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Forest probably on right side of loss rules

Nottingham Forest have been reported as a club at risk of breaching the Premier League’s rules on profit and sustainability.

The PSR guidelines see clubs permitted to lose a maximum of £105million ($132.6m) over a three-year period. But Forest have only been in the Premier League for a year of the last three-year period, which means their permissible losses are even smaller.

Forest’s losses would be capped at £61million, which breaks down as £13m for the 2020-21 and 2021-22 seasons when they were in the Championship, plus £35m for last season, their first back in the top-flight.

Football finance guru Kieran Maguire states: ‘Based on figures from final Championship season I estimate that Forest sneaked in just under the £39 million limit for the three seasons (as averaged out for 2019/20 and 20/21). Lot will depend on wages and amortisation for 22/23 as to whether they are below the £61m max.’

Selling Brendan Johnson was always a key part of the plan for Forest. Because he is an academy product, Forest did not spend a transfer fee on the Wales international to sign him. Any sale is pure profit. (The merits of a system that encourages clubs to sell their best young players for financial reasons can be discussed another day.)

But for Forest, it meant that they could invest a significant amount of money in the transfer market again.

The second reason Johnson’s sale is important is because of when it went through. The financial year for which Forest are being assessed ends on June 30 — and Johnson was not sold until September 1, when he moved to Tottenham Hotspur.

Forest could have sold him earlier in the window when they had offers of around £30million on the table from Brentford. But selling him at that point would have meant accepting a markedly lower price. It made sense to wait until later in the window when they ended up selling him for £47.5m.

The club, throughout the process, were in conversation with the Premier League, briefing them on the situation and pointing out that it made financial sense. Forest were in constant contact with the league throughout the summer.

But Forest feel they have always been diligent when it comes to remaining on the right side of the spending limits, including when it came to getting the best possible fee for a player they always knew they needed to sell.

 

 

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