A raw deal for Forest?

On the face of it, things look pretty bad for Forest in terms of the Premier League charges, as they have consistently lost money. In fact, have only reported a profit once since 2005 – and that was entirely due to a £40m loan write-off in 2017.

In the four years covered by PSR up to 2021/22, their losses were over £100m, including a hefty £46m deficit in the season they were promoted. Not only was this the largest loss in Forest’s history, but it was also the 10th highest ever in the Championship.

Since promotion, Forest have really splashed the cash, spending around £163m to bring a vast number of players to the City Ground. It is estimated that there were 30 players in total, though it’s easy to lose count, including six purchases above £10m.

This was actually the sixth highest gross spend in the Premier League, according to Transfermarkt, ahead of the likes of Liverpool, Tottenham Hotspur and Newcastle United. It was also more than the two other promoted clubs combined (Bournemouth and Fulham).

Furthermore, no club has spent more in the transfer market than Forest in the first season after promotion to the Premier League. In fact, only four clubs have broken through the £100m barrier: Forest £163m, Aston Villa £156m, Fulham £120m and Wolves £111m.

Forest’s losses from day-to-day business were partially offset by profit from player sales, but the gains were nowhere near enough, even though £40m in the last four years was not too bad for the Championship.

Forest are sure to claim that the sale of academy product Brennan Johnson should be considered as a mitigating factor. The young winger was eventually sold on deadline day last summer to Tottenham Hotspur for a club record £47.5m, which was a great piece of business. As homegrown players have no cost in the books, this also represented pure profit in the club’s accounts.

However, the problem was that the sale took place two months after the 30th June cut-off for the 2022/23 accounts, so could not be included in the PSR calculation. Forest were thus on the horns of a dilemma: sell Johnson earlier and comply with the FFP regulations or sell him later and receive a higher transfer fee.

Fair to promoted clubs?

It has been evident for a long time that PSR benefits the leading clubs, who enjoy much higher revenue. The regulations make life particularly difficult for promoted clubs, who have far less room to manoeuvre, especially as it costs a lot of money to build a squad that is able to compete at the higher level.

This was particularly the case for Forest, who basically lost half a team after promotion, as their Championship squad contained so many loan players. They would argue that PSR works against owners like Marinakis, who want to show their ambition by investing in better players.

It does feel like the PSR should somehow acknowledge the difficulties faced by promoted clubs, who are “damned if they do, damned if they don’t”.

That said, Forest’s huge transfer spend following promotion was virtually unprecedented, so it could be argued that they have brought this on themselves. A more focused, smarter recruitment strategy, as employed by clubs like Brighton and Brentford, would have cost a lot less and could have also resulted in them staying up.

Either way, the outcome of failing FFP could be a points deduction, which might be the difference between Forest surviving in the Premier League and relegation.