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Financial Fair Play and Football: Forest Goes Down, but is it Out?


Joel Wallace provides a summary of the recent Premier League Commission decision in The Premier League v Nottingham Forest FC Ltd (PLC, 18 March 2024).[1] Topics include: financial fair play, the Premier League Profitability and Sustainability Rules, the Premier League disciplinary process, disciplinary sanctions in the Premier League, and point deductions.


“They’ve done it!”[2] exclaimed Kevin Campbell as the full-time whistle signalled Nottingham Forest’s win in the 2022 Championship play-off final and entry into the Premier League. Though accurate, Campbell’s phrase undersells the grandeur of the event; Forest fans had, after all, waited more than 20 years for promotion. Unfortunately, the club’s time in England’s elite league may be comparably short following a Commission – convened under the Premier League’s rule W Disciplinary procedures – ruling that Forest had breached the league’s Profitability and Sustainability Rules (“PSR”) and should be docked four points. The four-point sanction pushes Forest into the Premier League’s relegation zone and, with only eight games in hand, the risk of demotion is acute.

Given that Forest admitted the PSR breach from the outset of the case, the Commission’s decision does not provide any new principles for the interpretation and application of the PSR, though the Commission’s summary of the rules and how they operate is highly recommended. However, the Commission’s approach to sanction combined with the recent Appeal Board decision in The Premier League v Everton (AB, 17 November 2023),[3] provides useful guidance on the potential outcome where financial fair play is in issue.

Understanding the PSR

The PSR, beginning at rule E.49 of the current Premier League Handbook, require clubs to submit annual accounts for the last two seasons by 31 March in each Season. If there is a loss in the annual accounts then the club must also submit a calculation of its “Adjusted Earnings Before Tax” by 31 March and its annual accounts for the present Season by 31 December. Per the rule A definitions, “Adjusted Earnings Before Tax” means profit or loss after depreciation and interest, before tax, but excluding certain costs (eg spending on women’s football, community development, and youth development).

If a club’s aggregated Adjusted Earnings Before Tax across those last two accounts (known as the “PSR Calculation”) generates an aggregate loss of greater than £105 million then the club will be in breach of the PSR and the matter will be referred to rule W disciplinary proceedings.

Forest’s Breach

In Forest’s case, the PSR were adjusted in two ways: first, the PSR Calculation would use the previous season’s accounts and an average of the accounts from the two seasons before that, instead of simply the previous two seasons accounts. The rationale for this was to reflect the difficulties that clubs experienced during the COVID-19 restrictions. Second, the threshold for breach is lowered by £22 million for each season that that a club was in the English Football League (the “EFL”) ie not in the Premier League. This meant that Forest would be in breach of the PSR if its accounts and PSR Calculation for 2021 and 2022 generated a loss of more than £61 million (the £105 million threshold was reduced by £44 million – 2 x £22 million – to reflect the two seasons prior to entry into the premier league).

Forest’s annal accounts for 2023, submitted on 31 December 2023, revealed aggregate losses of £86,825,000 per the PSR Calculation. Given that the club’s losses were clearly above the £61 million limit, Forest admitted breach of the PSR in its email accompanying the accounts. However, scrutiny of the accounts led the Premier League to conclude that the total loss was in fact £95,536,000 such that the amount in default was £34,536,000. This was ultimately admitted by Forest.

The Approach to Sanction

The Purpose

The Commission’s powers to sanction with in rule W proceedings are extremely broad and there is no method for determining sanction prescribed by the rules, except that the defaulting party is invited “to place” mitigation before the Commission.[4] Fortunately, the Appeal Board’s decision in Everton provided the Commission with a set of principles which could be applied readily.

For the Commission, following Everton, the overarching consideration was the purposes of the PSR and, by extension, the need for sanction. The Commission decided to weigh up mitigating and aggravating features in light of those purposes, which are to protect the integrity of the competition, people’s confidence in the competition and to ensure fairness between clubs.[5]

The Starting Point

Aligning itself with the Appeal Board’s decision in Everton and the Guidelines from the EFL in respect of its financial fair play rules, the Commission decided that it would provide a starting sanction which would be amended to account for aggravating and mitigating factors in the case. To identify this starting point, the Commission created three types or bands of PSR breach: “minor”, “significant” and “major”. In this case, the Commission decided that Forest had breached the threshold by a significant amount and, as such, the breach fell into the “significant” band.[6] Mirroring Everton, the Commission decided that points deductions is an appropriate type of sanction for “significant” breaches (where minor may merit a fine and major may merit expulsion), and it used three points as the ordinary starting point. However, the breach in the present case was so much above the threshold that it merited an additional three point deduction, giving a starting point in this case of a six-point deduction.[7]

Aggravating and Mitigating Factors

The Premier League did not submit that there were any aggravating factors save for the miscalculation or reporting of the amount that Forest was in default. The Commission held that it had already incorporated the amount of the default into its analysis of the starting point and so found that there were no aggravating factors.

As to mitigation, six were provided by the club:[8]

  • The uniqueness of the circumstances since Forrest was the only club that was not in previously in the Premier League in any of the accounting years and it had been in the Championship for a substantial time so as not to benefit from “parachute payments” (payments made to clubs that are newly relegated from the Premier League to the Championship);
  • It had sold a player (“Player A”) to Tottenham Hotspur FC for £47.5 million at the end of the summer 2023 transfer window.[9] Unfortunately, the sale concluded after the account reporting period for that season (30 June 2023) so the sale could not be considered in the relevant accounts. Forest’s submission was that if it had made the sale in time then there would have been no breach; it was a “near miss” of the PSR on Forest’s part and made for, in Forest’s view, “golden mitigation”.
  • Money forecast errors, namely the price of promotion to the Premier League, reliance on an add-back for costs related to COVID-19, and the failure to position 12th in the league (and attain the award money tied to that position).
  • There was no sporting advantage to Forest;
  • Forest came with clean hands in that it had no prior sanction in respect of the PSR (or any financial fair play rules), admitted breach from the outset and had demonstrated responsible financial transacting through the profitable sale of players in the January 2024 transfer window; and
  • Forrest had cooperated with the Premier League throughout.

Factors (i) and (ii): Circumstances and “Near Miss”

The Commission found Forest’s claim to uniqueness lacking. It noted that there were 12 other clubs that had been promoted in circumstances similar to Forest over the past decade; Forest was walking a well-trodden path. Moreover, rather than taking a considered and cautious approach to spending, Forest had sailed “close to the wind” by repeatedly engaging in transfer window spending sprees with insufficient thought given to PSR save the hope that the sale of Player A would prevent them from a breach.[10]

The above point bled into the Commissions views of Forest’s second submission, the “near miss” or “golden mitigation” argument. Forest had run the risk of not selling by the end of the accounting period. It was also telling that Forest had rejected three earlier offers. The Commission held that Forest had placed the hope of attaining a higher price for Player A, and possibly obtaining a sporting advantage by retaining Player A’s services a little longer,[11] above financial fairness and respect for the PSR.[12] As such, the alleged “near miss” was not a mitigating factor at all.

Factor (iii): Forecasting Errors

It was noted above the Adjusted Earnings before Tax (being the basis of the PSR Calculation) was determined by subtracting or discounting costs (eg youth development costs). Both the Premier League and the EFL had produced guidance on PSR Calculations for seasons affected by the COVID-19 restricted period. Within the guidance, the leagues permitted additional costs attributable to COVID-19 to be discounted from the Adjusted Earnings before Tax (referred to in the decision as an “add-back”). Forest contended that it had genuinely but incorrectly identified the level of add-back that it would receive under this COVID-19 guidance. Whilst the Commission accepted that Forest’s error had been genuine (which was not contentious), it did not accept that the belief that Forest would receive any add-back under the COVID-19 guidance was reasonable. This was because the guidance clearly required clubs to satisfy certain conditions in order to obtain the add-back, such as providing a note of the COVID-19 related cost in issue. Forest had not satisfied the conditions and, as such, was unreasonable in its expectation of an add-back to reduce the reported loss.[13]

Further, the Commission gave short shrift to Forest’s reliance on promotion costs or, indeed, Forests failure to attain the award for reaching 12th place in the Premier League. Promotion costs were borne by all the clubs entering the Premier League for the first time and, as was noted in Everton, the risk of not placing in a certain position is part and parcel of the game and its business; neither factor is capable of reducing culpability for the breach.[14]

Factors (iv) and (v): No Sporting Advantage and Clean Hands

The Commission noted that a sporting advantage had accrued to Forest in respect of Player A, as described above. For the Commission, this advantage was demonstrative of the wider benefit that Forest had received from its breach of the PSR: Forest was, in essence, fielding a team that it could not afford. The Commission made it clear that this was not a mitigating factor; it was potentially an aggravating factor, although the Commission refused to go any further since the Premier League had not taken the point.[15]

As to what this article labels the “clean hands” factors, the Commission declined to consider Forest’s finances beyond those relevant to the default. Such future financial matters will be considered to determine future compliance with the PSR; they are not matters which concern the non-compliance in issue. Perhaps most surprisingly, the Commission also did consider Forest’s prior clean record as mitigation, although it acknowledged that a history of breaches might serve as aggravating factors.[16]

Factor (vi): Cooperation

There was no dispute that Forest had cooperated with the Premier League prior to and throughout the disciplinary procedure. Such was the level of Forest’s cooperation that the Commission recorded, at the Premier League’s behest, the particular manner in which Forest had engaged with the Premier League in the hope that other clubs might follow suit,

“12.106 The Commission was expressly asked by the Premier League to record all the cooperation Forest had provided… The Commission is pleased to do so:

‘Helping to facilitate an efficient and cost-effective resolution of the proceedings, including by:

(i) Responding constructively and promptly to requests for information prior to the deadline for the filing of any Complaint;

(ii) Agreeing to the application of the standard directions in the PL handbook and agreeing with the PL a full procedural timetable to give effect to the standard directions without the need for a procedural hearing;

(iii) As part of that timetable, agreeing to a process of early and rapid disclosure, meeting that deadline, and then responding constructively and promptly to the PL’s queries regarding disclosure (including the provision of further relevant documents where identified and/or requested);

(iv) Constructive and open communication with the PL and its solicitors at all times on all aspects of procedure as well as more substantive issues (such that there have been no surprises during the proceedings).

Voluntarily attending a fact-finding meeting (which is not a step provided for in the standard directions) at very short notice, including arranging for individuals to fly internationally to attend the meeting, and engaging with all the questions raised in that meeting (without objecting to any such questions being asked).

Agreeing a wide range of agreed facts, materially reducing the need for witness and documentary evidence.

Constructive engagement with the PL regarding the issues in dispute, including abandoning aspects of the Club’s case upon appreciating that they were based on a flawed factual premise (which was unknown to the Club at the time it originally advanced such points) and accepting representations from the PL as to that flawed premise without requiring the same to be proven (which would likely have required a confidentiality ring), resulting in an amendment to remove parts of what is now §27.4 of the Amended Answer …

Releasing a brief and neutral press release regarding the proceedings – stressing the Club’s intention to cooperate with the PL.

Agreeing to the directions agreed in these proceedings being disclosed in other proceedings to assist the PL [to] achieve similar directions.’[17]

The Sanction

A two-point deduction for both the early plea and cooperation was awarded to Forest. The Commission expressly denied that it was bound to reduce the sanction by a third for early plea alone, or that it needed to deploy a percentage reduction at all. Two points were adequate to account for all mitigation, leaving Forest with a sanction of a four point deduction.[18]

Finally, the Commission considered whether any part of the sanction should be suspended but declined to do so. In the Commission’s view, suspended sentences are ordinarily part of a carrot and stick approach to sanctioning, where the threat of sentence motivates the defaulting party to comply with a particular regime or settlement plan. No such plan existed in the present case. Moreover, the Commission held that the seriousness of the breach and the need to maintain public confidence in the game meant that a suspended sentence would be simply inappropriate.[19]


The decision on sanction can be seen as harsh in two ways: First, the Commission’s refusal to treat early plea alone as worthy of a reduction is at odds with the approach to sanction in sport more generally. It may be, though it seems unlikely in this case, that additional cooperation is insufficient to reduce the sanction further, but (save in exceptional circumstances) some discount ought to be assigned to Forest’s admission of the breach alone. Second, it is unclear why Forest’s clean record (where PSR breaches are concerned) cannot serve to mitigate. The Commission is undoubtedly right to state that past breaches may serve to aggravated, but to hold in the same breath that longstanding compliance with the rules cannot be a mitigation feature is dubious.

Although Forest were successful in reducing the sanction from its starting point, the Premier League is the real winner. Both the acerbity of the sanction and the verbatim guidance, more instruction, on how to cooperate with the League, create a clear message to other clubs: gaming the PSR or disciplinary process will not be tolerated. The Commission’s decision will likely give at least Manchester City FC and Leicester City FC, clubs squarely in the Premier League’s crosshairs, pause for thought.

Forest has not announced an appeal against sanction, but it has 14 days from the date of the decision in which to do so. As things stand, a successful reduction of the Commission’s sanction by just one point will move Forest out of the relegation zone. A reduction of the sanction by two points could provide the club with the breathing space it needs to safeguard its position in the Premier League next season. Given the high stakes and Forest’s current position in the League, Forest has much to gain and stands little to lose by mounting a challenge.

[1] The full written reasons of the Commission can be found here.

[2] Sky Sports News, 29 May 2022.

[3] See Joe Bryan’s excellent article summarising key points in Everton here.

[4] As was noted by Forest. see Forest, para 9.12.

[5] Ibid, paras 9.15.

[6] Ibid, para 9.18.

[7] Ibid, para 14.15-14.15. Note that in Everton the starting point was also raised to 6 points, albeit for different reasons.

[8] Ibid, para 12.1.

[9] This article follows the Commission’s lead in attempting to preserve the player’s anonymity, although the author notes that such efforts are likely in vain given that Forest’s sales are well publicised.

[10] Forest, para 12.23-12.25.

[11] Ibid, para 12.54.

[12] Ibid, para 12.57-58.

[13] Ibid, para 12.75.

[14] Ibid, paras 12.70, 12.74, and 12.76.

[15] Ibid, paras 12.89-90.

[16] Ibid, para 12.99.

[17] Ibid, para 12.106.

[18] Ibid, para 14.17.

[19] Ibid, para 14.23.

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