Record revenues but a big loss at Forest

The Swiss Ramble provides a forensic analysis of the accounts of Nottingham Forest. Much more detail and analysis is available on his Substack page.

Despite the improvement on the pitch, Forest swung from a £12m pre-tax profit to a £79m loss in 2024/25, which represented a £91m decline, largely due to a significant decrease in profit from player sales, which dropped from £101m to just £7m.  Forest’s £79m loss was one of the worst in the Premier League in 2024/25, only surpassed by Chelsea £262m, Tottenham £121m and West Ham £104m.

More positively, revenue rose £32m (17%) from £190m to £222m, which was a big new club record, though this was largely offset by a steep increase in operating expenses, which were up £24m (9%) from £263m to £287m, while net interest payable was up £6m (38%) from £15m to £21m. The club has been hit by the double whammy of having to spend more on facilities to meet more stringent standards in the Premier League and the impact of rising inflation on services and utilities.

 Forest’s revenue has really taken off in the Premier League, so is more than seven times as much as the £30m they generated in their last season in the Championship.  All of Forest’s main revenue streams were higher, most notably broadcasting, which shot up £29m (22%) from £130m to £159m, thanks to the much better league position. In addition, commercial was up by around a third, increasing by £9m from £30m to £39m, while gate receipts rose £6m (41%) from £14m to £20m.

Forest have only been profitable once in the eight years since Marinakis arrived, as the Greek businessman has had to bear £242m of losses.   That includes a hefty £134m deficit in the three seasons following promotion to the Premier League, while last season’s £79m loss is the club’s worst ever.

Forest have rarely made big money from player sales, so last season’s £7m profit could be considered as a return to the norm.   The £101m profit in 2023/24 was therefore something of an outlier, being not only an all-time high for the club, but more than the previous 25 years combined.  The reason why player trading is so important to Forest is that they continue to post substantial operating losses, i.e. excluding player sales, exceptional items and interest.

Impact of relegation

Of course, if Forest are relegated, their revenue will suffer a big hit in the Championship. Looking at the clubs that went down in the last couple of seasons, revenue decreases by around 40% on average.

The most significant reduction would be in broadcasting, even though this would be cushioned by parachute payments, which are worth £49m in year one, £40m in year two and £18m in year three.   Adding the £5m EFL central distribution would give Forest £54m TV money, compared to the £159m they received in the Premier League last season. In other words, they would lose more than £100m income from this revenue stream alone.

They are also likely to see commercial income fall, due to relegation clauses in sponsorship contracts, as well as fewer corporate events, though match day income might hold up (this actually increased at Leeds United and Sheffield United after going down).

Even after the significant reduction, the chances are that Forest would have one of the highest revenues ever generated in the Championship. 

According to the Swiss Ramble’s model, being in the Europa League has so far earned them €19.9m in TV money for reaching the quarter-finals, comprising €4.3m participation fee, €8.9m prize money and €6.7m value pillar (the replacement for the old UEFA coefficient and TV pool).  If they go all the way and win the competition, they would earn around €37m – and secure the important bonus prize of qualification for the highly lucrative Champions League.

Attendance and stadium

Forest’s average attendance increased from 29,363 to 30,064, the first time this has been above 30,000 for nearly 50 years, when the late, great Brian Clough’s team won the old First Division in 1977/78.   This means that crowds have risen by more than 4,000 since promotion. In fact, they are 50% higher than the 19,676 Championship low in 2015/16.

In January the club submitted the planning application for the redevelopment of the City Ground to deliver “a sustainable and iconic design” that will increase the stadium’s capacity to over 50,000.   In the first phase, capacity would increase from 31,000 to 45,000 before a redevelopment of the Brian Clough stand would take this up to 52,000. This major project will require a significant investment by the owner, Evangelos Marinakis, including buying the freehold for the City Ground from the council for a reported £8m-10m.

Wages

Forest’s wage bill very slightly grew from £166m to £167m, which was a new high for the club. It was a bit surprising that the increase was not more, given that the club would have paid bonuses for achieving European qualification.  However, a few expensive players departed this summer, as they were out of contract, such as Cheikhou Kouyaté, Felipe, Harry Arter and Wayne Hennessy.

It is clear that Forest have pushed the boat out in order to ensure that they could attract elite talent to compete in the Premier League.  Indeed, their £145m wage bill in 2022/23 is the second highest ever for a club in its first season after promotion to the Premier League, only behind Leicester City’s £152m last season. This can partly be attributed to inflation, but it is still quite striking.

Forest’s £153m net spend on plyers this season is the fifth highest in England’s top flight, only surpassed by Arsenal £268m, Liverpool £228m, Manchester City £161m and Tottenham £159m.

The club has had to invest significant sums in the transfer market to compete in the Premier League, which has been largely funded by Marinakis, who has injected £260m since his arrival, including £148m in the last two years alone.  It also required a breach of PSR and a consequent points deduction, though Forest look OK these days, at least in terms of domestic regulations.  However, it’s a different story in Europe, where they are likely to fail UEFA’s assessments. This will probably lead to the owner having to sign another large cheque to pay a fine.