be forthcoming the process could run to late May – beyond the end of the season. Because of the subjectivity involved, clubs can appeal on any one of a number of areas. With Forest, it is expected they will claim they sold Brennan Johnson to Tottenham on deadline day in August for a higher fee (a club-record £47.5m) than they would have received in June – prior to the end of the financial year, although whether that would wash remains to be seen.
WHAT IS THE BIGGEST PUNISHMENT A CLUB COULD BE HIT WITH IF FOUND GUILTY?
There is no sanctioning policy or set range of punishments. Instead, any punishment is in the hands of the Premier League-appointed independent commission, and the rule book is ‘open’. It is likely that the harshest punishment would come in the form of a heavy points deduction that could make relegation for an offender a formality.
By Mike Keegan
English (US)