Are Forest Falling Foul Of FFP?

Nottingham Forest’s “FFP Situation”: What we know, and what the experts say…

Financial Fair Play is not a term Premier League football fans, and indeed all football fans in the English Football pyramid are stranger to. Over the years, numerous clubs have been sanctioned under the rule – some have recovered, some were devastated – but most will agree, when the FFP charges come knocking, it won’t be a door any club wants to answer.

Further context must be understood as to why FFP, Financial Fair Play, and Nottingham Forest are being used in the same conversation. Just recently, reports from various sources – including John Percy, a reputable Football Journalist – that Forest had hired a ‘top sports lawyer’ to argue the case that the Reds had breached no Financial rules in the previous FFP period. Given the happenings with Derby, Everton, and various other clubs in the football league, any mention of a potential FFP breach creates pandemonium amongst a fanbase; Forest are no different, and such news has caused the latter on Social Media. Nick Demarco KC will lead Nottingham Forest’s legal defence — Percy, Telegraph, claims that Nottingham Forest are confident no rules have been broken.

What actually is Financial Fair Play?

To understand the wider context of the situation – which at this stage has amounted to no form of penalisation for Forest – FFP must be understood, and applied to said context.

Financial Fair Play rules were agreed to by UEFA members in 2009, and were semi-implemented after the 2011-12 season (fully post-2015), under then-UEFA president, Michael Platini – for whom was later suspended from all footballing operations until 2023 following a corruption scandal also involving then-FIFA president, Sepp Blatter. After extensive research, UEFA found that out of the 600+ clubs in the organisation, at least half were making annual losses, and 20% of those were in “actual financial peril” – leading to the idea that such measures such as FFP were needed. UEFA describes such regulations as: “a set of regulations established to prevent professional football clubs spending more than they earn in the pursuit of success, and in doing so not getting into financial problems which might threaten their long-term survival.”

Profit and Sustainability Rules, otherwise known as PSR’s, which is another term for FFP, allow Premier League sides to lose £5m per year, which amounts to £15m over the FFP period – which is over three years. Alongside this, a Premier League club can have what is called “secured funding,” which essentially relates to equity payments/commitment to pay for shares by club owners, which must total £30m per year, making the total allowable losses of a football club £35m per year – £15m (Basic loss) + £90m (Secured funding) = £105m (Total allowable loss), over the course of three years. Clubs, this season, entered a new FFP period, meaning accounts from previous years won’t affect this period. That being said, and as per new rules known as the “fast track system” clubs must submit 22/23 season accounts by December 31st 2023, with any sanctions announced on January 14th – the Fast Track system was created to swiftly punish those who breach FFP rules, in theory creating a tougher stance on Finance within football.

In the Championship, a club can lose up to £13m a year (£39m max over total FFP period) – £5m based loss allowed + £8m in secured funding, totalling to £13m total allowable loss for a club in that League.

For Nottingham Forest, given they spent two seasons in the Championship and one season in the Premier League during the last FFP period (ending 22/23), their allowable loss over the three years would be £61m. £26m (Champ Max loss x2) + £35m (Prem max loss x1) = £61m (Max loss over FFP period).

What do we know about Forest’s FFP situation?

Without speculating, not a lot. Chief’s in charge of Forest’s financials will have the insight needed, and are confident that no rules have been breached. There is however a common belief, particularly from financial experts & Journalists – such as Kieran Maguire & John Percy – that Forest are “sailing close to the wind,” essentially, the belief is that no breach has occurred, but it is a very tight situation.

Brennan Johnson’s sale to Spurs is accredited to a reason for Forest not to have breached rules, given the £47.5m sum he was sold for, but it remains unclear as to whether this will be the case. Journalists from the Athletic claim that during the process of Brennan Johnson’s sale to Tottenham Hotspur, Forest regularly cooperated with the Premier League, explaining why they didn’t sell the Welsh forward to Brentford for £12m less, and instead waiting on the higher bid from Spurs.

Financial Expert within Football, Kieran Maguire, says that any concern of a breach at this stage is “premature,” but that it is likely there is “little room for manoeuvre” in regard to Forest’s FFP situation, with “a lot depending on outstanding Covid Allowances & Promotion costs exempt from FFP.”

Caution & Calm urged, with various factors being taken into account, and no mention that Forest actually have breached any rules – at this stage, it is probabilities based. The Telegraph mention that at least three clubs are at risk, with Everton & Forest named in other reports.

What now?

Patience, and focus on upcoming fixtures. While frustrating and nerve-wracking as a potential breach of FFP may sound, there is nothing concrete to suggest Forest are facing any sanctions at this stage, or at any point in the future.

As mentioned previously, any such decision will be made on the 14th January, ten days from this article being written.

All that can be done is wait, and allow the process to conduct its operation, which, by the way, every club will be scrutinised under. All clubs in the Premier League will find out if they have breached rules on the 14th.