A football finance expert explains why these three clubs are most likely to be punished if charges are announced on Monday
Accounting and law appear to have become a key part of footballing knowledge in 2024, with potential breaches of the Premier League’s profit and sustainability rules (PSR) rumoured at clubs up and down the table.
Any charges will be announced on Monday 15 January, with numerous clubs expected to be close to, if not over, the loss limit of £105m over three seasons.
But in case you don’t know your revenues from your turnovers, here’s everything we might expect to see on Monday and why, with help from sports finance expert Dr Rob Wilson.
Why Nottingham Forest may be charged with FFP breaches
Nottingham Forest are reportedly the club most likely to face charges on Monday, having signed 43 players since promotion to the Premier League in May 2022.
Owner Evangelos Marinakis has spent more than £250m on transfer fees in that period, alongside offering players disproportionally high contracts in order to attract them to the east Midlands. Marinakas also converted £11m worth of loans into shares for the financial year 2022-23.
“They spent very, very heavily – even when they brought in loan players, they’ve had high wages,” Wilson explains. “It’s a relatively constricted ground in Nottingham, the commercial deals are not as high as they might have expected, they went without a shirt sponsor for some time last season – it’s almost a parallel to Chelsea.
“The more you spend, the less headroom you have. Then when you’re unable to move some of that short-term talent on, or you’ve brought in aging talent – Jesse Lingard is a really good example – you can’t capitalise on any of it. It’s just pure expenditure. You have to believe they’re right on the PL headroom, just like Everton have been.”
Forest are expected to present the sale of Brennan Johnson as a defence for any potential breaches. Johnson was the subject of a £30m offer from Brentford in June 2023, which would have counted within the 2022-23 accounting year, but he was eventually sold to Tottenham for £47.5m in August.
Forest believe this shows they are committed to resolving any PSR issues as they held out for the highest value, but not everyone will see it that way.
“There is mitigation there,” Wilson explains. “It depends what sort of breach it is – if its minor, then fair enough. If it’s a major breach and they’ve gone 20,30, 40m over, then you can argue that they waited and waited to sell Johnson not because of his increasing value, but because of his on-pitch performance.
“So that overspending saved their Premier League position – now they’re reaping the benefits of that, getting their £120m TV deal. That’s what the PL are trying to deal with, in the same way as Everton, they’ve not been relegated as a consequence of their overspending. That’s unfair, in terms of competition.”
Forest are concerned enough about their potential charges to have hired Nick De Marco KC, also known as the “Lionel Messi of sports law”, to defend them. This fear is not unfounded – after Everton’s deduction this season, the Premier League appear to have fundamentally altered how they consider and punish financially breaches.
“The days of a modest fine or suspended fine appear to have gone with the threat of an independent regulator,” Wilson says. “The Premier League are trying to demonstrate that they don’t need regulating by an external party. By the same token – I’m not sure the league ever expected a club to lose £105m over three years – it’s pretty significant.
“If Forest are found to be in breach of that regulation, their punishment will be similar to what we’ve seen at Everton, potentially more, because Everton were working with the league and self-declaring a lot of it.
“There’s obviously been a lot of outcry over the Everton penalty, but they got away with it to an extent. If Forest get found to have breached it by any amount they will be facing points deductions, because that’s the way the league seems to be going.”
Why Everton could face further points deductions
Everton have already been given a 10-point deduction, which they are appealing, but that does not mean they won’t be charged again. Their previous penalty was for the 2019-2022 period, whereas this year’s charges would relate to the 2020-2023 period, which is considered an entirely new year in terms of financial regulations.
“We were pretty sure Everton were going to be over last year, and our calculations were about where the Premier League landed theirs,” Wilson explains. “They’re going to be right up against it – they haven’t sold like I was expecting them to. It’ll be very tight.
“They’ll argue that they’re working with the Premier League, and their net spend is positive, but you can’t keep losing that sort of money.”
Their project to build a new stadium at Bramley-Moore Dock is often cited as a contributing factor in their PSR issues, yet Wilson explains this is not the case: “The stadium is a bit of a red herring, because you can offset stadium development costs in PSR. Technically, the stadium has no real impact on what they’re doing.”
Everton have a net transfer spend of +£63.78m in the past three seasons, not recording a transfer loss since 2020-21. Yet this is not the only financial factor in their continued battle with PSR.
“We don’t know the details of their player contracts, so I’m going to hypothetically give you what might be happening,” Wilson says. “They might have players that they’ve subsequently moved on, that they’re still paying, because it was the way to get them out of the club, they’ll be making payments to managers that they’ve sacked.
“They’ll be honouring contracts that they’ve set up with existing players that they never could afford and probably still can’t afford. They’re not spending huge amounts at the moment but they have spent huge amounts historically.
“If you go back to the principle of amortisation, they still have to pay for former players every year in their PSR calculations. If they’ve bought players for £20m over a five year period, that’s £4m per year. You only need 10 of those to have a big impact when your income is already pretty static.”
There are plenty of examples of recent players who fall into that category, with Allan, Moise Kean, Jean-Philippe Gbamin and Andre Gomes just a few expensive failures.
And with the Premier League set to maintain their hard-line status, Everton’s PSR misery may not be over yet.
Why Man City won’t be punished this season
The first thing you’re likely to hear from Nottingham Forest fans ahead of any potential charges is: “But Man City have 115 but their case won’t be heard for years!”.
Of course, they’re right. City’s alleged offences are far more wide-ranging than anything Forest may be charged with, but it is that complexity which causes the delay.
Under new regulations put in place by the Premier League, any club charged with a standard financial rule breach must have their case and any potential appeals heard within 12 weeks of the charges being brought. This means any punishment will be enforced within the season in which the breach has taken place.
This means that if Forest or Everton are charged on Monday, then any potential punishment will be doled out by 8 April 2024. But as City’s charges are not considered “standard”, there is no set timeframe in which they will be punished.
As Wilson explains: “It’s the fact that it’s one year times 115. PSR calculations effectively punish clubs for one season’s breach. The document from the Everton charges was 190 pages, but it’s significantly less than what Man City’s will be.
“There’s just a huge amount of paperwork and litigation to get through. It’s just very, very complicated with lots of people. For a contemporary example, it’s like the Post Office scandal. What we’ll probably do is look back in 10 years, as we are with the Post Office now, and realise these failings that go right the way from the Premier League and the club to Uefa and up into government as well.”
“It demonstrates the lack of robustness that the Premier League and Uefa have had over the last 15/20 years in European football. I did some work with Der Spiegel back in 2017, and the evidence I’ve seen – you think, why hasn’t that been dealt with? That was seven years ago now.”
Why there will be more clubs to follow next year
Forest and Everton are not the only two clubs to be linked with potential PSR breaches. Wolves have sold £140m worth of players this season, but that will not count in this set of accounts, meaning the £152m they bought in 2022-23 puts them in a precarious position.
Yet this, as Newcastle are also finding out, is a natural consequence of ambition, of attempting to secure your position higher up the Premier League for more than a season.
“Our calculations expect Wolves to be close,” Wilson says. “Fulham went pretty hard one year, but they’ve managed to recover that position. But we’re looking at all the clubs south of 11th. Most of them, aside from the newly-promoted teams, have thrown the kitchen sink at it – Wolves and Forest are examples of that. If you continue that on an ongoing basis, you’re going to get into all sorts of bother.
“There’s something more structural, systematic in this. For decades, we’ve heard about player power – very few club executives ever take the player on. There’s a litany of examples of players going into contract negotiations and coming out with a lot more than they’d originally planned for.
“That’s the functional problem – when you’re in negotiations with a player and they ask for £50k a week but you can only afford £30k, draw your line in the sand. The clubs are part of the problem, because they’re not saying no to the players. And if you’re not saying no to the players, then the next player to go into the next club has got a new benchmark.
“There are a handful of clubs trying to take a stand against it – Manchester United are trying to push their wages down. That’s really important from a structural POV – that you don’t sign an average player for a 30 per cent higher transfer fee and 30 per cent wages than they’re probably worth. It just sets benchmarks constantly.”
These are all issues which will mean PSR concerns loom over bottom-half clubs for years to come. Unless your club is as effectively run as Brighton, who have a selling model which naturally complies with PSR, the only other way to attempt to break into the top 10 is by sailing close to the regulatory wind and hoping you don’t crash.
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