Latest Nottingham Forest news: Reds appeal against four-point deduction for PSR breach.
A harsh ruling has been issued on Nottingham Forest’s four-point deduction for violating the Premier League’s Profitability and Sustainability Rules.
The club has appealed their sentence, which has resulted in their relegation. And financial analyst Robert Matusiewicz says he well understands why they made that decision.
Matusiewicz, a professional accountant and board member of the Nottingham Forest Supporters’ Trust, spoke with Max Hayes and Sarah Clapson on NottinghamshireLive’s Garibaldi Red Podcast. His thoughts on the Reds’ PSR breach, as well as the written findings from the club’s hearing before an independent panel, are included below. The entire interview is available on our YouTube channel and across all standard audio devices.
Q: Could you please explain the PSR charge and lay down what Forest was charged with?
RM: “Before we get into that, could we take a step back and clarify the goals of the PSR Rules? I believe it is critical to first grasp the aims of the PSR regulations, then evaluate what Forest has done and been accused of, and last compare what they have been accused of to what the rules’ objectives are.
“The stated goals of PSR are to improve clubs’ economic and financial capability, increase transparency and credibility, improve governance standards, encourage clubs to operate on their own revenues, introduce more discipline and rationality in club finances, and promote responsible spending for the long-term benefit of football. So, the first element of PSR is to instill financial discipline in clubs so that they do not overspend and can remain solvent.
“The second factor is how much clubs may lose before being placed on the naughty step. Premier League clubs are permitted to lose £35 million each year. The breach is reviewed over a rolling three-year period, meaning a Premier League club might lose £105 million at any time.
“The rules vary slightly if a club spends time in the Championship since Championship clubs can lose £22 million less per year than Premier League clubs. Forest’s PSR breach occurred after two years in the Championship and one year in the Premier League, resulting in authorized losses of £61 million. The independent panel determined that Forest had violated that, resulting in losses of £95 million, which exceeded £34 million.
“A lot of the media have taken the simplistic approach and thought, ‘That’s a slam dunk. Guilty, as charged. How many points will you be deducted? On the surface, that appears to be a logical approach: rules are rules; you broke them; accept the consequences.
“However, the issue with Forest is much more convoluted than that. There is a technical infringement, but I believe the commission has failed to identify the circumstances that led to it. I completely understand why the Forest board and owners were upset when the decision was issued.”
“Based on their accounts after six months and their projections for the year, it was determined that they were approaching the limit. However, Forest acknowledged that there were covid-related charges of around £12 million.
“The December 2022 submittal for anticipated PSR includes a provision for covid expenses. However, it also claimed an additional £20 million as an allowance, which was the cost of bonuses to players after winning the play-off final. On that logic, Forest was floating dangerously near to the brink, and they knew it. Even in December, they considered selling a player.
“In March 2023, Forest presented another change to their PSR forecast. The Premier League informed Forest at the beginning of June that they would not accept the covid claim and that the incentives paid for promotion were not an eligible deduction from their losses.
“So, two or three weeks before the end of the year, when the transfer window was closed, Forest were warned, you’re not going to have a little violation; you’re £35 million behind. We might argue for days about whether Forest should have known that. I’d have more sympathy for that argument if the Premier League’s prospective attitude had been communicated to Forest in January, while the winter transfer window was still open. I’m not clear what the Premier League expected Forest to do when they were informed of a material breach after the season had ended, or just as it was ending and two weeks before the transfer market started.
“The transfer window opens on June 14th, while Forest’s financial year closes on June 30th. Anyone who has worked for a professional football team knows that as soon as the season ends, players, staff, and managers are released. That is when they take their holidays.
“Looking at the timings, I believe Forest was put in an almost difficult situation by the timeliness of the breach notification. You have to wonder when the Premier League knew it was going to be a problem, and why wasn’t the club informed sooner, rather than waiting until what appears to be the last minute?”
Q: Do we know why the transfer window and PSR calculation periods do not match?
RM: There is no explanation. You have uncovered what I believe is a major problem in the PSR rules.
“If you were serious about PSR’s objectives, it would make perfect sense to have club year ends coincide with the opening and closing of transfer windows.” So, if the transfer window shuts on June 30th, have accounts set up to run through June 30th. It would prevent many difficulties.”
Q: Given your results, is a four-point deduction fair? Or is it harsh?
RM: “If you look at the Brennan Johnson transfer in detail and the different stages it went through, as well as the commission’s stance, it is ludicrous. I believe it was on June 30th that Atletico Madrid made an offer for Brennan Johnson, but it was contingent on a lot of circumstances. It required consent from the Spanish League, as well as an agreement with the player. More importantly, Atletico had to sell one of their own players in order to raise the transfer money required to pay for Brennan. That was not an offer that could be accepted.
“You can only imagine how the commission would have reacted if Forest had accepted this conditional offer and the entire process had collapsed because Atletico couldn’t sell the player they wanted to sell for the price they wanted. However, the report states that Forest should have accepted it because it would have been completed shortly after the end of the year. I have never seen a comment like that in a legal decision before.
“On what basis does the independent commission argue that Forest should have accepted an offer in the hopes that it would be completed? Nonsense.
“It was rejected. Then, a few weeks later, Brentford comes in with an offer of £30 million, I believe. That was rejected. They return a fortnight later with £35m. I believe they upped it again after that. The bids were rejected because, as stated in the report, Brennan had chosen new advisors. The club had informed the new advisor that they could have to sell, therefore the new advisors were searching for possibilities for Brennan.
“Tottenham were considered as a prospective buyer towards the close of last season. The player has the option of joining Tottenham or Brentford.
“It is not Forest’s choice because a move requires three parties to agree: the selling and buying clubs must agree on a price, and the buying club must agree on conditions with the player. No transfer may occur unless all three of these parties agree. That is one issue that appears to have been overlooked by the independent commission in the way they completed this study.
Forest subsequently sold Brennan to Tottenham for £47.5 million, which was £17.5 million more than Brentford’s original bid. To my mind, and I believe to the minds of any right-thinking person, that is completely consistent with the goals and objectives of PSR – prudent financial management and revenue maximization.
“The commission’s viewpoint was slightly different. Forest should have accepted the lower offer; it may have cost them money, but it would have demonstrated respect for the regulations. Again, what are the rules? How on earth is taking a £17.5 million loss consistent with the declared goals of PSR? It’s nonsense.
Q: Was Forest’s points deduction reduced by two points to four because of Brennan and the mitigating circumstances? Or was it more because Forest collaborated with the Premier League?
RM: “It’s a little of both, I believe. After reading the news on Everton’s point reduction, I must admit that I did not really understand it. It was almost as if they realized, “We have to do something here,” because some of the justifications offered for the deduction did not make sense.
“There’s a little spiel in the 50 pages (of Forest’s report) about how it was a significant breach and how we might have done this and that, but we’ll call it six and then subtract two. When I was reading through the 50 or so pages, I got the idea that it was a hatchet job.
“Do you recall how, when Forest were first promoted, the media was obsessed with the quantity of signings? It was like an echo in this report: they spent all this money on players, and they now have all of them.
“Actually, if you look at it, a lot of players came in and a lot of guys left throughout the promotion season. The headcount really decreased.
“It (the story) was repeating the old argument about Forest signing all these players without paying regard to the reality. They also said Forest spent £145 million, which is significantly more than any team has spent since being promoted from 2013 to 2023. In some cases, the report is correct. Nobody spent £145 million on footballers in 2013. However, the article did not mention that football revenues in 2023 were twice as high as in 2013.
“It sounds like the type of statistic you’d use to make it appear as if you knew what you were talking about, but without really considering the implications of what you were saying. I thought that was a rather misleading figure to include.
“Returning to the parachute payments, we are all aware of the conditions that Forest faced when Steve Cooper took over, as well as the need to rebuild the squad. Forest responded, “Yes, but Fulham and Bournemouth have also come up, and they have benefited from parachute payments.”
“A Premier League specialist confirmed that Fulham received £44 million in parachute payments, while Bournemouth received £79 million over two years. However, that money was not spent on players; instead, it was used to compensate the revenue loss caused by relegation.
“I believe it is a slightly misleading perspective because, thanks to the parachute payments, they were able to continue paying the salaries of the Premier League players they wanted to maintain. They didn’t have to buy players to make up the difference, as Forest did, because the parachute payments allowed them to keep them on the roster.”
Q: What type of penalty do you believe Forest should have received?
RM: “There is no structure for determining the appropriate consequences for a breach. If a club goes bankrupt, it loses nine points, according to the rules. But what’s the point of selling a player two months after the end of the year and only getting four points? It’s completely disproportionate.
“If the Premier League applied the regulations fairly and uniformly across all clubs, maybe there would be more acceptance of them. But that is not what the Premier League is doing. This may be a cynical viewpoint, but it appears that depending on the size of the club and their weight in the Premier League corridors, they get away with it.
Q: How hard is it for freshly promoted clubs to compete?
RM: “I do not think freshly promoted teams have a chance. Any new team will be forced to sell in order to prevent a PSR breach, which will be nearly impossible. That means players will have to be sold during the winter window, or teams would face the same risk as Forest, who had two weeks at the end of June to sell a player before the shutters came down and the PSR got out the abacus to calculate the size of the shortfall. It’s crazy.
“A cynical viewpoint would be that it would benefit the top six clubs if all of the elite players in the promoted teams could be scooped up for low transfer costs since those clubs are keen to sell and do not want a points penalty. On what grounds does that promote strong and fair competition? It is not. The regulations need to alter.”
Q: Do you understand the club’s decision to appeal?
RM: “Absolutely.” I’m not surprised the club was outraged when they read the report because it appeared to be a hatchet job. The Premier League appointed a commission, and I had anticipated more from them.”