Where Nottingham Forest are with PSR as future plan becomes clear

Nottingham Forest were hit with a four-point deduction for breaching PSR regulations last season.

This season has been very different from Nottingham Forest’s previous one as they continue to aim for a spot in the top four and a berth in the UEFA Champions League the following season.

Nuno Espirito Santo’s team has surprised everyone this season by starting the season in a title race. Forest is presently in third position, tied with second-place Arsenal and only six points behind leaders Liverpool.

Last season was a different story, of course. Finishing the season six points and one place above the bottom three, it was a campaign that saw Forest hit with a four-point deduction after they were found to be in breach of the Premier League’s profit and sustainability rules (PSR).

PSR’s primary goal is to guarantee financial responsibility and sustainable club operations within their limits. Over a rolling three-year assessment period, clubs are allowed to lose £105 million. This amount can be deducted for things like funding community projects, the academy and women’s team, and infrastructure. Additionally, losses resulting from the COVID-19 pandemic were allowed.
This season, Forest is vying for European football, therefore supporters would be devastated by the idea of another PSR violation. However, how probable is that, and how does Forest appear to be doing in terms of compliance?

According to figures presented by football finance expert Swiss Ramble, Forest should, just about, be able to fly under the radar when it comes to PSR and remain within the constraints.

For the 2021/22 and 2022/23 financial years, Forest made pre-tax losses of £46m and £67m, respectively. Against allowable deductions for those two periods of £4m and £15m the net PSR result for the club was a combined £92m. But with the 2021/22 period falling when Forest were in the Championship, that campaign allowed them to only make a £13m loss as opposed to the £35m per year loss allowed for in the Premier League.

Because the Championship season is still included in the rolling three-year evaluation period, Forest is still constrained in terms of their PSR position even though their 2023–24 accounts will be released in the upcoming weeks.

However, according to Swiss Ramble’s forecasts, Forest will break even in 2023–2024. This indicates that the club will have a positive PSR position of £10 million for the season after deducting the approximately £10 million in permitted deductions. That implies that the club would be narrowly under the £1 million limit for their overall PSR position. Were Forest using the entire £105 million as they will for the 2024–2025 timeframe, which is the final PSR evaluation prior to clubs moving to a squad cost ratio rule, they would have been well under at around £23m.