Nottingham Forest drops to relegation zone after four-point deduction for financial misconduct

PSR rules exist to ensure that English clubs don't spend too far beyond their means. Premier League clubs may not report losses in excess of $133.5M over a three-year period. That number shrinks if the club spent time in the Championship, England's second division.

Nottingham Forest spent the 2022-23 season in the Championship before winning promotion to the Premier League. Its three-year loss maximum, therefore, was set at $77.5M, but Forest is understood to have breached that figure by $43.8M. 

The club defended itself before an independent commission this week but failed to prove that its losses were reasonable.

"The four point sanction is not to punish Forest so much as it is to be fair to the other clubs," said the independent commission responsible for Forest's hearing, via The Guardian. "To give the public confidence that when a club invests as Forest did to compete in the Premier League, it still needs to comply with the PSR threshold for losses."

Forest raised eyebrows when it spent nearly $318M on players in a bid to become competitive in the Premier League. U.S. Men's National Team goalkeeper Matt Turner was one of its key acquisitions. The club attempted to sell homegrown academy players to offset its purchases, but the sales were too small and too late to balance its books.

Forest believes it acted in good faith and blamed the Premier League for not understanding the challenges promoted clubs face. It is widely expected to appeal the decision. 

"In circumstances where this approach is followed by future PSR commissions," Forest said in a statement, "it would make it extremely difficult, if not impossible, for newly-promoted clubs without parachute payments to compete, thus undermining the integrity and competitiveness of the Premier League."

Forest's four-point deduction drops it into the Premier League's relegation zone with nine games remaining in the season. It's not the only club to face a points deduction this year: Everton was docked 10 points in the fall for similar breaches, though the number was revised down to six points after a successful appeal.

The Premier League is off this week due to a global international break and returns on March 30. Nottingham Forest will face Crystal Palace at home in what now looks like a crucial match to save its season.