Having announced a loss of £17.1m for the 2012-13 season, Nottingham Forest have gone beyond the allowed limit of £10m under Financial Fair Play. But beyond that, what do the figures mean? Steve Wright has taken a closer look


The Al-Hasawi family took control of Nottingham Forest in July 2012, purchasing the club from the estate of Nigel Doughty. In my last review of the club’s finances I explained that notes to the statutory accounts had been added to give a little more detail about the takeover as it had happened between the end of the financial year and the publication of the accounts.

What we learnt from the notes was that the outstanding debt to the Doughtys, which stood at £85.3m at the year-end, had been reduced to a £20m loan. It was not clear whether any additional cash payment had been made in order to buy the club, nor did we know the terms of the new loan, but we did know that this was the only significant debt held against the club.

We now have the statutory accounts for the year to 31 May 2013 which allows us to gain a little more understanding of how the club is being taken forward under its new ownership; although much of that year was clouded in uncertainty with both the takeover and the considerable changes that occurred on both the football and commercial sides, and this will have impacted some of the numbers.

To explain for new readers and remind others, I use cash-adjusted financial statements for these explanations which means that I strip away non-cash financial elements such as amortisation to give a true picture of the money that moved in and out of the club in the year. I believe that this is the best way to view its financial status and health. My other articles covering the finance records of Forest going back to 1999 and also the recent financial histories of both Derby County and Leicester City are available on my website Mist Rolling In From The Trent.

The year to 31 May 2013

So, the headlines for the year are that losses rose from £7.5m to £12.8m with the largest contributing factor being a 20% increase in staff costs from £17.4m to £20.9m. This gives us a fairly clear view of where the club is heading, especially when we consider that since the end of the financial year we have added several high-profile signings to the wage bill.

NFFC 3 years P&L to 2013

Between May 2012 and May 2013 the club added Guedioura, Collins, Halford, Harding, Gillett, Cox, Lansbury, McLaughlin and Henderson to the squad and moved on Chambers, Lynch, Gunter, Anderson, Smith, Freeman, Camp and Moloney, resulting in a 20% increase in the wage bill (although clearly the timing of movements in and out has different impacts on the wage bill).

Since 31 May 2013 we have further added Lichaj, Jara, Paterson, De Vries, Abdoun, Mackie, Wilson, Hobbs and Djebbour with the loss of McGugan, McGoldrick and Guedioura, so it seems fair to say that the wage bill in 2013-14 is substantially higher than it was in 2012-13 and so is the net transfer spend. The financial pressures are undoubtedly rising, but so far they do not appear to be a problem to the club’s owners – the accounts are prepared on a going-concern basis only because of the commitment of Fawaz Al-Hasawi to continue to support it financially, as they were previously with Nigel Doughty.

Other reasons for the increased losses are a higher investment in capital assets (from £0.1m to £1.1m) and a cash loss on transfer fees in and out, compared with a profit in the prior year (£1.7m loss compared to £1.5m profit in the prior year). What is noticeable is that non-staff costs have fallen considerably from £6.0m to £3.5m, however, a look at the Balance Sheet shows that this is not an actual cost saving but a change in the profile of debtors and creditors. The club has actually committed itself to spending £7.5m but funded £4m of it by increasing creditors.

This change means that my cash-adjusted losses are actually understated by £4m. It has not been a problem before because the balance on creditors and debtors has remained fairly constant. The comparative loss with 2011-12 (when the club made a cash loss of £7.5m) is actually therefore £16.9m, a huge increase.

The Balance Sheet also tells us more about what has happened to the financing of the club since it was bought by the Al-Hasawi family. As explained earlier a large part of the loans owed to the Doughty estate were capitalised but £20m remained owing. NFFC Group Holdings, the club’s parent company which is owned by the Al-Hasawi family, provided the club with funds to pay this balance and so the football club as a result has a debt to the parent company for £20m plus the interest which had accrued on it. At the year-end the football club owes NFFC Group Holdings £20.5m for this loan.

NFFC 3 Years Financing to 2013

In addition the Al-Hasawis themselves are providing further funding to the club to meet its ongoing activities. This loan is interest-free but is payable on demand at a time when the club can afford it. As at 31 May 2013 this loan is valued at £14.9m. As there is no interest element to it this is the cash amount the owners have injected to cover operating activities between taking ownership in July 2012 and the financial year-end.

We can be sure that this has increased significantly since then with substantial investment in both transfer fees and wages in the last two transfer windows, so anyone thinking that the Al-Hasawi family isn’t spending substantial money on the club is massively misguided.


So the facts of the club’s statutory accounts are one thing but the big question that fans should be asking is whether they represent a good or a bad thing. Without that context the numbers themselves do not have a great deal of meaning.

The fact that the owners are putting money into the club means that it can bring in more expensive, and hopefully better, players and compete higher up the league. So long as they remain happy to meet the obligations that they are taking on – which run well beyond the current period – this should be a good thing for the club in terms of being successful.

It only really becomes a problem if the owners reach a point where they cannot, or do not want to, meet those obligations. This is basically the same situation as we had under Nigel Doughty’s ownership and it only became a problem when he died and was therefore no longer able to continue to meet obligations. Even when he started to step back he was committed to seeing the club through a transition period where it could adjust to his reduced funding and it was only tragedy that changed that.

I think it is important to be clear on this aspect because Doughty and Al-Hasawi have both been criticised for their lack of financial backing (and worse have also both been horrendously abused by some fans) when in fact both have spent heavily on the club. Complaining about a lack of spending is completely unfounded.

Having said that it is also important to say that it is possible to be completely aware and grateful for the funds that are being put into Forest and still be critical of the way those funds are being spent and the strategy that is being taken. It is as unfounded to say that simply because the owners are putting money into the club this denies fans the right to comment about how it is being spent, as it is to suggest that the owners are not putting ‘enough’ in.

This is a football club with nearly 150 years of history, and hopefully a good deal more future,e and as fans we are a part of that. The club is being shaped by the actions of the owner and his appointed staff and if we are not happy with the way that is happening we should be able to speak out, so long as it is done positively and with the club at heart.

So, in final conclusion, we are currently able to spend well in excess of our natural level of income because of the support of our owners; but we are also totally at the will of those owners who could bring us to our knees if they so wished because we are so over-committed financially. There is no reason to think that the Al-Hasawi family will do anything to harm the long-term future of the club and they deserve our respect, but it also concerning that we are so reliant on any individual and that their support could become tied to questionable decisions and actions (as it seems to have at Hull and Cardiff).

As such, fans should fully support the owner in what he is trying to do, we have a shared goal after all, but we should also be mindful of the potential fall out of the strategy that he is implementing. We should be able to question decisions that are being taken and we should be able to call the owner to account if he appears to be risking the club’s future. We need transparency and that comes from fans being able to ask questions, the independent media being able to ask questions and the club giving clear and honest answers. In many ways what has happened at Forest since the period that these accounts relate to is more worrying than any of the numbers they contain.

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