Much is being made of the transfer business completed by Nottingham Forest this summer.
Forest signed Igor Jesus to get the ball rolling, with Jair Cunha also checking in from Botafogo earlier in the summer.
Anthony Elanga signed for Newcastle in a deal worth around £60 million and that gave Forest a void to fill but also some much-needed wriggle room in the transfer market.
Dan Ndoye signed for Forest to replace him and he scored his maiden goal against Brentford in the Premier League curtain-raiser on Sunday.
Omari Hutchinson signed for Forest before the game, with James McAtee also unveiled on the pitch after a £30 million move from Manchester City.
On Monday, when Forest added Arnaud Kalimuendo to the ranks, the rest of the Premier League went crazy, wondering how the Reds were able to sign so many players for such considerable sums.
Nottingham Forest PSR situation explained
Given the frustrations from other fans, it got us wondering just how close Forest might be to the threshold.
Two seasons ago, the Reds were deducted four points in the aftermath of a hefty summer spending spree following promotion that saw 30 new players signed across two windows.
However, our football finance expert, Adam Williams, has told us that there feels very little to worry about when it comes to the Premier League and their PSR requirements.
He explained to Nottingham Forest News: “When assessing how much a team can spend, we’re looking at it through two different lenses – PSR and cash.
In terms of PSR, Forest are in a much, much better position than they were last season because the Premier League’s financial rules are assessed over three season, which means the £69m they lost in 2022-23 is now no longer part of the calculation.
They generated a £12m profit in 2023-24, thanks in part to some of the horse trading they did with Newcastle in terms of the player swap deals before the end of the financial year.
We don’t have the accounts for 2024-25 yet. They will be released in the Spring of 2026. They will have swung back to a loss, but it won’t have been anywhere near enough to breach PSR.
This summer, they have spent significantly, yes, but they have also sold well. The Elanga sale will have generated about £45m in profit as far as PSR is concerned, based on his amortised book value. Danilo, as well, will have been a £14m-profit sale. Sosa, that’s another £2m profit.
So while the day-to-day business is still cash-negative, they are generating sufficient account profits to be okay for the coming season. And remember, of the £150m or so they have spent this season, only about £30m of that is going to hit the bottom line this season. That’s how amortisation works.
They can also rely on European revenue. Prize money isn’t going to be particularly significant unless they go deep into the Europa League. The maximum you can get is just under £25m, but it’s more significant than the Conference League, where it’s around £13m. Forest would earn more money if they had a recent history in Europe because that’s partly what contributes to the ‘value pillar’, which is coefficient-based. In terms of matchday income, they’ll get another £5m or so in the league phase.
Against that extra revenue, the wage bill is going to rise as performance bonuses are paid out. It will be interesting to see whether bonuses are paid based on last season’s league position or the European competition they have ended up playing in because of the CAS verdict. As a venture, it’s possible that they may only just break even in terms of the costs vs revenue in European football.
In terms of cash, Forest are fine too. They have the £80m loan with Apollo and Marinakis will continue to underwrite the club too. That’s pricey debt, but the interest is lower than the previous deal with another financial institution. So regardless of how they have structured these three new signings, they are okay on the cash front.”
Forest could be close to UEFA financial restrictions
With Forest now in the Europa League, the club has a whole host of other requirements in order to meet the restrictions imposed by UEFA.
Aston Villa and Chelsea have received fines in the past for breaching the criteria and Williams believes this is a concern for Forest with the new season now underway.
He continued: “The one are they are likely to have more concerns however is with one element, UEFA’s equivalent of PSR.
“Under that system, you’re not allowed to spend any more than 70 per cent of revenue plus player sale profits on wages, transfers and agents fees. They were at over 100 per cent in the last financial year. UEFA’s is a calendar-year test, so the numbers are hard to forecast, but I think there’s a real chance they could have an issue there.
“The punishment won’t be too draconian if that happens, however. It will likely be a settlement like Villa and Chelsea have agreed to as opposed to sporting sanctions like the ones imposed by the Premier League.”
Evangelos Marinakis will be completely aware of the restrictions at home and on the continent and as a result, perhaps more wheeling and dealing will take place before the window closes.
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