Forest’s pre-tax loss in 2022/23 widened by £21m from £46m to £67m, despite revenue shooting up £125m from £30m to a club record £155m following promotion to the Premier League, as this was eaten up by operating expenses rising £135m in the top flight.
In addition, net interest payable significantly increased
from £1m to £10m, while profit from player sales dropped from £4m to £3m.
Forest are no strangers to losses, as they have only
reported a profit once since 2005 – and that was entirely due to a £40m loan
write-off in 2017. Otherwise, the club has consistently lost money, amounting
to £191m in the last 10 years, including £176m in the six seasons since
Marinakis arrived.In fact, Forest’s £67m loss last season is the club’s highest
ever, while they have lost £113m in the last two years alone.
Forest’s losses would have been even higher without the
owners writing-off £73m of loans in the last eight years. The largest write-off
of £40m came in 2017 when Evangelos Marinakis bought the club from Fawaz Al
Hasawi, though £5m was included in both 2020 and 2021.
The main driver of Forest’s revenue growth was broadcasting,
which rose a staggering £113m from £12m to £125m, due to the far more lucrative
Premier League deal (ten times as much as in the Championship). Despite the steep increase, Forest’s £155m
revenue was the third lowest in the Premier League last season, only ahead of
Southampton £146m and Bournemouth £141m.
There was also good growth in the other revenue streams,
especially commercial, which more than doubled from £9.3m to £18.9m, while
match day increased by a third, rising £2.8m from £8.2m to £11.0m.
Although Forest’s £67m loss is far from ideal, it’s worth
noting that this was by no means the worst result in last season’s Premier
League, as no fewer than seven clubs posted larger deficits, namely Aston Villa
£120m, Tottenham £95m, Chelsea £90m, Leicester City £90m, Everton £89m,
Southampton £87m and Newcastle United £73m.
Player sales
One of the reasons for Forest’s large loss was that they
generated very little profit from player sales, which actually dropped from
£4.1m to just £2.6m. Most players left on free transfers, though the club did
receive a fee from Lens for Brice Samba.
The figures would have been much better if they had sold
Welsh international Brennan Johnson before the end of June 2023, which would
have also resolved their PSR issues. As an Academy product, his £47.5m sale to
Tottenham represented pure profit.
The slowdown in player sales has hit Forest’s finances hard.
They only averaged a £3m gain in the last two seasons, compared to £12m in the
preceding 5-year period. The last big season was 2020/21 when they sold Matty
Cash to Aston Villa.
However, the result will be significantly better this
season, thanks to the Johnson sale plus reasonable money earned from the sales
of Sam Surridge, Gustavo Scarpa and Braian Ojeda. In addition, the club
received a sizeable loan fee from Lyon for Orel Mangala.
Forest’s average attendance increased by more than 3,000 in
the Premier League, rising from 25,778 to 28,808. This was nearly 50% more than
the 19,676 low in 2015/16. Even after
this growth, Forest’s 28,808 attendance was on the low side for the top flight,
where seven clubs regularly attracted crowds above 50,000, with Manchester
United leading the way with 73,671.
This is one reason why Forest have been looking into
opportunities for the stadium, as they try to increase revenue, including
improved hospitality and executive boxes.
The original plan was to upgrade the City Ground with two
new stands, taking the capacity to 40,000, but the club has apparently
experienced difficulties in agreeing terms for a new lease with the council.
As a result, it has recently emerged that Forest are
exploring other options, including constructing a brand new 50,000 capacity
stadium in another part of Nottingham with Toton mentioned.
Wages and transfers
Forest’s wage bill shot up £86m from £59m to £145m, due to
“a record level of investment by the ownership to ensure the club were able to
attract elite talent” in the Premier League. The number of players increased
from 69 to 84, while non-playing staff were up from 142 to 170.
Following this growth, Forest’s £145m wage bill was
comfortably the highest in the club’s history. Not only that, but this was more
than more established Premier League clubs like Wolves, West Ham, Crystal
Palace and Brighton, so Forest really pushed the boat out.
Forest splashed out an amazing £170m to bring a vast number
of players to the City Ground last season. This was eighth highest in the
Premier League, ahead of the likes of Newcastle United, Tottenham and Liverpool.
It was also much more than the other promoted clubs: Bournemouth £130m and
Fulham £86m.
Forest’s significant activity in the transfer market is even
starker when looking at net spend, where their £165m was actually the fourth
highest in the Premier League, only surpassed by Chelsea, Arsenal and
Manchester United. No club has spent
more on the transfer market than Forest in the first season after promotion to
the Premier League. no club has spent
more on the transfer market than Forest in the first season after promotion to
the Premier League.
Forest’s gross financial debt increased by £61m from £21m to
£82m, comprising £45m other loans, £13m bank overdraft, £23m from the owners
(NF Football Investments Ltd) and £1m finance leases However, Forest’s debt would have been much
higher without Marinakis converting £104m debt to equity in the last six years,
including £11m last season and £41m in 2021/22. In addition, £73m of loans have
been written-off in the last eight years.
Since his arrival, Marinakis has pumped £112m into Forest,
boosted by £33m from third party loans. The vast majority of this money has
been used to simply cover £100m of operating losses with another £27m spent on
player purchases (net) and only £15m on improving infrastructure.
Indeed, various owners have provided more than a quarter of
a billion of funding since 2006: Marinakis £112m, Fawaz Al Hasawi £88m and
Nigel Doughty £61m. In reality,
Marinakis’ £112m funding in the last six years is only average for the Premier
League (though only one of those was spent in the top flight). In that period,
owners at four clubs have put in more than £400m, namely Everton £643m, Fulham
£496m, Aston Villa £475m and Chelsea £416m.
To ensure that they don’t face issues with PSR this season,
Forest would have to post an adjusted profit of £10m. Excluding allowable
deductions means that they will essentially have to break-even.
That’s a tough ask, even though their maximum loss has
increased to £83m after two seasons in the Premier League. They will be boosted
by the inclusion of the Brennan Johnson deal, but Forest are currently
projecting losses of approximately £12-17m for this season, as per the findings
in the Commission’s report, so there is still some work to do.
Forest’s issues with PSR have masked the club’s achievement
in first securing promotion from the Championship, then surviving in the
Premier League two years in a row. Their success has been built on the owner’s
money, but that’s the case for almost every football club, so these feats
should still be acknowledged.
Forest will believe that they have been punished for showing
ambition. They would argue that the cards are stacked against any club that is
promoted to the top flight after spending many years outside the top flight.
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