Revealed: Why Nottingham Forest were hit with a four-point deduction for breaking Premier League financial rules after Everton’s six point penalty

Nottingham Forest’s early admission of guilt and collaboration with the Premier League contributed to the club receiving a lesser sanction than Everton for breaching financial rules.

Forest were hit with a four point deduction on Monday after breaching Premier League’s Profit and Sustainability rules.

The punishment sees Forest drop into the relegation zone as they now sit 18th in the Premier League table on 21 points, a point behind Luton in 17th. An appeal will likely follow.

The penalty was later reduced to six points following an appeal.

Nottingham Forest were credited with an early admission of guilt and cooperation 

The early plea and cooperation saw a potential six point penalty reduced by two points

Everton were hit with a six-point sanction in the first PSR case having denied wrongdoing

The Independent Commission ruling on Forest’s case acknowledged it could ‘see merit in adopting’ the Appeal Board’s approach in Everton’s case.

A three point deduction was viewed as the entry point for a significant breach of the rules, but noted the Toffees case had ‘a couple of factors that moved it up the scale to a starting point of six points.’

The factors were considered to be the size of the breach and ‘incorrect’ information provided to the Premier League.

In Nottingham Forest’s case, the club were found to have had larger breach than Everton, having breached rules by £34.5m compared to the Toffees £19.5m.

This led to Forest’s sanction being increased to six points, but there was no additional consideration around incorrect information being provided.

‘The Commission does not know how the three extra points were arrived at by the Appeal Board for Everton, but some part of those three points must relate to the provision of incorrect information,’ the Commission added.

While Everton had denied breaching the spending rules for a long period after they were charged, Forest admitted to the Premier League that they were in breach of the rules.

The Commission stated that there was ‘no dispute that early plea/exceptional cooperation should result in a deduction.’

The Premier League had suggested two points be deducted from the penalty imposed on Forest, while the club pushed for a one-third reduction – which would have taken the sanction down to three points.

Forest move into the relegation zone after picking up the penalty and drop behind Luton Town

Forest are now in the relegation zone below Luton following the four-point deduction

The Commission ultimately determined not to deduct a third point for an early plea, instead deciding to deduct two points for the early plea and cooperation.

Forest were ultimately hit with a four-point penalty as a result.

Everton were also hit with a second charge in January along with Forest, with the Toffees on this occasion admitted to breaching PSR rules. 

‘Everton FC and Nottingham Forest FC have each confirmed to the Premier League that they are in breach of the League’s Profitability and Sustainability Rules (PSR),’ the Premier League said in a statement in January when the charges were announced.

‘This is as a result of sustaining losses above the permitted thresholds for the assessment period ending Season 2022-23.

‘In accordance with Premier League Rules, both cases have now been referred to the chair of the Judicial Panel, who will appoint separate Commissions to determine the appropriate sanction.

‘Commissions are independent of the Premier League and member clubs. The proceedings are heard in private with the Commissions’ final decisions made public on the Premier League’s website. The League will make no further comment until that time.’

Part of Forest’s defence had involved the sale of Brennan Johnson to Tottenham for £47.5million in August. 

Everton are facing a second PSR charge with the Toffees having admitted a breach in January

As PSR calculations are made over a three-year period ending on June 30, the Johnson deal will count towards the reckoning for 2021-2024 rather than 2020-23 as it was completed on deadline day.

Clubs are permitted to make financial losses of £105m over a three-year period, with Forest reporting an annual loss of £45.6m in their last accounts.

Another complication comes as Forest were only a Premier League team for one of those three seasons; Championship club’s have losses capped at £13m per season, meaning their cap was in fact £61m.

Forest have since issued a statement outlining their ‘extreme disappointment’ at the decision reached by the Independent Commission.

The club have claimed the existing PSR rules will ‘destroy mobility in the football pyramid’.