Sport nationNottingham Forest are anxiously awaiting the verdict from an independent commission after facing charges of breaching the Premier League’s Profitability and Sustainability Rules (PSR). The hearing, which took place on March 7th and 8th, saw the Reds mount a robust defence against allegations that they exceeded the permissible losses during the assessment period ending in the 2022/23 season.
The club’s legal team, spearheaded by the renowned sports lawyer Nick De Marco KC, presented their case over the two-day hearing, hoping to avoid the potentially devastating consequences of a points deduction. De Marco, a barrister at Blackstone Chambers in London, boasts an impressive track record in dealing with financial fair play cases and has previously represented high-profile clients such as Forest defender Harry Toffolo.
The Premier League’s financial regulations stipulate that clubs are only allowed to make a maximum loss of £105 million across a rolling three-year period, or £35 million per season. However, for newly promoted teams like Forest, who spent two of the three seasons in question in the Championship, the permissible loss is reduced to £61 million – £13 million for each of the two years in the second tier, plus £35 million for their first Premier League campaign.
While the extent of Forest’s breach remains undisclosed, the club’s primary line of defence is expected to revolve around the £50 million sale of academy graduate Brennan Johnson to Tottenham Hotspur in August 2023. The Reds had previously rejected offers from Brentford for the talented forward, with the highest bid reported to be around £30 million in June 2023 – a figure that, if accepted, would have kept Forest comfortably within the permitted loss threshold.
However, the timing of Johnson’s eventual transfer to Spurs fell outside the financial period under scrutiny, leaving the club in a precarious position as they await the commission’s ruling. The independent panel, comprised of three individuals, must provide their decision within one week of the hearing’s conclusion, as per Premier League regulations.
Regardless of the initial verdict, the saga is unlikely to end there, as both parties have the option to appeal any punishment handed down by the commission. If Forest opt to challenge the decision, they must lodge their appeal “no later than one week” after receiving the ruling, setting in motion a new round of legal proceedings.
In such a scenario, an appeals board would convene to hear Forest’s case, with the Premier League stipulating that any appeal hearing should “conclude no later than and if possible some time before 24 May” – a mere five days after the final round of fixtures for the 2023/24 season.
The prospect of a points deduction looms large over the City Ground, with the potential ramifications being severe for the Reds’ hopes of avoiding relegation. Currently sitting precariously in 17th place, just four points above the drop zone, any significant points penalty could prove catastrophic for Steve Cooper’s side.
The recent case of Everton, who were initially docked 10 points for a PSR breach before successfully appealing to have the punishment reduced to six points, has set a precedent that both Forest and the Premier League will be keenly aware of.
Dave Powell, chief business of football writer for Reach, believes that while the Toffees’ appeal outcome may provide some insight, Forest cannot read too much into it as a precursor to their own fate. “The cases don’t have uniform punishments, hence the reason why the rather arbitrary 10-point deduction was so fiercely contested,” Powell explains.
The Everton example also highlights the potential for further legal challenges beyond the initial appeal process. The Premier League has made provisions within its rules for clubs to “establish exceptional circumstances” and “seek a stay of the effect” of the appeal decision by bringing the matter before a single arbitrator.
According to the regulations, “Any such stay application shall be heard and decided by the provision of the single arbitrator of their decision, with written reasons to follow, prior to 8 June.” This additional layer of legal recourse underscores the complexity and potential longevity of the FFP saga, with the possibility of Forest’s fate remaining unresolved even after the final whistle of the 2023/24 campaign.
The timing of the verdict and any subsequent appeals could prove crucial for Forest, as they battle to secure their top-flight status amidst the uncertainty surrounding their financial situation. With crucial fixtures against fellow relegation candidates Everton, Sheffield United, and Burnley on the horizon, the Reds will be desperate to avoid the distraction and potential demoralizing effect of a points deduction during the run-in.
Nottingham Forest’s case is further complicated by the unique circumstances surrounding their promotion to the Premier League and the subsequent financial outlay required to compete at the highest level. In their bid to avoid an immediate return to the Championship, the club embarked on an ambitious recruitment drive, spending a reported £250 million on 43 new signings across the last three transfer windows.
While such expenditure may seem excessive, it reflects the stark reality of the financial gulf between the Premier League and the Championship – a chasm that Forest deemed necessary to bridge in order to retain their hard-fought top-flight status.
The Reds’ legal team is expected to argue that the sale of Brennan Johnson, while falling outside the assessment period, was a calculated move to offset their losses and bring the club into compliance with the PSR regulations. However, the Premier League’s stance on the matter remains to be seen, and the commission’s interpretation of the rules could prove pivotal in determining Forest’s fate.
As the footballing world awaits the outcome of Forest’s hearing, the case has once again thrust the issue of financial fair play into the spotlight. The Premier League’s profit and sustainability rules, introduced in 2013 in the wake of Portsmouth’s high-profile financial collapse, were designed to promote financial stability and sustainability among member clubs.
However, the regulations have faced criticism from some quarters, with concerns raised over the static nature of the £105 million loss limit and the failure to account for inflation and the ever-increasing costs associated with running a top-flight club.
According to estimates, if the Premier League’s loss threshold had been adjusted for inflation since its inception, clubs would currently be permitted to lose over £200 million – nearly double the current limit. This discrepancy has fueled calls for a more dynamic and responsive approach to financial fair play regulations, one that better reflects the evolving economic landscape of modern football.
Beyond the immediate implications for Nottingham Forest, the outcome of their FFP case could have far-reaching consequences for the Premier League’s approach to financial regulation. A lenient verdict or a successful appeal could embolden other clubs to push the boundaries of the existing rules, while a harsh punishment could prompt calls for reform and a more nuanced application of the regulations.
Moreover, the Forest case has reignited debates surrounding the potential introduction of an independent regulator for English football. In the wake of the European Super League debacle and growing concerns over the financial sustainability of clubs, the UK government has signaled its intention to establish a new regulatory body to oversee the game’s governance and financial affairs.
Such a regulator, if implemented, could potentially play a pivotal role in shaping the future of financial fair play regulations, ensuring a more consistent and transparent approach to enforcing the rules across all levels of the game.
As Nottingham Forest anxiously await their FFP fate, the broader implications of their case extend far beyond the confines of the City Ground. The outcome could reverberate throughout the Premier League, influencing future financial decisions and potentially catalyzing long-overdue reforms to the existing regulatory framework.
For now, however, the focus remains squarely on the independent commission’s impending verdict and the potential legal battles that may ensue. As the clock ticks down to the final weeks of the season, Forest’s hopes of avoiding relegation hang in the balance, inextricably intertwined with the complex web of financial regulations that govern the beautiful game.
Citations:
[1] https://www.nottinghampost.com/sport/football/football-news/nottingham-forest-points-deduction-ffp-9036202
[2] https://www.skysports.com/football/news/11095/13092774/premier-leagues-profit-and-sustainability-rules-to-be-replaced-as-early-as-this-summer
[3] https://www.express.co.uk/sport/football/1868374/Everton-financial-fair-play-appeal-deduction
[4] https://inews.co.uk/sport/football/nottingham-forest-ffp-schedule-possible-outcomes-2928156
[5] https://www.lexology.com/library/detail.aspx?g=54dc45ae-c98d-43ab-a354-c09d5539b5dc
[6] https://inews.co.uk/sport/football/everton-ffp-appeal-prediction-2901634
[7] https://worldsoccertalk.com/news/nottingham-forest-appeal-to-ffp-charges-to-start-in-early-march-20240226-WST-491737.html
[8] https://www.capitallaw.co.uk/news/2024/01/18/premier-league-clubs-in-the-hot-seat-for-breaking-profit-and-sustainability-rules/
[9] https://www.skysports.com/football/news/11095/13076051/everton-points-deduction-appeal-the-key-questions-answered-as-premier-league-club-awaits-outcome
[10] https://swissramble.substack.com/p/nottingham-forests-ffp-issues
[11] https://theesk.org/2023/03/25/referral-by-the-premier-league-ps-explained-the-potential-consequences/
[12] https://www.mirror.co.uk/sport/football/news/what-evertons-ffp-premier-league-32166060
[13] https://inews.co.uk/sport/football/nottingham-forest-ffp-hearing-prediction-2942821
[14] https://viewpoints.reedsmith.com/post/102j2hr/everton-pays-the-price-for-breaching-profit-and-sustainability-rules
[15] https://onefootball.com/en/news/premier-league-charge-everton-and-nottingham-forest-over-ffp-breaches-38879173
[16] https://www.linkedin.com/pulse/summarising-financial-rules-consequences-premier-league-stephens
[17] https://www.sportspromedia.com/news/everton-nottingham-forest-points-deduction-financial-breaches-premier-league-ffp/?zephr_sso_ott=wKGNSK
[18] https://brodies.com/insights/media-broadcasting-and-sports/financial-foul-everton-football-club-docked-10-points-for-breach/
[19] https://www.skysports.com/football/news/11661/13048863/everton-and-nottingham-forest-charged-with-breaching-premier-league-profitability-and-sustainability-rules
[20] https://www.sportspromedia.com/news/leicester-city-premier-league-financial-rules-breach-charges-chelsea/
Sport nation
