LONDON: Nottingham Forest have dropped into the Premier League’s relegation zone after being penalised four points for breaching profit and sustainability rules. An independent commission found Forest’s losses to 2022-23 breached the threshold of £61m by £34.5m.

A furious Forest are the second top-flight team to be penalised for PSR breaches after Everton lost 10 points in November, cut to six on appeal. Forest will appeal, complaining that they had been unfairly judged because of the lower ceiling in the second-tier Championship.

Premier League clubs can lose £105m over three seasons – £35m per campaign – but Forest’s maximum loss was only permitted to be £61m because they spent two years of the assessment period in the Championship.

The commission acknowledged Forest’s “exceptional cooperation” during the inquiry. process. They had risked a a six-point deduction – three points for the initial breach and a further three for the size of the breach – but their “early plea” and “cooperation” saw that reduced to four points.

The league’s rules state any appeals process should “conclude no later than and if possible some time before 24 May” – five days after the season finishes.

*Both Forest (4) and Everton (6) have now been deducted points this season – pending a Forest appeal and a further Everton case to be heard

Forest lost an average of £3m across 2020 and 2021 with a further £40m loss in 2022 and £52m in 2023, amounting to a total of £95m. They were promoted in May 2022 and signed a British-record 22 new players that summer and made five loan signings. Their net transfer spend over the 2022-23 season was £142.8m.

In terms of outgoings, Forest sold two players for a fee, loaned out nine and released two.

Forest based their case around six points of mitigation but all six were disputed by the Premier League. The major plank in their argument was the sale of Brennan Johnson to Tottenham in September. The £45m move took place after the accounting deadline but Forest argue selling Johnson at a later date allowed them to earn a higher fee than if they had sold him by June 30.

The written reasons state Forest received an offer from Atletico Madrid of 50m euros (£42.7m) for Johnson on 30 June and counter offered with 65m euros (£55.6m) on the same day, after which discussions “did not progress further”.

Forest subsequently rejected three offers for Johnson from Brentford of £32.5m, £35m and £40m in July and August.

The striker, who came through the club’s academy, was not keen to join the Bees at that point, while Tottenham also had to bide their time to make their move, which impacted Forest’s position.

His transfer was ultimately linked to Harry Kane’s move to Bayern Munich, with Spurs able to move for a replacement once the England skipper left for Germany in his own move reportedly worth an initial £82m.

The commission concluded the timing of when Johnson was sold was a business decision and not a mitigating factor.

Forest also argued they were in a “unique position” as they had spent the previous two years in the EFL so had a lower threshold but also had not benefitted from parachute payments.

Again the commission did not see this as a mitigating factor and ultimately only gave Forest credit for their early plea and cooperation.

After the charge two months ago, Forest said they were “confident of a speedy and fair resolution”.

Everton are waiting on a potential second punishment, relating to the assessment period ending with their 2022-23 accounts.

Manchester City were also referred to an independent commission in February 2023 after more than 100 alleged rule breaches.