IN THE MATTER OF A PREMIER LEAGUE COMMISSION

PLJP 2024/1

Mr Mark A. Hovell
Mr Robert Glancy KC
Mr Steve Holt FCA
7 & 8 March 2024

BETWEENTHE PREMIER LEAGUEClaimant

AND

NOTTINGHAM FOREST FOOTBALL CLUBLIMITEDDECISION

RespondentIndex1

INTRODUCTION ....................................................................................................... 1

2

WHO’S WHO ............................................................................................................. 1

3

THE PROFITABILITY & SUSTAINABILITY RULES .................................................. 2

4

COVID-19 .................................................................................................................. 55

FACTS ....................................................................................................................... 6

6

PROCEDURAL HISTORY .......................................................................................... 9

7

ISSUES .................................................................................................................... 10

8

THE BREACH .......................................................................................................... 129

SANCTION PRINCIPLES – APPROACH TO SANCTION ........................................... 1210

SANCTION PRINCIPLES – AGGRAVATING/MITIGATING FACTORS ..................... 1711

AGGRAVATING FACTORS ..................................................................................... 18

12

MITIGATING FACTORS .......................................................................................... 19

13

NATURE OF SANCTION.......................................................................................... 43

14

QUANTIFICATION OF SANCTION .......................................................................... 44

15

CONCLUSION ......................................................................................................... 50

1

INTRODUCTION

1.1

By a complaint dated 15 January 2024, the Premier League Board (the “Premier League” or
the “PL”) alleges that Nottingham Forest Football Club Limited (“Forest” or the “Club”) has
acted in breach of the Premier League’s Profitability & Sustainability Rules (the “PSR”).

1.2

The Premier League’s case is that Forest’s PSR Calculation, dated 31 December 2023,
demonstrates losses in excess of the £61m threshold applicable to Forest, as a newly promoted
club.

The Premier League considers that Forest’s PSR Calculation results in a loss of£95,536,000, breaching the £61m threshold by £34,536,000.
1.3

Forest accepts that it is in breach of the PSR but asserts that this ought to be considered in lightof certain exceptional circumstances which the Commission has considered below.

1.4

The parties’ cases were pleaded in the Complaint dated 15 January 2024, the Answer dated 30
January 2024 and the Amended Answer dated 26 February 2024. The Hearing took place on 7
and 8 March 2024. The Premier League was represented by Jane Mulcahy KC and Mark Vinall,
instructed by Linklaters LLP. Forest was represented by Nick De Marco KC and Tom Leary,
instructed by Squire Patton Boggs (UK) LLP.

1.5

The parties relied on a significant quantity of documents to support their respective cases. The
Premier League called one expert witness, and Forest, one expert witness and two employee
witnesses. Proceedings were conducted expeditiously, in line with the PSR Standard Directions(the “Standard Directions”), and that has largely been possible due to the level of co-operation
between the parties and the diligence of their respective representatives. The Commissioncommends them for this approach.

1.6

The Commission has made its Decision having considered all of the legal and factual evidence
presented to it. The Commission has addressed in this Decision only those issues which
remained unresolved at the close of the Hearing. However, the Commission has considered allof the issues raised in these proceedings, even if they have not been specifically or expressly
addressed in this Decision.

2

WHO’S WHO

2.1

Set out below are some individuals and organisations referred to in this Decision or in
documents included in the Hearing Bundle:

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1

• Evangelos Marinakis

Majority shareholder of Forest since May 2017.

• Ioannis Vrentzos

Forest’s former Chief Executive Officer and a member of Forest’s
Board of Directors throughout the relevant PSR assessment period(May 2022 – June 2023). Witness for Forest.

• Jonathan Brown

Expert witness for the Premier League.

• Ross Wilson

Forest’s Sporting Director.

• Jonathan Pryor

Expert witness for Forest.

• Thomas Bonser

Forest’s current Finance Director since January 2022. Witness for
Forest.

• Player A

Forest player. Transferred to Tottenham Hotspur FC on 1
September 2023 for £47.5m.

3

THE PROFITABILITY & SUSTAINABILITY RULES

3.1

The Commission notes that financial controls – i.e., controls over the amounts football clubs
are permitted to spend and/or lose – have become a feature of European football regulation overthe last decade and a half. These regulations are named differently by different regulators andcompetition organisers, although their objectives are largely the same – to promote financial
self-sufficiency, sustainability and solvency amongst football clubs. At the UEFA level, theseregulations were originally called the ‘Financial Fair Play’ regulations and now take the formof the Financial Sustainability Regulations. Similarly, other ‘Big 5’ leagues have their own
forms of financial regulations, as does the English Football League (the “EFL”), for clubs
playing in the Championship, League One and League Two.

3.2

The PSR are the Premier League’s version of financial controls – a regime applicable to all
clubs within its membership, first introduced in the 2013/14 football season.

3.3

In summary, the PSR regulates the level of losses clubs are allowed to incur over a period of
three years. The Premier League monitors this by requiring every club within its membershipto submit audited accounts for T-1 and T-2 (i.e. the two preceding years) together with its
estimated profit and loss account and balance sheet for T (the current year). During the relevant
period of this case, to reflect the circumstances of Covid, the PSR calculation used a two-year
mean of T-2 and T-3 (instead of T-2 only).

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2

3.4

If the aggregation of a club’s earnings before tax in T-1, T-2 and T-3 results in a loss, the clubmust also submit its ‘Adjusted Earnings Before Tax’ for each of T, T-1, T-2 and T-3. The‘Adjusted Earnings Before Tax’ means the earnings before tax excluding certain allowablecosts that it has incurred in those periods. The Premier League (like UEFA before it) recognisesthat certain types of expenditure are in the general interest of developing football. These
include, inter alia, depreciation of tangible fixed assets, expenditure on Women’s Football,expenditure on Community Development and expenditure on Youth Development. Further, in
relation to years 2019/2020, 2020/2021 and 2021/2022 certain COVID-19 costs were also
permitted to be excluded, only if separately disclosed either by way of notes to the Annual
Accounts or by way of supplementary information which reconciles to the Annual Accounts
and which has been subject to independent audit.

3.5

The aggregation of a club’s ‘Adjusted Earnings Before Tax’ for each of these four seasons(from T to T-3, T2 and T3 being averaged) is termed as its “PSR Calculation”. The PSR
Calculation is the basis upon which the Premier League determines whether a club has acted inbreach of the PSR. This depends on the extent to which the PSR Calculation reveals a loss. If
the PSR Calculation reveals a loss:(a)

Up to £15m: the Premier League will assess whether the club is in a position to pay its
liabilities until the end of the following year (i.e., T+1).

(b)

Greater than £15m, but less than £105m: the Premier League will ask the club for (i)financial forecasts for the next two years (i.e., T+1 and T+2); and (ii) evidence of‘Secure Funding’, or in other words equity funding (an injection for funds in return forshares) as opposed to any form of debt (such as introducing the funding by way ofloans), to cover this maximum permitted shortfall of £90m.

(c)

Greater than £105m: the Premier League will treat the club as being in breach of the
PSR and is required to refer the matter to a Commission by way of a Rule W complaint.

3.6

The Commission notes that the PSR effectively allow for a club’s owner(s) to invest £90m overa three-year period to cover these permitted losses, which is significantly more than is allowedin other competitions, such as at UEFA level or in the EFL.

3.7

However, where a club subject to the PSR was a member of the EFL during any/all of T-1, T2 or T-3, the permissible loss of £105m is reduced by £22m for each relevant season that theclub was a member of the EFL.

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33.8

In this case, Forest was promoted to the Premier League at the end of the 2021/22 season (T1), having also spent T-2 (FY21) in the EFL. The £105m threshold is therefore reduced by£44m to £61m, in that first season in the Premier League.

3.9

The Commission notes and agrees with the view of the Appeal Board in Everton FC Co Ltd v
FAPL (26/2/24) (the “Everton Appeal”) at [5]-[6]: “The PL Rules are aimed at ensuring fair
sporting competition, and fair revenue sharing, what is “fair” in each case being determinedby the clubs themselves. They are also designed to ensure a dynamic and robust
competition…The PL Rules and their enforcement are therefore not imposed on the clubs by
an external regulatory body. They are agreed by the PL clubs to ensure (among other things)
fairness and sustainability of the competition as [a] whole. When the Board of the PL enforces
the PL Rules against a club in breach it is, in effect, doing so on the mandate given to it by the
clubs in the PL Rules, and in the interests of all (and, certainly, all other) member clubs and,given the enduring nature of the PL, prospective member clubs to some indirect extent.”

3.10

Forest noted that the PSR give effect to the Financial Fair Play (“FFP”) principles adopted byUEFA in 2012. On 21 March 2012, the European Commission and UEFA issued a Joint
Statement identifying the objectives of the FFP regime as being to:

3.11

“-

Improve the economic and financial capability of clubs;-

Increase transparency and credibility;-

Improve governance standards in football;-

Encourage clubs to operate on the basis of their own revenues;-

Introduce more discipline and rationality in club finances;-

Protect the integrity and smooth running of UEFA club competitions;-

Encourage responsible spending for the long term benefit of football;-Protect the long-term viability and sustainability of European club football.”Forest’s FY23 PSR Calculation showed that its Adjusted Earnings Before Tax in FY20 and
FY21 was an average of c. £3m. It then made a loss of c. £40m in FY22 (when it was in theChampionship) and a loss of c. £52m in FY23 (its first season in the Premier League). This
resulted in an aggregate Adjusted Earnings Before Tax loss of £95,536,000, which exceeded

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4the applicable PSR Threshold (£61m, see above) by £34,536,000, which Forest has now
admitted in full.
3.12

Forest’s original PSR submissions claimed to be entitled to add back the amount of £11,211,000
in Covid-19 Costs for FY22. The Premier League considered, and Forest now accepts, that itis only entitled to add back £2.5m of Covid-19 Costs for FY22.

3.13

The loss has triggered a complaint under Rule W of the Premier League Rules (the “Rules”),
and the appropriate sanction for this breach in all the circumstances is what the Commission istasked with determining in this instance.

4

COVID-19

4.1

The impact of Covid began to be felt in early 2020. On 13 March 2020, the Premier League
suspended the 2019/2020 season, until 7 June 2020, with clubs then playing behind closed
doors. The 2020/2021 season commenced with clubs still playing behind closed doors. From
14 August 2021, games were once again played in front of crowds.

4.2

On 6 August 2020, the Premier League clubs approved amendments to the Rules to implementchanges to the PSR regime to reflect the impact of Covid. Those changes resulted in the Premier
League issuing guidance to the clubs (the “Covid Guidance”). The EFL followed suit andissued its own guidance to its clubs.

4.3

4.4

For the matter at hand, the important sections of the Covid Guidance stated:“B.

Process and Review

4.

In accordance with the Premier League Rules, COVID-19 Costs may only be excluded
from a Club’s Adjusted Earnings Before Tax if they are disclosed to the League:

4.1

by way of notes to the Annual Accounts; or

4.2

by way of supplementary information which reconciles to the Annual Accounts andwhich has been subject to independent audit.

5.

Further, COVID-19 Costs must be:

5.1

non-speculative;

5.2

quantifiable by reference to historical precedent or firm expectation; and5.3

certified by an Authorised Signatory of the Club as accurate and calculated incompliance with the provisions of this guidance.”

The EFL’s guidance was identical, aside from the reference to the “Premier League” in the firstline of the above.

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5

5

FACTS

5.1

Set out below is a summary of the relevant facts based on the parties’ written submissions,pleadings and evidence adduced in these proceedings. The Commission considers that theissues presented by this case (see section 7 below), although distinct, are based on matters offact that occurred simultaneously, over a period of time. For ease, the Commission has sought
to broadly summarise matters of fact as those relating to (A) Forest’s promotion from the EFL
Championship to the Premier League in May 2022 and its first season in the Premier League;(B) Forest’s PSR Calculation; (C) Forest’s transfer activity in the Premier League and thepermanent transfer of Player A; and (D) Forest’s PSR filing with the Premier League.

(A)

Forest’s promotion from the EFL Championship to the Premier League in May 2022

5.2

On 29 May 2022, Forest beat Huddersfield Town FC in the EFL Championship Play-off Final,
thereby achieving promotion to the Premier League for the 2022/23 season. This was the firsttime it would be competing in the Premier League since the 1998/99 season.

5.3

Fulham FC (“Fulham”) and AFC Bournemouth (“Bournemouth”) were the other two clubs
along with Forest to achieve promotion to the Premier League for the 2022/23 season. The lasttime Fulham and Bournemouth competed in the Premier League was in seasons 2020/21 and2019/20 respectively.

(B)

Forest’s PSR Calculation

5.4

Before being promoted to the Premier League, Forest was subject to the EFL Championship’s
Profitability and Sustainability Regulations (the “CPSR”). The CPSR, like the PSR, required
clubs within the membership of the Championship to make periodic financial filings, with apermitted loss of up to £13m per season over a 3-year period (i.e. a total permitted loss of£39m).

5.5

To that end, on 1 March 2022, Forest made its filing with the EFL in fulfilment of the CPSR
requirements; its last one before being promoted to the Premier League approximately threemonths later. In this filing, Forest claimed a Covid Add-Back allowance of £12,178,000.

5.6

On 4 July 2022, some two months after achieving promotion to the Premier League, Forest sent
the same information previously provided to the EFL on 1 March 2022 (see paragraph 5.5
above), to the Premier League.

5.7

On 31 March 2023, Forest sent the Premier League interim accounts for the six months ended

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6

31 December 2022, comprising its balance sheet, profit and loss account, cash flow statement
and related explanatory notes. These statements showed an unaudited loss of £26,845,000 for
the six-month period to 31 December 2022, as against an unaudited loss of £12,613,000 for thesix-month period to 31 December 2021.
5.8

On 31 March 2023, Forest provided the Premier League with its PSR Calculation based on a
projected league position of 12th at the end of the 2022/23 season. This PSR Calculation also
included the Covid Add-Back of £12,178,000 for FY22. Forest was also looking to add-backthe promotion costs of c. £20m that it had incurred (largely in the form of contractual bonuses
to its playing squad and the coaches) when it secured promotion to the Premier League.

5.9

On 2 June 2023, the Premier League informed Forest, in relation to its PSR Calculation for the2022/23 season, inter alia that: it would only allow a Covid Add-Back of £2.5m for FY22, notthe entire £12,178,000 claimed and it would not allow Forest to claim any allowances for costs
linked to promotion from the EFL Championship.

5.10

On 1 December 2023, Forest raised, and on 7 December 2023 the Premier League responded
to, queries in relation to Forest’s FY23 PSR Calculation, again dealing with the Covid AddBack and the promotion costs.

(C)

Forest’s transfer activity in the Premier League and the permanent transfer of Player A

5.11

Having secured promotion to the Premier League, Forest invested in a number of players in thesummer 2022 transfer window. Forest signed 19 new players permanently; signed three new
players on loan; elected to extend the contract of one player; sold two players for a fee; loaned
out nine players; and released two players.

5.12

During the January 2023 transfer window, Forest signed three new players permanently,
completed a transaction in respect of one player signed on a pre-contract basis and signed two
players on loan.

5.13

Forest’s net transfer spending over the 2022/23 season was £142.8m.

5.14

On 30 June 2023, Forest received an offer from Atlético Madrid (“Atlético”) of EUR 50m forthe transfer of Player A’s registration on a permanent basis, to which it counter offered withEUR 65m the same day. Discussions with Atlético did not progress further.

5.15

On 21 July 2023, Forest received another offer for the transfer of Player A’s registration on apermanent basis, this time from Brentford FC (“Brentford”). The offer included a guaranteed

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7

transfer fee of £32.5m but it was also declined by Forest following consultation with Mr
Marinakis.
5.16

Brentford made a second, improved offer of £35m for Player A on 24 July 2023. Forest declined
this offer once again that same day.

5.17

On 28 August 2023, Brentford made a third offer of £40m for Player A. This was also declined
by Forest. On the same day, Mr Vrentzos was instructed by Mr Marinakis to sell Player A
before the window closed.

5.18

On 1 September 2023, the last day of the summer transfer window, Forest agreed to transfer
Player A’s registration on a permanent basis to Tottenham Hotspur FC (“Spurs”). Pursuant toa transfer agreement between the two clubs, Player A’s registration was transferred to Spurs fora guaranteed transfer fee of £47.5m, payable to Forest in instalments.

(D)

Forest’s PSR filing with the Premier League

5.19

On 31 December 2023, Forest submitted its FY23 annual accounts and FY23 PSR Calculation
to the Premier League. As noted above, Forest’s FY23 PSR Calculation showed total losses of£86,825,000, exceeding the PSR Threshold of £61m by £25,825,000. In this email, Forest
stated that it “[…] admit[ted] a breach of the PSR and that [it] wishe[d] to enter into early
discussion with the Premier League concerning the extent of the breach and the possible
sanction”. Forest further submitted that its case differed from that involving Everton FC, “notonly due to [its] immediate admission of breach and full cooperation but also as to thesubstantial mitigation that exists”. Forest also placed on record that it was “taking steps toimprove its PSR position, by already agreeing the sale of one player for a significant profit in
the forthcoming [transfer] window”.

5.20

On 3 January 2024, the Premier League, following a preliminary review of Forest’s 31
December 2023 email and its enclosures, requested Forest to provide the following further
information in support of its PSR Calculation:(a)

A full breakdown, together with evidence, of the £11.211m claimed as the FY22 Covid
Add-Back, and analysis of how it complies with the Covid Guidance; and(b)

Mitigating factors upon which Forest intends to rely, along with reasons and documents
in support.

5.21

On 5 January 2024, Forest sent the Premier League a presentation by Twenty First Group, titled18-Mar-24

8

“Covid Impact Review – 2021/22 Season”, which it believed addressed the Premier League’s
request for further information summarised at paragraph 5.20(a) above (the “TFG Report”).
5.22

The Premier League responded to Forest on 10 January 2024, highlighting various flaws in its
assessment of the FY22 Covid Add-Back. The Premier League concluded that of the £11.211m
being claimed, Forest would be entitled to claim £2.5m. Thus, Forest’s FY23 PSR Calculation
resulted in a loss of £95,536,000, which breached the PSR Threshold by £34,536,000. The
Premier League invited Forest to comment on whether it agreed with this assessment of the
PSR Calculation which revealed a breach that was greater than Forest’s own assessment, before
submitting a complaint on 15 January 2024 in accordance with Rule W of the Rules.

6

PROCEDURAL HISTORY

6.1

On 15 January 2024, the Premier League served a PSR Complaint on Forest in Form 21, andin accordance with Rule W.24 of the Rules (the “Complaint”). It is the Premier League’s casethat Forest’s FY23 PSR Calculation demonstrates a loss of £95,536,000, resulting in a
£34,536,000 breach of the PSR Threshold.

6.2

On 17 January 2024, the Chair of the Premier League Judicial Panel appointed the Commissionin accordance with Rule W.26, as follows: Mr Mark A. Hovell (Chair); Mr Robert Glancy KC
and Mr Steve Holt FCA.

6.3

On 17 January 2024, the Premier League filed a copy of the Complaint with the Commission,
which was followed by Forest’s Answer in accordance with Rule W.29 of the Rules, on 30
January 2024. The Answer admitted the alleged breach in full (including the amount) andpresented various grounds of mitigation.

6.4

On 6 February 2024, a directions hearing had been arranged but was vacated on the day of thehearing after the parties agreed directions following the Standard Directions, which theCommission duly made.

6.5

On 13, 15 and 19 February 2024, Forest produced three tranches of disclosure in response torequests from the Premier League.

6.6

On 22 February 2024, Forest attended a fact-finding meeting with the Premier League.

6.7

On 23 February 2024, the Premier League made further requests for documents arising out of
the fact-finding meeting and Forest’s previous disclosure. Forest responded to these requests
with explanations and documents on 28 February 2024.

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96.8

On 26 February 2024, the parties exchanged evidence: the Premier League served the expert
report of Jonathan Brown of Ankura Consulting (Europe) Limited. Forest served witness
statements from Ioannis Vrentzos and Thomas Bonser. On the same day, Forest put forward a
draft Amended Answer, which was accepted by the Premier League.

6.9

On 1 March 2024, Forest served two further witness statements (being further statements fromMr Vrentzos and Mr Bonser) and an expert report from Jonathan Pryor of Evelyn Partners LLP.
Again, these were accepted by the Premier League.

6.10

On 5 March 2024, the parties exchanged their written skeleton arguments, and a draft timetable
for the Hearing was presented to the Commission.

6.11

On 6 March 2024, the parties submitted an agreed List of Issues.

6.12

On 7 and 8 March 2024, the Hearing took place in London.

6.13

At the Hearing, the Commission looked to adopt a flexible approach, allowing Forest’s Annex
to its Skeleton (as it claimed submissions by the Premier League that Player A could have beentransferred in the January 2023 window and its proposal regarding Forest’s early plea/level ofcooperation had taken it by surprise); additionally allowing submissions made by Forest on
Wolves’ PSR position and its sale of a player in June 2023; and allowing a number of lastminute authorities.

6.14

The Decision was made publicly available on 18 March 2024.

7

ISSUES

7.1

The parties produced the agreed List of Issues, as follows:“1)

The overriding issue for the Commission is as follows: The Club having admitted abreach of the PSRs, and the amount of the breach (£34,536,000), what is theappropriate sanction, having regard to any mitigating factors? This issue is broken
down into the following key questions:2)

Is the PL’s approach of adopting a sanction “starting point”, without considering theactual circumstances of the Club itself, and prior to considering mitigation,
appropriate?

3)18-Mar-24

What should any “starting point” be?
10

4)

Was the Club in a unique or exceptional position as a recently promoted Club on thebasis that: (i) it was subject to a lower threshold having spent the preceding two years
in the EFL; and/or (ii) it had not benefited from Parachute Payments? If so, does that
constitute mitigation?

5)

Did the Club have a reasonable and viable business plan for FY23, which included thesale of Player A during FY23? Did the timing and circumstances of the Club’s sale ofPlayer A after the year end constitute a mitigating factor?

6)

What were the costs incurred by the Club as a result of promotion and did they
constitute a mitigating factor?

7)

Was the Club’s genuine and honest belief that it was entitled to a Covid Add-Back of£12,178 million in FY22 reasonable? In any event, does that belief constitutemitigation?

8)

Did the Club’s inaccurate estimate as to the Merit Award constitute mitigation?

9)

Did the Club enjoy any sporting advantage from the breach? If not, does that constitutemitigation and/or is it otherwise relevant to the form of sanction?

10)

Does the Club’s prior disciplinary record constitute mitigation?

11)

Does the Club’s financial position in FY24 show a future “positive trend”? If so, doesthat constitute mitigation?

12)

In relation to the Club’s admission of the Complaint, and its agreed exceptional cooperation, what impact does that have on sanction?

13)

If any of the above items constitute mitigation, what weight should be afforded to suchitem(s)?

7.2

14)

In the light of all of the above, what is the appropriate sanction?

15)

Should any sanction be suspended? If so, on what terms?”

Determination of these issues involves consideration of a number of factual and expert issues
that have been developed during the course of the Hearing. In this Decision, the Commission
confines itself to consideration of matters that are necessary for the proper determination of theComplaint. The Commission has considered all the matters that have been raised, but determine

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11

only those that are required to be determined and then, not in the same order as the parties haveset out above, rather as follows:
7.2.1

Issues 1 and 14 are dealt with in Section 14 of this Decision;

7.2.2

Issues 2 and 3 are dealt with in Sections 9, 10 and 13 of this Decision;

7.2.3

Issue 4 is dealt with in Sections 12, 13 and 14 of this Decision;

7.2.4

Issue 5 is dealt with in Sections 12 and 14 of this Decision;

7.2.5

Issues 6, 7, 8, 9, 10 and 11 are dealt with in Section 12 of this Decision;

7.2.6

Issues 12 and 13 are dealt with in Sections 12 and 14 of this Decision; and7.2.7

Issue 15 is dealt with in Section 14 of this Decision.

8

THE BREACH

8.1

As noted above, Forest has admitted that it breached the PSR and that the quantification of suchbreach for Forest’s FY23 PSR Calculation is a loss of £95,536,000, resulting in a £34,536,000
breach of the PSR Threshold. The Commission accepts this quantification of the breach.

9

SANCTION PRINCIPLES – APPROACH TO SANCTION

9.1

The Commission’s powers in relation to sanction are contained in Rules W.50 and W.51. Rule
W.50 states: “Upon finding a complaint to have been proved the Commission shall invite the
Respondent to place any mitigating factors before the Commission.” Rule W.51 lists a numberof sanctions that a Commission may impose, ranging from a warning through to expulsion fromthe Premier League, concluding with the power to make any such other order as theCommission thinks fit. The appropriate sanction is to be determined by the Commission having
heard and considered all aggravating and mitigating factors.

9.2

The Commission notes that the Premier League sought to argue at the first instance hearing inin Everton FC Co Ltd v FAPL (17/11/23) (the “Everton First Instance”) that on 10 August2023 the Premier League Board had formed a view as to what it considered to be appropriate
to breaches of the PSR. Ultimately, the Commission in the Everton First Instance determined
not to follow that approach. The Premier League has not asked this Commission to follow iteither.

9.3

However, the Premier League made a number of submissions as to the principles that should
1218-Mar-24

be applied by the Commission when determining the appropriate sanction, having been able tosee the approach taken by the Appeal Board in the Everton Appeal. The Commission notes that
the Everton Appeal is the first appealed decision that the Premier League (and indeed itself)
can refer to regarding PSR breaches.
9.4

Firstly, the Premier League considered the purpose to be achieved. A sanction should be
proportionate: it “must achieve the aims of the PSR but not exceed that which is reasonably
required to achieve those aims” (the Everton Appeal at [194]).

9.5

The aims of sanctions for a breach of the PSR, as approved in the Everton Appeal at [197], arefourfold, citing EFL v Derby County Football Club Ltd (30 June 2021): “(i) to punish the clubfor the breach, (ii) to vindicate other clubs which had not engaged in conduct that breachedthe P&S Rules, (iii) to deter future breaches of the P&S Rules, whether by the relevant club orother clubs and (iv) to restore/preserve public confidence in the fairness of the EFL competition[which] necessarily incorporates the aim of ensuring that the competition is in fact fair.”

9.6

According to the Appeal Board at [199]-[200], the “primary purpose is to protect the integrityof the relevant competition by restricting the level of financial risk a club might take”.
Deterrence is “an important overlapping aim”. Further, vindication of compliant clubs is “alsoimportant” while punishment is “far less important”.

9.7

Secondly, the Premier League submitted that a points deduction is the appropriate sanction fora PSR breach. The Premier League submitted that while the Commission has a wide discretion
and a broad range of sanctions available, “leaving any mitigation aside, only a points deduction
is appropriate for a breach of rule E.51… any breach of rule E.51 is [a] serious matter. It likely
gives the club in breach an unfair sporting advantage and a correspondent revenue advantage.
In our view, only a points deduction, with its immediate and overt effect, has the appropriate
power of disincentive for clubs to remain within the upper loss threshold required to maintainthe aim of an FFP regime. It also, in our view, addresses both the financial and sporting aspects
in the most appropriate way” (the Everton Appeal at [202]).

9.8

Further:
9.8.1“[A]ny PL club could properly predict that, leaving aside any particular powerful
mitigation, any breach of the PSR would result in a significant points deduction”(the Everton Appeal at [206]).

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13

9.8.2A fine or a player registration embargo will not be appropriate for the reasonsdescribed in the Everton Appeal [203]-[204].

9.9

The Premier League then considered the minimum points deduction reasonably required toachieve those aims. Again, referring to the Everton Appeal, the Premier League noted that the
Appeal Board took into account the following “benchmarks”:
9.9.1

The guidelines adopted by the EFL. These provide for sanctions to reflect the extent
of a breach in monetary terms, with a maximum sanction of 12 points (leaving
aside any particular aggravation) and a minimum of three points (absent any
particular mitigation), albeit the structured approach of the EFL Guidelines cannot
automatically be translated across to the Premier League in a linear way, and “thetemptation to take financial risks to enhance sporting achievement in the PL isparticularly high” (at [213] of the Everton Appeal);

9.9.2

The Premier League penalty for insolvency. Under Rule E.35, a Premier League
club suffers an automatic deduction of nine points on an “Event of Insolvency”(although that automatic sanction may be accompanied by other disciplinary
sanctions for breaches of other rules which the Event of Insolvency (or theunderlying circumstances) may trigger) (at [217] of the Everton Appeal);

9.9.3

The Premier League refer to the following facts as stated in the Everton Appeal at[218]:(i)

114 points are available over the course of a season. (Although the Appeal
Board gave a figure of 108 at [218], which the Premier League noted wasslightly wrong. There are 38 games for each club in a season with threepoints available for a win in each game, totalling 114);(ii)

A three-point deduction is equivalent to erasing one match win whereas
one point is equivalent to erasing one draw;(iii)

The median points earned per season is 49 and the mean is 52;(iv)

The broad view of the Premier League Board that breaches of Rule E.51
are a serious matter requiring a substantial points deduction sanction was
found to be “worthy of some respect” by the Appeal Board in the Everton
Appeal.

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14

9.10

The Premier League submitted that, on the facts of Everton, where that club had exceeded the
PSR Threshold by £19.5m, the Appeal Board described the breach as significant “both inpercentage and monetary terms” (at [226]) which conferred “a significant sporting advantage
which, although impossible precisely to quantify, requires a deduction of some points in order
simply to eradicate that advantage and to be fair to other PL clubs”. After considering“modest” further aggravation and “modest” mitigation, which might be seen as having
cancelled each other out, the Appeal Board imposed a deduction of six points.

9.11

Finally, the Premier League argued that it would not be appropriate to suspend any points
deduction. An immediate deduction is appropriate in PSR cases, and a suspended deduction
will generally be inappropriate, for the reasons given in the Everton Appeal at [228]. In
particular, suspension “would not address the position in the league itself, nor would it address
the potential profit share advantage that not having any deduction in points would have”.

9.12

Forest submitted that the Commission’s discretion as to sanctions for breach of the PSR is “verywide” and no applicable guidelines have been developed by the Premier League to guide that
discretion: see the Everton Appeal at [188] and paragraph 9.2 above. The Complaint
acknowledges at its paragraph 4.1 that “the Commission may select from a wide range ofpowers” and has “a wide discretion”. Forest argued that a points deduction is not the only (oreven always the appropriate) option.

9.13

Forest argued that the Commission’s broad discretion is, however, limited by the purposes of
the PSR regime and of the sanctioning powers:
9.13.1

Paragraph 4.1 of the Complaint notes that a sanction “must achieve, but also go nofurther than is reasonably necessary and proportionate to achieve, the legitimate
purposes of . . .[i] punishment of the Club in breach . . .[ii] vindication of compliant
Clubs and the encouragement of future compliance . . . [iii] deterrence of similar
conduct by any and all Clubs in the future . . . [and] [iv] restoration of the public’s
confidence in the integrity of the competition”: see also EFL v Derby County
Football Club Ltd (30 June 2021) at [20-23].

9.13.2

Whilst Forest agrees with that analysis in the broadest terms, it warned that the
proposition needs to be treated with caution. It is important to keep the underlying
purposes of the PSR as an FFP scheme at the forefront. Punishment is not theoverriding or even primary aim of a sanction in this area of football regulation.
Indeed, the sanction need not be punitive at all. The primary purpose of the regime

18-Mar-24(and of any sanction) is to address any unfairness, i.e. “to protect the integrity of15

the relevant competition by restricting the level of financial risk a club might take,in the case of the PL, to a level and in the manner in which the PL clubs agree”:
see Everton Appeal at [199]. That means avoiding unfairness for compliant clubs
and ensuring that lasting benefits (if any) are not conferred by the breach: see
Everton Appeal at [200]. But it also needs to consider fairness in relation to theclub in breach, and to ensure that it is not sanctioned in a manner that is unfair,arbitrary, or disproportionate in all the circumstances.
9.14

Forest concluded that any sanction must go no further than is reasonably necessary andproportionate to achieve the legitimate purposes of the PSR regime, i.e., to protect the integrityof the Premier League, ensure fairness for all clubs, and (albeit to a lesser extent) to deter similar
conduct in the future. The goal is not to punish for punishment’s sake.

9.15

Overall, the Commission notes the above approaches of the parties are broadly similar, bothdraw from the Everton Appeal. Both agree that the primary aims of any sanction are not somuch as to punish Forest, but to protect the integrity of the competition, people’s confidence inthe competition and to ensure fairness between the clubs in a proportionate manner.

9.16

The Commission took note of the Premier League’s request for consistency and it does itself
draw from much that is in the Everton Appeal. Whilst the Rules provide the Commission witha wide discretion of sanctioning powers, it can see that having a starting point (as the EFL havein its Guidelines and as the Appeal Board used) assists clubs and the regulator.

9.17

However, the Commission can see that there is a risk in focusing completely on the amount ofany breach in isolation: the context behind a breach should be understood too. In the case athand, matters like the reason for the excess and the “uniqueness” of Forest (together, theparticular circumstances of the club) seem to fit better in this initial starting point analysis thanin mitigation.

9.18

The Commission considers that it would assist to band breaches into “minor”, “significant” or“major” breaches, to remove the focus on the absolute number, especially when different PSR
Thresholds can apply. However, that approach can be adopted/disregarded as otherCommissions see fit - what is clear to the Commission here is, just like Everton, that Forest’s
losses are “significant”, as are its excesses over its PSR Threshold, so that it should face a points
sanction. As such, and as the Appeal Board in the Everton Appeal determined at [201 to 204],
other available sanctions, such as warnings, fines, embargos and the like are not appropriate in
the case at hand.

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16

9.19

Where a PSR breach is “minor”, then it will be for other Commissions to determine if any
points deduction is necessary, appropriate or proportionate but if the breach is properly
described as “major” then it may be the case that even a very severe sanction such as expulsion
is more appropriate.

9.20

The Commission agrees with the Appeal Board in the Everton Appeal that the entry point for asignificant breach should be a deduction of 3 points and this will have the added advantage ofachieving consistency with that decision. The Commission will then consider both Forest’s
particular circumstances and the quantum of the breach, that might slide it up or down the points
scale to find its starting point, before mitigation (and aggravation, if there was any) is
considered; and finally dealing with such matters as suspension.

10

SANCTION PRINCIPLES – AGGRAVATING/MITIGATING FACTORS

10.1

The Commission notes the helpful comments made by the Appeal Board in the Everton Appeal.
The Premier League too noted at [80]-[82] that it “is well-recognised in the context [of]breaches of the criminal law that circumstances in relation to the offence or the offender may
warrant a higher or lower sentence/sanction, because they indicate higher or lower culpability
and/or they reflect higher or lower consequential harm…as a matter of principle, thecircumstances of a breach of rule E.51 may similarly aggravate and/or mitigate for sanctioning
purposes under the PSR in the same ways…However, circumstances are only mitigating or
aggravating when marked against the aims of the regime in which sanctions are being
imposed… We have already considered the aims of FFP and the PSR…Mitigating andaggravating circumstances – like the assessment of proportionality…must be consideredthrough the prism of those aims.”

10.2

The Premier League supported the position of the Appeal Board that the fact that theconsequences of imposing a sanction may seem harsh is a matter of little weight. In the Everton
Appeal at [82]-[83], it held that consequences for the club and its supporters “are likely to beof less significance in proceedings for breach of rule E.51 because the overarching concern
there is the integrity of the PL competition”. It referred to a “sound and well-established” line
of authority that “the actual, projected, probable or possible position of a football club at theend of a season has been disregarded in cases in which a points penalty has been considered
and/or imposed...To approach the sanctioning exercise in any other way, in our view, would bea failure to treat the clubs in the PL equally and fairly”.

10.3

Finally, the Premier League submitted that where Forest seeks to rely on a mitigating factor,
the onus is on Forest to prove both the underlying facts and the principle that they should count17

18-Mar-24

as mitigation, having regard to the aims of the PSR. In the Everton Appeal at [87], the Appeal
Board stated that: “In respect of a possible mitigating circumstance, if the respondent (in thiscase, the Club) does not satisfy that burden of proof on that issue [i.e., circumstances tending
to decrease culpability or harm], then those circumstances are left entirely out of account. If the
respondent satisfies the Commission as to that tendency, then the Commission must take thatcircumstance into account, giving it the weight that it (the Commission) considers
appropriate.”
10.4

Forest acknowledged that the Commission must consider all relevant aggravating andmitigating factors. It should take into account any relevant benchmarks and not exercise its
discretion in a vacuum. Forest noted that the Commission could take some assistance from theRules themselves, including the approach taken to an Event of Insolvency (for which a ninepoint deduction is imposed). Regard may also be had to the non-binding EFL P&S Guidance,
together with the EFL case-law: see the Everton Appeal [182-192]. However, imposing asanction is not a “mathematical exercise” [207 of the Everton Appeal] and the approach takenin the EFL “cannot automatically be translated across in a linear way” (at [213]). The EFL
Guidance therefore offers “some useful assistance in assessing appropriate sanctions forbreach of the PSR” but cannot operate as a mathematical or definitive guide (at [213]).
However, Forest concluded that in this case it was in such a unique position, and thecircumstances are so exceptional, that reliable comparators from other cases are likely to be
few and far between.

10.5

The principles are clear to the Commission from the above. The Everton Appeal offers
guidance. The Commission notes that the party asserting an aggravating or mitigating factor
bears the burden of proving that factor on the balance of probabilities.

10.6

As such, the Commission will next consider the specific aggravating and mitigating factors
advanced by the parties.

11

AGGRAVATING FACTORS

11.1

In the matter at hand, the Premier League does not rely on any points of aggravation save forthe size of the breach itself. The Commission notes there were no aggravating factors raised at
all in the Complaint.

11.2

Forest noted that the extent to which a club has exceeded the PSR Threshold could be a possible
aggravating factor in some cases, as was put by the Appeal Board in the Everton Appeal [225].
However, Forest argued that caution is required in trying to apply that sort of approach to this18-Mar-24

18

case for three reasons:11.2.1First, the reason why breaches of the normal £105m PSR Threshold are generally
treated seriously is that the threshold itself is recognised to be “generous” (theEverton Appeal [226]). However, for Forest, as a newly promoted club, thethreshold was substantially lower at £61m;

11.2.2

Secondly, Forest was unable, when investing sums in its first year in the Premier
League, to spread the costs of player investment over a three-year reporting cyclein the way other Premier League clubs do; and11.2.3

Thirdly, the Complaint acknowledges at paragraph 7.1 that “the Premier League
has not identified any aggravating factors at the present stage”.

11.3

The Commission notes all Forest says and determines to consider the quantum of its breachover the PSR Threshold as part of its consideration when calculating the starting point of the
sanction, rather than to consider this as aggravation, else there would double counting.

12

MITIGATING FACTORS

12.1

The Commission notes Forest’s six broad heads of mitigation:
12.1.1Firstly, its “unique position” as the only club in the Premier League in the 2022/23
season that was either not previously in the Premier League, and therefore able totake advantage of the higher PSR Thresholds, or not newly promoted with thebenefit of Parachute Payments;

12.1.2

Secondly, it breached the PSR Threshold because the sale of Player A occurred ashort period later than was necessary, which Forest describes as a “near miss” or“golden mitigation”;

12.1.3

Thirdly, the reason for the excess namely that most of the excess loss was incurred
due to: (i) the price of promotion to the Premier League; (ii) a reasonable relianceon the FY22 Covid Add-Back; and (iii) a reasonable but ultimately inaccurate
estimation as to the Merit Award Forest would receive;

12.1.4

Fourthly, Forest obtained no sporting advantage as a result of the breach;

12.1.5

Fifthly, Forest (i) had a good prior record with respect of FFP rules; (ii) admitted
the breach at the first opportunity; and (iii) had made further profitable player sales

18-Mar-24

19during the January 2024 transfer window, therefore demonstrating a “positive
trend”;
12.1.6
12.2

Finally, Forest had cooperated with the Premier League.

The Commission notes that some of these issues cross over into where the Commission should
set the starting point for any sanction. The main two being the “uniqueness” of Forest and, inpart, the reason for its excess. These were considered by the Commission as both potential
mitigating factors, but also as factors to consider when looking where to set the starting point.

12.3

The Premier League disputes these six areas in the main, as is set out below, however, it has
accepted two points of mitigation: Forest (a) admitted the Complaint in full at the firstopportunity, and (b) has cooperated extensively with the Premier League before and during thedisciplinary process. The Premier League submitted that each of these matters constitutes“substantial mitigation which together justify a material reduction in sanction.”

12.4

That noted, the Commission will now consider these broad heads of mitigation, the parties’
respective positions on each head and provide its determination:“Unique” position of Forest
12.5

Forest first considered the Rules to explain why it was of the view that it was in a “unique”
position. The purpose of the reduction in the PSR Threshold for promoted clubs at Rule E.50,
on account of membership of the EFL previous years, is to ensure that clubs cannot unfairly
compete in the EFL, effectively buying promotion, and then escape sanction in the Premier
League. That is the mischief the rule is aimed at. It is not aimed at those, like itself, who comply
with the EFL P&S Rules during the EFL season but then overspend the reduced PSR Threshold
applicable in the Premier League as a result of preparing for their first season in that league
during the summer transfer window.

12.6

Forest additionally made the comparison with all other 19 Premier League clubs competing inthe 2022/23 season. It was recently promoted but without the benefit of previous Parachute
Payments. It was therefore in a particularly disadvantageous financial position relative to all
the other clubs, and at a concomitant sporting and financial disadvantage. That basic unfairness
is a fact, not a criticism of the PSR regime, but one that can and should be taken into accountwhen assessing what fairness requires in terms of a sanction. In that season every other club
had either retained Premier League status (and benefited from the higher PSR Threshold than
Forest) or, in the case of Fulham and Bournemouth, had only recently been in the Premier

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20

League (Fulham in the 2020/21 season and Bournemouth in the 2019/20 season). Both were inreceipt of substantial Parachute Payments which allowed them to continue to retain and/or
otherwise invest in a playing squad closer to that of an established Premier League club. Fulham
had received £44.41m in Parachute Payments in the 2021/22 season and Bournemouth hadreceived £79.77m in Parachute Payments for the 2020/21 and 2021/22 seasons. They were also,of course, carrying squads of considerably greater value and Premier League experience than
Forest.
12.7

Forest argued that it had none of these benefits to smooth its transition from the Championshipto the Premier League. The critical expenses and losses that Forest claimed took it over its PSR
Threshold were incurred after promotion was secured, and in preparation for the Premier
League.

12.8

Forest submitted that it was in the rare position of obtaining promotion in compliance with the
EFL P&S Rules: (i) for the first time in many years; (ii) without the benefit of Parachute
Payments; and (iii) without having breached the EFL P&S Rules and the EFL Annual Upper
Loss Threshold. Clubs in such a position will be competing in the Premier League at asignificant financial and sporting disadvantage to all other clubs, and with much greater
vulnerability to a single transaction creating a significant effect or distortion on its financial
position, because they cannot benefit from the significantly higher thresholds in the three-year
reporting period to “smooth any peaks or troughs”, nor benefit from Parachute Payments thatsoften the financial blow on a club relegated from the Premier League and/or allow it to be able
to invest in and/or retain a playing squad closer to that of a Premier League club without risking
breaching the applicable PSR Threshold.

12.9

Additionally, Forest argued that it should not be treated as if it were in the same position asother Premier League clubs in the 2022/23 season, nor should it be treated as if it had exceeded
the “generous” £105m threshold. That will be highly relevant to any assessment of how far, if
at all, the breach has: (i) conferred any sporting or financial advantage on Forest; and/or (ii)impacted the integrity or fairness of the Premier League competition. Forest acknowledged that
Mr Brown’s report suggests that Forest spent significantly more on players than other newly
promoted clubs and clubs promoted without Parachute Payments since the PSR regime was
first introduced in 2013/14. However, this report fails to consider the unique circumstances ofForest. Mr Brown’s report overlooks the fact that Forest’s business model was and is“sustainable and sound”.

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21

12.10

Finally, Forest considered the position of an established Premier League club, such as Everton,
spending above a far higher PSR Threshold, over a number of years in the Premier League, andcompared it with itself, that is assessed against a significantly lower (by £44m) PSR Thresholdin circumstances where its promotion year was inevitably more vulnerable to distortions
affecting its financial position. It also looked to differentiate between its position (spent in
preparation for the Premier League season after the close of the Championship) and aChampionship club which spent a similar amount before the close of the Championship season
to secure promotion. This is important because Rule E.50 has been designed to ensure theintegrity of both the Championship and the Premier League competitions.

12.11

The Premier League acknowledged that (a) non-recently promoted clubs had the benefit of ahigher PSR threshold, and (b) the other two clubs promoted alongside Forest had the benefit ofsubstantial sums in Parachute Payments. The Premier League relied upon the evidence of its
expert, Mr Brown, who explained how Parachute Payments work and has produced a schedulesetting out the amounts of those payments. However, in both cases, that is what the Rules
provide. The effect of the lower threshold for seasons spent in the EFL is to replicate thethreshold applicable in the EFL P&S Rules. It is obviously legitimate to hold clubs to the EFL
threshold in respect of seasons spent in the EFL. Applying the ordinary £105m threshold to a
newly promoted club would allow it to incur losses of £79m in its first financial year in thePremier League, which would not further the objective of sustainability.

12.12

The Premier League noted that Forest had to take the PSR as it found them. It cannot say that
the PSR operate in a way which is detrimental to its interests, and thereby ask the Commission
to redress the balance by treating its breach of the PSR more leniently than it otherwise would.
That would be to subvert the PSR, as agreed by the Premier League clubs.

12.13

Furthermore, the Premier League noted the “very substantial” (as Mr Bonser referred to it)
player acquisition activity that Forest engaged in during the summer 2022 transfer window. It
then undertook further signings in January 2023. Mr Brown pointed out that Forest’s net
transfer spending in 2022/23 was £78.7m (123%) higher than the average net transfer spendingof all Premier League clubs (excluding Chelsea) and its incoming transfer volume was not only
the highest in the Premier League but nearly double the next-highest club.

12.14

Whilst Forest submitted that winning promotion through the play-offs meant that it hadsignificantly less time to plan for its time in the Premier League than other clubs, it does notconstitute mitigation: it is simply how the promotion system works. Clubs are expected tocomply with the PSR however and whenever they secure promotion.

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22

12.15The Commission does question the use of “unique” in Forest’s submissions. It was clear from
Mr Brown’s report that 12 other clubs over the last 10 years of the Premier League (so 13
including Forest) had been promoted without the benefit of a Parachute Payment the year
before. They then joined a league where the other 17 teams all had a Premier League squadand, in the main, would have the benefit of the full £105m PSR Threshold. This is not a uniqueoccurrence, rather it is something that has happened every season in the previous 10 seasons,on average.

12.16

There is an overlap between the EFL and Premier League and how they manage clubs thatcome up and go down. The Premier League clubs are all in the joint venture (i.e. they are all
shareholders in the Premier League, along with The FA) and are able to shape its Rules,
including the PSR. Over the years the clubs have determined to deal with the overlap, how totreat clubs coming up and going down and what PSR Thresholds should apply to them. If the
clubs, including a number who would have shared Forest’s “uniqueness”, had wanted to amend
the PSR and changed the thresholds, they could have done so. Ultimately, Forest should havebeen well aware of what threshold it would be working to and how much additional income it
would receive as a new Premier League club. It made the commercial/ business decision of how
much of that income to invest in its squad.

12.17

There was a fair bit of expert evidence from Mr Brown and Mr Pryor at the Hearing. Their
opinions did not differ dramatically. There was an acknowledgement that their reports were not
perfect (the use of Transfermarkt data was the best source they could find for publicly available
information and they had a different approach on how to adjust for inflation over the 10 years
that were reviewed – by using CPI or the level of wage inflation in the Premier League) but,taking the most favourable position for Forest, its spending was not hugely out of kilter withsome other comparator clubs that also decided to invest to compete in the Premier League (thePremier League noted that some clubs came up, expected to go back down, but with the
Parachute Payments, so spent little to compete in the league).

12.18

The Commission noted Forest’s argument that it was in a different position to both
Bournemouth and Fulham who also came up in the same season as Forest, as they had enjoyedParachute Payments in the one or two seasons before. However, there was no evidence to showthat the Parachute Payments had been used to enable those clubs to invest, rather theCommission's understanding was that these payments were able to soften the income losses forthe clubs when they went down (when their expenditure may not be reduced as quickly). The
Commission noted that both Fulham and Bournemouth initially spent less when they were
promoted, but there was no real evidence as to why this was the case. The Commission was not

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23

able to draw any conclusions other than that different clubs take different decisions. To theCommission this is not a mitigating factor, it is simply the reality of comparing a club that had
a Parachute Payment the year before with one that did not and that they might act differently
from one another. Indeed, Fulham and Bournemouth may have made different businessdecisions from each other. It is the decisions that Forest made that are of most relevance in thecase at hand.
12.19

It is obvious that such a club might need to spend more to compete in the Premier League, but
it receives a significant income boost (the accounts for FY23 show that its revenues increased
from £29.7m to £154.8m following promotion to the Premier League) and would be aware of
how much it could spend and how much could be covered by its owners over a three-year
period. We therefore take the view that the comparison with other clubs takes Forest nowhere.
The PSR are to promote sustainability.

12.20

Forest could control what it spent, how it was amortised (by the length of contracts they gave
the players) and how much it invested. These were a series of commercial decisions it took,
working within a framework it was fully aware of.

12.21

It would have been clear to Forest that to comply with PSR it would need to sell players as wellas buy, if it intended to bring a high number of players in during the summer 2022 window (seeparagraph 5.11 above). By the end of September 2022, it was clear that PSR was a real issue toForest, yet it continued to acquire players in the January 2023 window.

12.22

The Commission noted that there were few documents that demonstrated what Forest was doing
about its PSR issue. There were no board meeting minutes and only a few emails or messages
included within disclosure. Most communications were apparently oral. Mr Bonser, the FinanceDirector at Forest, did produce some forecasts of its PSR position. The first was on 22 August
2022, the next was a week later and the next was on 29 September 2022. During this period,
Forest was investing in players, so the PSR forecast was changing, but the last of thesecommunications from Mr Bonser was forecasting a significant breach, absent intervention fromthe Club. These communications did not deter the Club from bringing further players in over
the January 2023 transfer window (see paragraph 5.12 above).

12.23

Forest’s business model is to acquire players, showcase them on the pitch and then sell themlater at a profit. However, it would take some time to promote some players in the Premier
League shop-window, before they could be sold at a profit. It was accepted by Forest that selling
Player A was its only solution to the PSR breach it was forecasting. In the Commission’s view,
rather than this demonstrating Forest’s alleged “uniqueness”, the evidence shows that Forest
24

18-Mar-24

were “sailing close to the wind” and were “leaving all its eggs in one basket” because it had tosell Player A in the first two weeks of a summer transfer window.
12.24

The Commission did not see the comparisons with other clubs as evidencing a mitigating factor,
nor one that would help with the setting of the starting point for the sanction. Rather, theCommission concluded that Forest knew the Rules, including the PSR, and took informed
business decisions aware of the risk of a PSR breach that it must bear the responsibility for.

12.25

The Commission therefore concluded that this is neither a mitigating factor, nor does it help it
when providing context to the Commission as it sets the starting point for any sanction.

Player A: the “near miss” or “golden mitigation”
12.26

Forest submitted that it breached the PSR Threshold because of a “near miss” as to the timingof selling Player A, and not as a result of reckless or unsustainable spending. It had a reasonable
and viable business plan that involved up-front costs to compete in the Premier League but
would substantially reduce losses to comply with the PSR through the sale of the key“homegrown” Player A (in addition to other sales). This is not a case of irresponsible financial
management, instead, Forest adopted a legitimate and accepted business model of player
trading, just failing to achieve PSR compliance because Player A was sold on 1 September
2023 rather than by the end of June 2023.

12.27

From around the end of January 2023, Forest decided that it would need to sell one of its mostimportant players to ensure PSR compliance. Player A was the obvious and only single player
whose sale could achieve compliance and it was always planned to sell him. The majority ofthe discussions about sounding out other clubs and sporting directors in respect of Player A
took place around May and June, after the appointment of Mr Ross Wilson (Forest’s Sporting
Director) on 12 April 2023. As at June 2023, Forest had valued Player A at £50m. Because
Player A was a “homegrown” player practically the whole of that sum, less any capitalised
agent fees, would be treated as profit for the purposes of the PSR calculation.

12.28

Forest was aware that Player A was in the process of changing agents (which was completed
only on 4 July 2023), which made an early deal more difficult. However, Forest continued toseek out buyers for Player A in June 2023, engaging with Unique Sports Management (Player
A’s new agents), Brentford, Spurs, Manchester United, Aston Villa, Manchester City, andAtlético. Forest submitted that by 30 June 2023, it had made every effort to generate a formal
offer for Player A but none had been received at that stage that were capable of being completed
in time.

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25

12.29Efforts continued and Player A’s registration was sold for very close to the valuation placed onhim. On 1 September 2023 Spurs agreed a guaranteed up-front fee of £47.5m for the transfer
of Player A – i.e. only £2.5m less than Forest’s valuation, confirming that it was a reasonablevaluation.

12.30

Forest submitted that the sale was not possible before the FY23 end. The timing of the transfer
was dependent on the timing of offers from prospective purchasers and the wishes andaspirations of Player A. The first formal offer for him was at Euro 50m from Atlético on 30
June 2023, but that offer was contingent on a player being sold and was rejected. In any event,because of its contingency, it would have been impossible for the transfer to have been
completed that day. The first formal offer from a Premier League club was from Brentford on
21 July 2023 at £32.5m, which then increased on 24 July 2023 to £35m. A third offer wasreceived by Brentford on 28 August 2023 for £40m. Each of those offers from Brentford were
well below the value placed on Player A and were, in any event, after the financial year end.

12.31

In Sheffield Wednesday Football Club v Football League Limited (SR/196/2020) (4 November2020), the club had exceeded the EFL upper loss threshold by 46.7% (equivalent to exceeding
the normal PSR Threshold by £49m) and had a worsening trend of losses than Forest. Further,
there were no Heads of Terms signed by the time Sheffield’s deadline passed, only discussions
around the possibility of its owner acquiring the stadium. Nevertheless, the starting point
penalty of 12 points according to the EFL Sanctioning Guidelines (and as applied by the first
instance Commission) was reduced by 50% to six points on appeal because the original
Commission had failed to take into account as a substantial mitigating factor that if the club
had sold its ground less than three weeks earlier the EFL P&S Rules would not have beenbreached at all. That was described as “a significant mitigating factor”. In the Everton Appeal[214], it was described as “golden mitigation”.

12.32

Forest argued that the same approach should be applied to it, as it narrowly missed PSR
compliance because of the timing of the sale of Player A. Whatever starting point theCommission thinks would be appropriate in this type of case, a similar 50% deduction should
be made.

12.33

At the Hearing, Forest’s position was that a sale of Player A at any time during the summer
2023 transfer window would constitute a “near miss”. Players can only be sold during the twotransfer windows (summer and winter). Further, a sale in the next window (January 2024) could
also be a near miss, but if it was the following summer 2024 window, then Mr De Marcoconceded it would no longer be a “near miss”.

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12.34

The Premier League challenged Forest’s “reasonable and viable business plan”. It had spentheavily in FY22 and incurred a loss of £40m in its Adjusted Earnings Before Tax. Together
with the loss in the previous years, it would have been clear to Forest early in the season (andwell before “April/May 2023” as it claimed) that its loss for FY23 needed to be materiallylower, rather than higher, than that in FY22, if it was not to exceed the £61m PSR Threshold.
By 29 September 2022 (following the end of the summer transfer window), Mr Bonser prepareda forecast showing a PSR breach of £6.9m. Further forecasts prepared in December 2022 also
showed a breach. It is not therefore clear why Forest did not take steps to address the looming
PSR problem during the January 2023 transfer window (instead making further signings).

12.35

This left Forest having to sell Player A in the first two weeks of the summer transfer window(which opened on 14 June 2023). Indeed, Mr Vrentzos says that “From around February 2023,
I knew that the Club would have to sell a valuable…player for significant profit in order toensure compliance with the PSR. Due to my understanding of football finance and accounting
I knew that the player would have to be Player A…This was obvious…”. Mr Bonser says that“in April and May 2023… there was regular discussion about the fact that, in order to comply
with the PSR, the Club needed to realise circa £30m profit on player sales by 30 June 2023…
Further, there was a common understanding within the SMT that Player A… was the playerthat needed to be sold”.

12.36

The Premier League submitted that although an early sale might have been incompatible withobtaining the target valuation, or the fee that could have been obtained later in the window,
Forest should have had no choice: the sale had to happen before the end of June 2023, or it
would breach the PSR Threshold. Further, it was expressly warned by the Premier League on
6 June 2023 about this.

12.37

The Premier League criticises the actions Forest took. It did little to market Player A proactively
during FY23; and the account given by Mr Vrentzos as to what Forest did is relatively thin,given the number of clubs who might have been in a position to buy Player A’s registration and
who would be likely to be interested in acquiring his services. Forest’s view of Player A, as
expressed in one email, was that he is “extremely talented”.

12.38

On 30 June 2023, the last day of FY23, Forest received an email from Atlético with the subject
line “Offer” and a set of proposed commercial terms listed under the heading “OFFER”,
including a transfer fee of €50m (£42.9m). The email stated that “Any agreement is expressly
subject to the following Conditions: reaching an agreement with the Player, Player passing
medical… and the previous authorization by the Spanish League to register the player”.

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Forest’s response was to make a counter-proposal of €65m (£55.8m) (and increases to some ofthe proposed contingent bonuses). No documents relating to the internal discussion leading tothis response were disclosed by Forest.
12.39

Mr Vrentzos says that “This was not an offer that was capable of acceptance as we knew that
Atlético de Madrid had to sell a player before it could sign Player A”. The Premier League
submitted that the offer could have been accepted on the conditional basis on which it was
made. Entering into a conditional agreement during FY23 which would hopefully become
unconditional very shortly after the year end would have been a “true near miss” and would
have constituted “very powerful” mitigation.

12.40

In any event, the situation in which Forest found itself in June 2023 is precisely the situation
described by the Appeal Board in the Everton Appeal [95]: it was “sail[ing] so close to theupper loss threshold … that, as a result of circumstances arising in the ordinary course of
conducting the business of professional football, that threshold is breached”.

12.41

The Premier League submitted that a period of two months cannot be described as a “nearmiss”. Further, the timing of the sale had consequences, some of them positive for Forest. As
well as the obvious benefit of the cash it has received from Spurs under the transfer agreement- for the next three financial years Forest’s PSR calculation will benefit from the c. £48m of
profit which it booked in FY24 on the sale of Player A - Player A also played three league
games in the 23/24 Season. Evidently, Forest must take the rough with the smooth.

12.42

The Premier League contends that the sale of a player outside the relevant financial year cannot
constitute mitigation unless the facts are exceptional. Forest relies on the Sheffield Wednesday
decision as indicating that a “near miss” can constitute mitigation, but the Premier League
points out the Sheffield Wednesday case did not concern the sale of a player and isdistinguishable. It also involved a related-party transaction with an entity associated with the
club’s owner, and there is no reason to believe that its timing had any effect on its value. Here
Forest chose to wait in order to maximise the transfer fee.

12.43

The other point of distinction with Sheffield Wednesday is that, in that case, there was at leasta clear plan from an earlier stage in the season: “the EFL was on notice from April 2018 that
the Club intended to sell the Stadium in order to comply with the P&S Rules. The Club lawfully
extended its accounting period to 31 July 2018 in an attempt to comply with the P&S Rules”(at [112]). The club did what it said it was going to do, albeit late. In the present case, Forest
did very little to sell Player A until after the end of FY23 (waiting until the very end of the18-Mar-24

28

transfer window to conclude a deal). It can be inferred that if Spurs’ offer had not been
forthcoming when it did Player A would not have been sold.
12.44

The Commission notes how this type of potential mitigation has been categorised. The Appeal
Board in the Everton Appeal call it “golden mitigation”, the Premier League refer to it as “verypowerful mitigation” and Forest noted it was termed “a significant mitigating factor”. This is
doubtless because the Panel in the Sheffield Wednesday appeal case replaced the original 12point deduction with a 6-point deduction, so the effect on that club was significant or perhaps
golden. However, like all mitigation, it has to be earned and this Commission puts the labels to
one side and considers the actions and omissions of Forest.

12.45

The Commission noted that looking to sell Player A earlier (in the January 2023 window) would
have given Forest a far better chance of not missing the PSR Threshold at all. However, theonly evidence Forest could produce that this had been considered was that Mr Vrentzos said hespoke to Player A’s then agent about the possibility before the January 2023 window and that
Forest’s then sporting director, Mr Giraldi, knew to listen to any offers made.

12.46

The Commission could see that some efforts were made in May and June 2023 to sell PlayerA, but no acceptable offers were made in time. Mr Vrentzos’ evidence was that there were somediscussions with clubs such as Manchester City, Crystal Palace and Player A’s new agent from
USM.

12.47

Finally, there was the Atlético offer that came in on 30 June 2023, the deadline for PSR
purposes. However, Mr Vrentzos stated that it was not one they could accept (albeit Forest did
propose a counter offer that same day) as he was aware that Atlético had to sell before it could
buy. If Forest had accepted to sell Player A conditional on Atlético then having to sell someother player at some future stage, Forest could then have had to wait to see if that ever happened
and could have missed out on selling Player A elsewhere.

12.48

Once the 30 June 2023 deadline had gone by, the Commission notes that it appeared to be
Forest’s position that it would have the entire summer 2023 window to sell Player A. Indeed,
the Commission notes that only on 28 August 2023 did Mr Vrentzos get the instruction from
Mr Marinakis to sell Player A. At that stage there was the Brentford third offer in hand andSpurs came in soon after, before the deal was done with Spurs on 1 September 2023.

12.49

The Commission notes the actual “near miss” could be that Forest nearly missed selling Player
A in the summer window altogether – it was cut extremely fine; however, it is whether Forest’s
missing the PSR deadline of 30 June 2023 was near or not that is the issue.

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12.50

The Commission noted the EFL v Sheffield Wednesday appeal case that Forest relies upon for“golden mitigation”. The panel stated that one of the lessons to be learned from this case was[at 135]:“… Club owners, in particular, need to understand that timetables set by the EFL forcompliance with the P&S Rules are not simply broad targets in a negotiating process: they are
set with the interests of all Clubs in mind and it is unfair on other Clubs for clearly establisheddeadlines to expire and then for ex post facto efforts (to be) made to rescue the position. If everthere was a case which demonstrates that hastily considered “rescue attempts” can lead tomisunderstandings, misconceptions and mistakes, this case does.”

12.51

The situation was different for Forest when compared to Sheffield Wednesday’s. The latter
could control the timing of the stadium sale that would have cured its financial breaches, as it
was the club’s owner that was buying the stadium. Further, the stadium sale was concluded
within two weeks of the PSR deadline. Forest identified that its “miss” was selling Player A in
time, however, it also identified how difficult it is to transfer a player. At least three parties are
involved – the selling club, the buying club and the player. When the player is in the process ofending relations with one agent on 30 June and then signing a representation agreement with a
new agent straight after, two more parties are added to the mix.

12.52

The Commission notes that Forest took a huge risk leaving itself with only one way to avoid a
PSR breach, selling Player A in a two-week window between the summer 2023 transfer window
opening and 30 June 2023, when it would be assessed for PSR. The Commission did note
Forest’s submission that Wolves had managed to sell a player in the same two-week period to
avoid a PSR breach (although no evidence of these facts was put before the Commission at the
Hearing or in the documents), but it also noted Mr Bonser’s admission at the Hearing that “notmany” players are sold in that part of the summer transfer window. It is not disputed that Forest
missed the deadline by about two months.

12.53

In his closing submissions, Mr De Marco submitted that the Commission should draw anadverse inference against the Premier League in relation to the suggestion that it would havebeen impossible (or at least very difficult) to sell Player A in the early weeks of the summer
transfer window. He pointed out, correctly, that there had been no evidence from the Premier
League, to that effect as, he submitted, one would expect if that was the Premier League’s case.
He relied on the case of R v IRC (ex parte TC Coombs & Co) [1991] 2 AC 283 at 300 (and intheir Annex to their Skeleton Argument, Forest also cited the case of Wisniewski v Central
Manchester Health Authority [1998] PIQR P324 at 340). However, the Commission, having

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considered this submission, takes the view that it can rely on Mr Bonser’s admission, as
mentioned in paragraph 12.52 above, that “not many” players are sold in the early part of thesummer transfer window as well as its own knowledge and experience of how that transfer
window operates and therefore declined to make the adverse inference that Mr De Marcoinvited the Commission to make.
12.54

The Commission has to assess whether this “miss” could be classed as a mitigating factor and,if so, then by how much. An issue the Commission has is whether Forest could (and should)
have sold Player A earlier in the summer transfer window in order to make the “miss” a lotnearer to 30 June 2023 (see the matters set out in paragraph 12.55 below). To Forest, that did
not seem to matter, even though Player A played in the Premier League three more times in the2023/24 season before he was eventually sold. Selling him when Forest did, not only could be
inferred to have provided it with a sporting advantage in those games (see below), but it enabled
Forest to get a better price for him. Money was not apparently Forest’s driver, Mr Vrentzos
explained at the Hearing that a few million pounds would not matter to a business that is turningover many millions, but, ultimately, it boils down to this for the Commission – what reallymatters is the integrity of the competition and how the public and other clubs saw Forest
behaving; along with the fairness to the other clubs playing in the competition and abiding by
the PSR. In the eyes of the other clubs, had Forest sold Player A within the first few weeks
following the PSR deadline, this would demonstrate a willingness to comply, so why not makethe “miss” as near as it could? It may have cost Forest some money, but it would havedemonstrated that Forest showed some respect for the Rules, its fellow clubs and thecompetition and reacted as soon as it could.

12.55

The Commission examined what evidence there was before it, to consider the actions andomissions of Forest over that period. There was the offer from Atlético. The Commission
understood from Mr Vrentzos that this was incapable of being accepted, as Atlético would only
have the funds if it managed to sell another player first. That is accepted, however, theCommission notes that a counter-offer was made and there was no evidence at all as what
happened after that. It does not appear that Forest followed it up. However, it is the negotiations
with Brentford which stand out to the Commission. There was a first offer on 21 July 2023, so
three weeks after the PSR deadline had passed. It appears that this was sent to Mr Marinakis
and was then rejected. On 24 July 2023, Brentford’s second offer came in and this was “swiftly”
rejected too. It is not clear if that went to Mr Marinakis or whether he was spoken to about it,
but within a few hours it was rejected as being “significantly below” his valuation of Player A.
It was for £35m and would have practically taken care of the PSR breach.

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12.56

Even if it might not have totally cleared the breach, the Commission wonders why Forest did
not look to counter-offer and see if it could have nudged Brentford’s offer up by a couple ofmillion pounds, to ensure it would have cleared the PSR breach, as it could then claim a “nearermiss”, one that in terms of time more closely reflected the Sheffield Wednesday “miss”. Mr
Vrentzos, at the Hearing, confirmed that Player A could have been prepared to go to Brentford
in the right circumstances. His new agent was in place by then too, the representation agreement
between the player and USM being entered into on 4 July 2023. However, there was simply noevidence of Forest making any of these types of attempts.

12.57

The Commission understands all clubs’ desire to sell their players for the most they can achieve.
That is a sensible commercial decision to take for any business. However, the Commission here
concluded that for Forest respecting the PSR regime and looking to make the miss as near as
possible was a less important factor, when compared to maximising value/profit.

12.58

The Commission would not see a sale in the January transfer window in 2024 as being a “nearmiss” at all. It could categorise a sale in the summer 2023 as a “near miss”, if it was truly nearto the PSR deadline or at the first available reasonable opportunity proximate to the deadline.
Forest here waited until Mr Marinakis gave the sale instruction on 28 August 2023 and managed
to sell Player A on the very last day of the summer window.

12.59

This business decision flies in the face of mitigation. In all these circumstances the Commission
determines that it cannot be rewarded as a mitigating factor.

Reasons for the excess
12.60

Forest submitted that it had to bear very considerable costs as a result of its somewhat
unexpected promotion to the Premier League, amounting to £20.92m. These costs were notanticipated in its March 2022 EFL P&S submission and, in effect, penalised it for securingpromotion by reducing its £35m allowable losses by £20.92m.

12.61

Secondly, those losses were increased by approximately £9.678m due to Forest being unable
to claim Covid-19 Add-Backs that it reasonably and/or genuinely and honestly believed would
be allowable (and which were notified to the EFL but not subsequently accepted by the Premier
League). Forest accepts that its belief was incorrect. The following is common ground between
the parties:
12.61.1

Forest acted in good faith when originally claiming the add back whilst in the EFL;

12.61.2

It was not notified it was disallowed as an Add-Back by the EFL;
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12.61.3

It had a genuine belief that it was permitted to maintain the Add-Back up to 2 June
2023;

12.61.4
12.62

It was, however, mistaken in that belief.

Forest maintains that it operated reasonably throughout: (i) it is common ground that there had
been no notification by the EFL that the add-back would be disallowed before June 2023; (ii)
it appears that the Premier League and the EFL were in discussions as to the appropriate
approach to take to Covid-19 Add-Backs from around mid-June 2022 and it took time for aclear picture to emerge; (iii) the Premier League’s position on Covid-19 Add-Backs was only
properly explained and understood on 2 June 2023. Indeed, in May 2023 the Premier League
remained in discussions with the EFL about at least some aspects of the Covid-19 Add-Backs
that the EFL had previously allowed.

12.63

Forest submits that it ought to be treated as genuinely and/or reasonably believing, during therelevant time, that it would be able to claim Covid Add-Backs in the sums it had assumed. It
therefore reasonably believed its losses were approximately £10m less than they have now beenfound to be. That goes to the seriousness of the breach and is an important mitigating factor,
very different from a club that knows it is over-spending but continues regardless, or which acts
in bad faith with respect to its accounting practices and PSR calculation.

12.64

Thirdly, Forest made a reasonable but ultimately inaccurate estimation as to the Merit Award.
It filed its PSR Submission at the end of March 2023. This was based on a projected final league
position in the 2022/23 season of 12th. The level of its losses increased due to it finishing theseason in 16th position, and so receiving approximately £12.5m less. At the end of March 2023,
Forest considered carefully its likely final league position taking account in particular: (i) theform of the bottom nine clubs over the previous 10 Premier League games; (ii) the points taken
by each of the clubs from the games against the teams they were due to play in their remaining
fixtures in the equivalent games in the first half of the season; and (iii) the league table as itthen stood. Forest maintains that the projection was reasonable at the time.

12.65

The point being taken, by way of mitigation, is that Forest was new to the Premier League and(having only the benefit of one Merit Award to ease its losses) it was particularly susceptible
to the impact of a reasonable but ultimately mistaken projection as compared with most otherclubs.

12.66

As regards the promotion costs, the Premier League argued that this does not constitutemitigation as a matter of principle. Various situations will cause clubs to incur costs of various

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types, as a necessary incident of running a football club. That promoted clubs will incur
promotion costs is not an excuse for breaching the PSR. Further, the vast majority of the£20.92m relied on consists of “player and staff bonuses” (£18.6m), but there is nothing unique
about this: all of Forest’s closest competitors are likely to have paid large promotion bonuses.
Moreover, Forest’s calculation does not take any account of the countervailing benefits ofpromotion which are far greater. The accounts for FY23 show that its revenues increased from£29.7m to £154.8m as a result of promotion.
12.67

As regards the Covid Add-Back, the Premier League acknowledged that the parties had agreed
that the Commission should proceed on the basis (in order to save time and costs) set out atparagraph 12.61 above.

12.68

The Premier League submitted that the issue therefore for the Commission is the reasonablenessof Forest’s belief. To that end, the Premier League noted that the Covid-19 Add-Backs which
are permissible under the PSR are described in Covid Guidance. This stated that Covid-19 Costs
may be excluded from a Club’s Adjusted Earnings Before Tax only if they are in the notes toor in supplementary information used to reconcile the Annual Accounts, and those had been
subject to an independent audit. They should also fall into one of three categories: (a) lost
revenues; (b) exceptional costs, and/or (c) impairment of value. Having included neither
impairments nor a Covid note in the filed accounts for FY22, Forest could not reasonably havecontinued to believe that it was entitled to the claimed Add-Back.

12.69

The Premier League argued that it should have been clear to a reasonable reader of both thePremier League’s Covid Guidance and its EFL equivalent that the claimed FY22 Covid AddBack was not permissible. Both sets of guidance require costs to be disclosed by way of notes
to the Annual Accounts or by way of supplementary information which reconciles to the Annual
Accounts, and which has been subject to independent audit.

12.70

Finally, the Premier League addressed the Merit Award. Points of this nature cannot constitutemitigation as a matter of principle. In the Everton Appeal, the Appeal Board stated at [94]: “[I]tis not a mitigating circumstance if the aspirations and predicted success of a club prove, overthe season, to have been (reasonably or unreasonably) unfounded. Such circumstances again
fall within the ordinary course of conducting the business of professional football, and cannotof themselves reduce the culpability of the club for the breach. We also consider it would be
unfortunate if determination of a level of sanction required a Commission to examine a club’s
documents and other materials to determine (on the basis of possibly inadequate information)

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whether its historical projections for (e.g.) revenue and/or likely finishing position in a tablewere unduly over-optimistic. We do not consider that the PL Rules require such an approach”.
12.71

The Commission notes that the PSR do not limit the expenditure that a club can incur, but rather
limit the extent to which losses can be incurred. Clubs have under their control various levers
to allow them to maximise income and control expenditure. The profit (or loss) recognised byany club during an accounting period is largely a reflection of an accumulation of commercial
decisions made by that club. It is therefore unfair (and inaccurate) to attribute a loss solely tothe failure to perform any singular transaction. In most cases, a loss is attributable to a series ofcommercial decisions made over an extended period.

12.72

The Commission notes that three reasons were given by Forest for the excess. It thought itwould/should be able to add back the c. £20m of promotion costs it had incurred; it was
reasonable for it to honestly believe that it would get to add-back the Covid losses of c. £12m;
and it was reasonable for it to assume it would receive a Merit Award of £12.5m. When they
all went the other way, the PSR position was such that Forest needed to sell Player A.

12.73

The Commission notes that the PSR relate to “profitability”. Forest, in its submissions, focused
mainly on expenditure. It received a huge boost in its income by gaining promotion (see para
12.66 above, the revenues in that financial year increased by c. £125m), which cannot beignored. Further, the PSR relate to “sustainability”. The Commission does not criticise Forest’sbusiness model but does question whether it should have acquired all the players it did(particularly in the January 2023 window) when it knew it had to sell players to meet the PSR
Threshold that it was facing.

12.74

Further, the Commission struggles to see why any of the three reasons should be treated as
mitigation or would ultimately affect the starting point for the sanction. The promotion costs
are what they are. Mr Bonser acknowledged that both Fulham and Bournemouth would have
had similar costs and that many Premier League clubs would have comparable “survival
bonuses” that they would have paid - indeed Forest had to pay a “survival bonus” to its players
at the end of the 2022/23 season. These are standard across the industry and should have been
anticipated.

12.75

The Commission has some sympathy with Forest as it seemed to take a long time before it was
finally told that the Covid add-backs it had claimed would not be allowed at anything more than
£2.5m. However, it seems clear to the Commission having reviewed the EFL and Premier
League Covid Guidance that there were some conditions precedent that needed to be meet inorder to claim the add-back (these are identical - see paragraph 4.3 above). These were not
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present here. The Commission notes that in Forest’s 30 June 2021 accounts there was a notethat forecast the FY2022 Covid add-back at c. £12m, however, there were no actual Covid addbacks reported in the 30 June 2022 accounts. The basic requirements of the Covid Guidance
had not been met. Those accounts were signed off by Forest on 28 February 2023, i.e. before it
made its PSR calculation for the Premier League. Whilst the parties have agreed that Forest’s
mistake was genuine and honest, it cannot be said that it was reasonable. Both Mr Vrentzos and
Mr Bonser claimed that they were familiar with the EFL position on Covid Add-Backs. The
Covid Guidance is identical in both leagues. The FY2022 audited accounts had been signed off
before the PSR return was made. There were no actual Covid costs separately reported in thoseaccounts. Ultimately, the situation that Forest found itself in was of its own making and does
not therefore in the Commission’s view count as a mitigating factor.
12.76

Finally, again the Commission has some sympathy with Forest regarding the forecasting of
where it would finish in the final Premier League table for 2022/23. At the Hearing, Mr Bonser
stated “I'm looking at it from the point of view of an accountant and I am prudent, by nature,
because I'm an accountant.” 12th could have been possible, as could relegation have been.
Forest made an optimistic but not totally unreasonable prediction. It was wrong and it affected
its PSR forecast, but not by enough to change the fact there was a significant PSR breach andagain, how Forest chose to forecast was its own business decision. That is not a mitigating
factor, nor does the context change the starting position for sanction.

No sporting advantage
12.77

Forest’s position is that it did not enjoy any sporting advantage as a result of the breach. Thisis a key mitigating factor going to what is a necessary and proportionate penalty, because thecore purpose of sanctions is to remedy any unfairness in the competition and not merely topunish those in breach for the sake of punishment.

12.78

Judged by that measure, the breach was inconsequential from a sporting perspective. In the vast
majority of cases, a breach of the PSR will confer (and/or can sensibly be inferred to haveconferred) a sporting advantage. Put simply, where two clubs are both limited to making losses
of no more than £105m over three years, and one of them spends significantly over £105m, asporting advantage can usually be inferred to accrue to the club that has breached the limits.
However, the inference of sporting advantage, and therefore of unfairness, is not (as made clear
in the Everton Appeal [159]) an irrebuttable presumption drawn from the mere fact of a PSR
breach.

12.79

On the facts of this case, Forest submitted that there is no basis for that kind of inference and/or
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any different case, in which the club in question had overspent over multiple seasons. By
contrast, Forest has a track record of full compliance.
12.80

First, Forest was already operating at a significant sporting and financial disadvantage with thesubstantially lower PSR Threshold. Even taking into account the PSR overspend, it remained
at a significant disadvantage relative to nearly every other club.

12.81

Secondly, the particular circumstances of the breach (which would have been avoided entirelyby the slightly earlier sale of Player A) meant that the only conceivable sporting advantage thatmight have been enjoyed by it arose from its deployment of Player A between 30 June 2023
and 1 September 2023. The question is not whether Player A participated in any matches (orwhether an inference of sporting advantage can be drawn from that fact alone), but rather
whether his playing time should be categorised as a sporting advantage in all the circumstances.
It is trite law that inferences must be reasonable in the circumstances and cannot be based on
speculation or conjecture.

12.82

Forest submits that on the facts, there was no such sporting advantage nor a basis for properly
inferring one. Forest’s Head Coach selected Player A to participate in the team during only
three Premier League matches played in August 2023 (which resulted in one win and two
defeats), Player A did not play a full match, and did not score or provide an assist. Those threepoints cannot be attributed to his involvement without an impermissible level of conjecture or
speculation.

12.83

Forest submits that this is clearly different from the situation arising in the vast majority ofcases where inferences of sporting advantage may legitimately and reasonably be drawn – e.g.
where a club buys additional players, or refuses to sell players, playing those players over a
substantial part, or the whole, of the season (and often over a much longer period of theirplaying contract), spending more money on players than competing clubs in comparable
positions, in order to, or at least with the likely effect of, obtaining a sporting advantage.

12.84

The absence of a sporting advantage for Forest is a powerful factor that calls into question
whether any sporting sanction is appropriate or proportionate in the unique circumstances ofthis case. It is difficult to justify a points deduction by reference to upholding the sporting
integrity of the Premier League or to undo a sporting unfairness in the absence of any clear
advantage, and there is little need for a deterrent to prevent such conduct in the future: (i) Forest
did not intentionally breach the PSR and needs no further motivation to ensure futurecompliance; (ii) other clubs are unlikely to place themselves in positions of breach where there
is such little prospect of a sporting advantage for them.
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12.85

The Premier League again relied on the Everton Appeal. At [14] the Appeal Board said that“significant spending on players is likely to benefit a club in sporting terms which may thentranslate into financial success. The converse is that other clubs which, for whatever reason,
do not make that investment may be relatively disadvantaged both in sporting and financial
terms”; at [20] that “although difficult to quantify, spending money on players is likely to givea club a sporting advantage…and, consequently, a financial advantage”, and at [144]-[145]“there is an obvious correlation between a Club spending on players and improvements on thepitch and, hence, in league placing…Because PSR overspending is almost always on players,
where a club breaches the FFP regime of a competition in which it competes, it obtains or may
obtain a sporting advantage (with any financial advantage that that entails) over rival clubs
which comply with the regime. To allow that would be unfair”.

12.86

Should the Commission be assessing whether there was in fact a sporting advantage, thequestion for it is whether Forest derived a sporting advantage compared to what would have
happened if it had complied with the rules, not compared to other clubs. In any event, as set out
in the report of Mr Brown, in the 2022/23 season Forest’s transfer spending was very muchhigher than Bournemouth and Fulham who were promoted alongside it and the second-highest
for any promoted club since the PSR were introduced in 2013, including 12 other clubs who
were not in receipt of parachute payments. Indeed, its gross and net transfer spending wereabove average for the Premier League as a whole.

12.87

There was also an advantage for the three games Player A played in in this season. Forest’s
arguments are misconceived because (a) the manager would no doubt not have played him if
he did not see an advantage in doing so; (b) a player’s contribution (even in the case of aforward) cannot be measured in goals and assists alone, and (c) the increased price obtained for
his registration by selling later in the window also conferred an advantage.

12.88

The Commission notes that Forest’s position is that if it had only sold Player A at the beginningof the summer window in 2023, everything would have been fine, so the only sporting
advantage to look at is the use of the player after 30 June 2023, before he was sold to Spurs in
September 2023, i.e. those three league games and the one cup game.

12.89

Another way to look at this is that Forest bought extensively in summer 2022 (to compete andto fuel its business model of showcasing those new players, with the view to selling them laterat a profit), knew it was in trouble with PSR before the end of 2022 and rather than sell one ofits best players (likely Player A) in the January 2023 window or indeed any other players, itbought more players in that window and its PSR position got worse. After that, its only plan to

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comply with PSR was the sale of Player A in a two-week period in June 2023.
12.90

Forest effectively went through the entire 2022/23 season with a squad that it could not afford(if it wanted to comply with the PSR) and with Player A that it had not sold. The Commission
has not been asked to consider this as an aggravating factor; the Premier League advanced nonein the Complaint, but it cannot ignore this and give mitigation to Forest when it is right to inferthat Forest would have enjoyed a sporting advantage over that season.

12.91

Further, the Commission did note Mr Vrentzos’s statement that “it would have beencatastrophic not to play Player A” in the four games in 2023/24, in that not playing him against
the manager’s wishes would have undermined the manager. In the light of the fact that the
manager clearly saw a benefit in fielding him and the fact that Forest also took a huge risk by
playing him (for example, he could have been seriously injured when playing in one of the fourgames that he played in in that season thus reducing or even removing the chance of selling
him in that transfer window), the Commission can and does infer that Forest gained some
sporting advantage in playing him in those games. Overall, Forest cannot claim that it had nosporting advantage and that there should be some mitigation in these circumstances.

Track record and positive trend
12.92

Forest claimed that it is taking active steps to improve its financial position to comply with the
PSR in the current reporting period. This includes the sale of Gustavo Scarpa to Atlético
Mineiro for EUR 5m and the loan of Orel Mangala to Olympique Lyonnais for a £10m loan fee(and an option to purchase for £15m). It has derived substantial profits, and wage savings, fromits activities in the January 2024 transfer window. Currently, it is projecting to realise losses ofapproximately £12-17m for the year ending 30 June 2024.

12.93

Under the current ownership, it has a good record of complete compliance with the EFL P&S
Rules. It has ensured that compliance by reasonable and responsible player trading to realise
the necessary profit, often selling players of great significance. Forest argued that is a further
significant mitigating factor. This is not a case of a recalcitrant club pushing the limits but of a
responsible club caught out by its player trading strategy despite actively aiming for (andgenerally achieving) compliance.

12.94

Forest submits that this historical compliance and the significant positive trend demonstrates
its commitment to compliance and amounts to powerful mitigation.

12.95

The Premier League submits that there is nothing unusual about a lack of previous PSR

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breaches. As the Appeal Board pointed out in the Everton Appeal at [140]: “[T]he evidence
before the Commission was that, in the seven years of the PSR regime to Season 2021-22, only
one other club may have breached the £105m threshold on the basis of its PSR Calculation –that is the matter which is still proceeding before a Commission”. Everton was not given any
credit for a clean disciplinary record. No doubt the presence of previous breaches could
constitute aggravation in appropriate circumstances, but the absence of such breaches is no
more than part of the standard of required conduct for a Premier League club. It is not something
above what is reasonably expected; it does not justify additional credit.
12.96

The Premier League then addressed the positive trend submissions of Forest. Whether or not a“positive trend” over the PSR period may be relevant mitigation, it is not appropriate for theCommission to look at later financial years for this purpose, particularly where the financial
year in question has not yet completed. The three-year period with which the Complaint isconcerned certainly does not disclose a positive trend (the losses in FY23 being larger than thealready substantial losses in FY22). The Premier League referred to the Everton First Instance[118]: “The position in subsequent years is a matter for those years”.

12.97

The Commission is concerned with the trend leading up to the PSR breach in June 2023. It
notes that Forest was compliant in the EFL, but then invested heavily once in the Premier
League and breached the PSR. That was a negative trend.

12.98

What happens for its second season in the Premier League is potentially a matter between theparties next year, when the PSR for FY24 is considered. The Commission agrees with the
Appeal Board in the Everton Appeal in this regard.

12.99

Forest is also claiming that the fact that this is its first PSR breach should be treated as
mitigation. The Commission does not agree. All clubs should comply with the PSR, however,
if a club does not, on more than one occasion, then that maybe an aggravating factor or one that
affects the starting point for sanction or an additional sanction.

Exceptional cooperation
12.100 Forest made it quite clear that it had no interest in becoming involved in a dispute with thePremier League. It supports the objectives of the PSR and seeks to assist the Premier League
in determining these proceedings with the minimum of delay and expense, assisting the Premier
League not only in these proceedings, but in its objective to encourage other clubs to co-operate
constructively with proceedings brought by it to enforce its PSR.

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12.101 Forest submits that it is a well-established principle of sentencing generally, applied in sports
disciplinary cases, that a person who enters a plea at the earliest opportunity is entitled to a
reduction of any applicable sanction by at least one third.
12.102 Forest respectfully notes in this regard that Everton appears to have avoided the prospect ofrelegation during the 2022/23 season by reason of initially denying the Complaint brought
against it, and taking various points, including resisting the Premier League’s application forexpedition, such that the first instance proceedings against it could not be determined until
November 2023. The need for swift decision making to assist the integrity of the Premier
League means that clubs that co-operate should be significantly rewarded to incentivise others
to do so and deter those who seek to delay or disrupt proceedings brought against them.
12.103 As set out above, the Premier League acknowledges the cooperation from Forest. However, it
took issue with Forest’s submission that “well-established principle of sentencing generally,
applied in sports disciplinary cases, that a person who enters a plea at the earliest opportunity
is entitled to a reduction of any applicable sanction by at least one third”. The Premier League
felt that is something of an overstatement and referred the Commission to Part D of theSentencing Council’s guideline “Reduction in Sentence for a Guilty Plea” which indicates thatthe maximum level of reduction in sentence for a guilty plea is one third, which is applicable
where a guilty plea is indicated at the ‘first stage of proceedings’.
12.104 The Premier League agreed with the Appeal Board in the Everton Appeal, in that there is alevel of cooperation that is reasonably expected by all clubs in the Premier League. In this case,
it considers that Forest has indeed displayed a level of cooperation which is above the levelreasonably expected. Forest has consistently indicated it intended to cooperate and has beenvery receptive to indications from the Premier League as to what would be required in thisregard. Its cooperation commenced prior to the submission of its Annual Accounts at the endof December 2023 and has continued thereafter. By doing so, it has significantly reduced thecosts of enforcement and assisted this Commission. It is desirable that such cooperation berecognised and given credit, both because it is deserved, and in order to create appropriate
incentives for respondent clubs in future PSR cases.
12.105 The Commission agrees with the Premier League and commends Forest for its early plea andfor the cooperative way it has conducted itself throughout this matter. Without this approach,it would not have been possible to conclude the process, including a two-day hearing, in justeight weeks from the Complaint. It is crucially important to the Premier League, all its clubs
and the fans around the world that these types of matters are dealt with expeditiously, so the18-Mar-24

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competition can be concluded on the pitch.
12.106 The Commission was expressly asked by the Premier League to record all the cooperation
Forest had provided, to serve as a helpful reference point for other clubs seeking to understandwhat would qualify as exceptional cooperation for the purpose of obtaining mitigation in any
future cases. The Commission is pleased to do so:“Helping to facilitate an efficient and cost-effective resolution of the proceedings, including by:(i)

Responding constructively and promptly to requests for information prior
to the deadline for the filing of any Complaint;(ii)

Agreeing to the application of the standard directions in the PL handbook
and agreeing with the PL a full procedural timetable to give effect to thestandard directions without the need for a procedural hearing;(iii)

As part of that timetable, agreeing to a process of early and rapid
disclosure, meeting that deadline, and then responding constructively andpromptly to the PL’s queries regarding disclosure (including the provisionof further relevant documents where identified and/or requested);(iv)

Constructive and open communication with the PL and its solicitors at all
times on all aspects of procedure as well as more substantive issues (suchthat there have been no surprises during the proceedings).

Voluntarily attending a fact-finding meeting (which is not a step provided for in the standard
directions) at very short notice, including arranging for individuals to fly internationally toattend the meeting, and engaging with all the questions raised in that meeting (without
objecting to any such questions being asked).
Agreeing a wide range of agreed facts, materially reducing the need for witness anddocumentary evidence.
Constructive engagement with the PL regarding the issues in dispute, including abandoning
aspects of the Club’s case upon appreciating that they were based on a flawed factual premise(which was unknown to the Club at the time it originally advanced such points) and accepting
representations from the PL as to that flawed premise without requiring the same to be proven(which would likely have required a confidentiality ring), resulting in an amendment to remove
parts of what is now §27.4 of the Amended Answer …
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Releasing a brief and neutral press release regarding the proceedings – stressing the Club’s
intention to cooperate with the PL.
Agreeing to the directions agreed in these proceedings being disclosed in other proceedings toassist the PL [to] achieve similar directions.”
12.107 In summary, Forest will be given credit for one head of mitigation, the cooperation/early plea.
All other heads put forward by it are rejected.
13

NATURE OF SANCTION

13.1

The Premier League submitted that the only proper sanction is a sporting sanction in the formof a deduction of points. It acknowledges that the Commission has a wide discretion and a broad
range of sanctions available but relies heavily on the Appeal Board’s position in the Everton
Appeal [202]: “leaving any mitigation aside, only a points deduction is appropriate for abreach of rule E.51… any breach of rule E.51 is serious matter. It likely gives the club in breachan unfair sporting advantage and a correspondent revenue advantage. In our view, only apoints deduction, with its immediate and overt effect, has the appropriate power of disincentive
for clubs to remain within the upper loss threshold required to maintain the aim of an FFP
regime. It also, in our view, addresses both the financial and sporting aspects in the mostappropriate way.”

13.2

The Commission has some doubts as to whether the blanket approach suggested by the Appeal
Board in the Everton Appeal is always going to be appropriate. The Commission recognisesthat the overriding factor the public will take into account will be the amount of the PSR breachand that this will have a large bearing on the integrity of the competition. Put simply, the bigger
the breach, the harsher the sanction that will be anticipated. However, the Commission has
taken into account the context surrounding the breach and the mitigating factors too, as above.

13.3

Rather than solely focusing on the quantum of the breach, it may assist to consider those in
categories or bands. The example of the £1 over breach must be a “minor” breach, for which a
points deduction may not be appropriate. There will be “significant” breaches that will morethan likely result in a starting point of a points deduction; these could be in the tens of millions.
Then there may also be “major” breaches which will undoubtedly result in a starting point ofpoints off and may even stray above the Event of Insolvency “cap” that has been advanced byForest. The Commission notes that Sheffield Wednesday had gone over its EFL threshold by
nearly £50m and it noted from Mr Brown’s report that there are examples of one Premier
League club’s spending on player transfers of nearly £200m in a single season and another

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club’s at over £500m. Of course, spending is judged over a three-year period and amortisation
plays a significant factor, but Forest’s excess may not be the highest the Premier League will
ever see.
13.4

This line of thinking can be left to one side for future Commissions to consider. The
Commission, even taking into account the contextual background of Forest’s breach, has no
doubt that the starting point for the sanction in the case at hand is a points deduction. A breachin the tens of millions of pounds is a significant breach.

14

QUANTIFICATION OF SANCTION

14.1

The Premier League pointed out that Forest was subject to a lower PSR Threshold than Everton(£61m rather than £105m) and exceeded it by a considerably greater margin (£34.5m rather
than £19.5m). As a result:14.1.1the excess was 77% larger than Everton’s; and14.1.2its excess was 57% of the applicable threshold, compared to Everton’s which was
19% of its applicable (albeit larger) threshold.

14.2

The Premier League submitted that this comparison is fair: it is appropriate to measure theexcess by reference to the (reduced) threshold applicable to Forest, and it is fair to compare itwith Everton even though a higher threshold was applicable to Everton. To do otherwise would
undermine the Rules which deliberately apply a reduced threshold in respect of seasons spentin the EFL. The extent to which the PSR Threshold has been exceeded in absolute terms,
regardless of its level in a particular case, will always have a correlation with the (improper)
sporting advantage that has been gained. The starting point when considering sanction, andbefore mitigation, must therefore be higher than the six points imposed on Everton. In theEverton Appeal at [210]-[213] one exercise undertaken by the Appeal Board was to start froma minimum of three points and work up to the six-point figure to reflect the magnitude of thebreach.

14.3

The Premier League compared the relevant quanta of the breach in Everton and in respect ofForest. In the present case the breach was 77% larger than in Everton which logically suggests
a starting sanction (before mitigation) of eight points, as follows:
14.3.1

Applying the minimum of three points alighted on by the Appeal Board in Everton;

14.3.2

In Everton a further three points were added for a £19.5m breach;

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14.3.3

Since the size of Forest’s breach was 1.77 times that of Everton’s, multiply those
3 points by 1.77, which equals 5.31;

14.3.4The starting point sanction of three points plus the five-point increase for quantum,
to reflect the seriousness of the breach, results in an eight-point sanction appliable
to Forest (before mitigation).

14.4

Alternatively, the Appeal Board in Everton may have awarded three further points for a breachof £19.5m, i.e. one point for every £6.5m. If the Commission applied the same approach toForest, this would also result in five points being awarded for the breach of £34.5m, to be added
to the minimum of three points.

14.5

The Premier League then considered the extent to which the sanction should be discounted toreflect mitigation. It suggested that the combined mitigation provided by the two factors of anearly plea and cooperation justifies a discount of two points. This would be a meaningful
reduction to a points deduction of the size suggested by the Premier League as the starting point(i.e. two points off eight) and would satisfy the twin objectives of fairly rewarding Forest for
its conduct and appropriately incentivising other clubs in future cases to adopt a similarly
cooperative approach. The Premier League’s view is that the 50% discount suggested by Forest
is too high: it gives too much credit for admission and cooperation and would be both
disproportionate to the conduct being rewarded and subvert the legitimate purposes of the PSR
outlined in paragraph 3 above. Further, it would circumscribe the sanctioning powers of thisand future Commissions too tightly, giving little room to reflect the individual circumstancesof any case in which an early admission, together with cooperation, requires recognition.

14.6

On the other hand, Forest noted that it was stated in the Everton Appeal [217] that there is someforce to the submission that “an Event of Insolvency is an inevitably more serious matter forthe relevant club in respect of its sustainability, and so for the integrity of the PL as acompetition”, than a breach of the PSR Threshold. As such, any approach to sanctions forbreach of the PSR should not be “internally inconsistent within the framework of the PL Rules”
as a whole. Where a club has breached the PSR Threshold but not triggered an Event of
Insolvency, Forest would expect to see points deductions of no more than 8 points in nearly allcases. The exception is, perhaps, in the most exceptional cases involving the most extreme
aggravating circumstances (taking into account the fact that an Event of Insolvency may inprinciple trigger sanctions additional to the automatic nine-point deduction provided for by
Rule E.35). That will however, even in a very serious case of breach of the PSR, be theexception rather than the norm.

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14.7

Forest too considered the “far more serious” Everton situation and noted that it merited a sixpoint deduction. Forest pointed out that Everton’s losses were c. £124.5m compared to its ownof c. £95.5m. It invited the Commission to adopt a substantially more lenient approach to the
exceptional circumstances that Forest had found itself in. It concluded that it is doubtful whethera points deduction would be appropriate at all on the facts of this case. The starting point should
be no sporting sanction (and in particular no points deduction), although a warning andreprimand and/or some other sanction such as fine and/or submission to a Business Plan would
be appropriate given the breach.

14.8

Alternatively, Forest suggested that if a points deduction is to be imposed, it should be minimal.
This case is at the opposite end of the spectrum to Everton (in which a six-point deduction wasmade), taking into account the unique and exceptional circumstances, the absence of any
sporting advantage, and Forest’s exceptional co-operation (together with the other mitigating
factors).

14.9

In particular, Forest urged the Commission to take into account the “golden mitigation” of its“near-miss” with Player A, any points deduction that would otherwise be imposed by theCommission ought to be reduced by 50%, following the approach taken in Sheffield
Wednesday Football Club v Football League Limited (SR/196/2020) (4 November 2020), also
referred to in the Everton Appeal. Forest’s exceptional co-operation with the Premier League
ought to lead to a further reduction of at least one third to a half. In short, taking into accountall of the mitigating factors, it is hard to see a basis for anything more than the most minimal
point(s) deduction (if any deduction is deemed truly necessary at all), whether suspended inwhole or in part.

14.10

At the Hearing, Forest did accept an entry point of three points as the starting point in a“normal” case but submitted it should be a lower starting point here as “in the round” this caseis not as serious as Everton.

14.11

The Commission notes that there is no fixed formula to use. However, the Premier League hassuggested a couple of mathematical methods that look at sanctioning in terms of a point per somany million pounds or such a percentage over the appropriate threshold. The Commission
notes that this was not too dissimilar to the Premier League Board’s guidance that was notfollowed in either the Everton First Instance or the Everton Appeal.

14.12

The Commission understands that this type of approach does bring certainty, but it seems tohave a couple of drawbacks. Firstly, it makes the sole focus on the amount of the excess anddoes not allow for a consideration of the contextual background, unless the factors describing
46

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that are also mitigating factors. Secondly, there seems to be an upper limit when taking into
account how Events of Insolvency are dealt with. If the Commission followed the Premier
League’s suggestion, a slightly larger PSR breach would result in a similar, if not greater points
deduction than an Event of Insolvency, when the offences are very different. An Event of
Insolvency can disrupt the entire competition (if a club was to liquidate mid-season, then thetable would need correcting to take points off clubs that had beaten or drawn with the former
club, would one less club be relegated or one more club come up, etc) and would seriously
undermine the integrity of the entire league, with many creditors suffering losses.
14.13

That noted, as stated above, the Commission does take into account the excess as part of theexercise to arrive at a starting point, before considering mitigation (there being no aggravationin the case at hand pleaded by the Premier League). All clubs have a margin of room up to theupper threshold which can be made good by additional investment its owners can make. Forest
went beyond that by almost £35m, which the Commission treats as a significant breach. The
Commission can see the merit in adopting the Appeal Board’s approach in the Everton Appeal
when dealing with a significant breach. As such, the entry point should be a three-point
deduction too.

14.14

If the context was such and/or the quantum at the lower end of a significant breach, then thestarting point might slide down the scale in terms of points and conversely, absent any
contextual justification and/or with a higher quantum within the significant breach band, thestarting point should slide upwards in terms of points. The Commission notes with Everton,
there were a couple of factors that moved it up the scale to a starting point of six points - thesize of the breach itself and what was initially termed as “misleading” the Premier League, but
on appeal shown to be “incorrect” information being provided to the Premier League.

14.15

In the case at hand, the Commission considered whether there were any additional factors thatshould be taken into account - the “unique” position and/or the reasons for the excess. The
conclusion was that these did not (nor were they mitigating factors, see above) and the only
factor driving Forest up the scale will be the size of the breach. It was bigger than Everton’s,
but both were in the “significant” breach band. However, there was no additional consideration
around incorrect information being provided to the Premier League, as Everton had. The
Commission does not know how the three extra points were arrived at by the Appeal Board forEverton, but some part of those three points must relate to the provision of incorrect
information. Forest’s breach (not its losses, the Commission is concerned with the breach of
the PSR Threshold) was larger than Everton’s and as a result, that alone slides it up the scaleby three further points to a starting point of six points.

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14.16

From there the mitigation needs to be taken into account. There is no dispute that earlyplea/exceptional cooperation should result in a deduction. The Premier League suggested two
points and would not be drawn at the Hearing on whether that should be expressed as apercentage. Forest felt the early plea alone should be worth a one-third reduction, in line withcriminal sentencing guidelines and therefore a further deduction should be made for thecooperation.

14.17

There are difficulties with both approaches. The Commission can see the sense in avoiding
taking fractions of points off clubs. In this instance, deducting two points is in line with thePremier League’s suggestion but slightly less than Forest argued for. The Commission notes
Forest’s argument that a third should be deducted for the early plea (so two points) and there
should be a further deduction for the cooperation. The Commission notes the sentencing
guidelines and the various authorities cited by Forest, however, it further notes that in thosecases (which were mainly criminal cases) a primary objective is to punish the offender. As
noted above, that is a lesser objective in a case such as this. The Commission did not feelcompelled to deduct a third for an early plea, rather it determined to deduct two points for the
early plea and the cooperation together.

14.18

This leaves Forest now with a four points deduction, which the Commission considers to be
fair, necessary and proportionate by reference to the facts placed in front of it:

14.19

Sanction

Paragrapheffectreference

Entry point for a significant breach

3 points

14.13

Circumstances and scale of the admitted breach+3 points

14.14 & 15

Less: Mitigation-2 points

14.17

Total Sanction

4 points

The final issue to determine is whether all or any part of this should be suspended, as suggested
by Forest, pursuant to the Commission’s powers under Rule W.51. (in particular at Rule
W.51.8).

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14.20Forest acknowledges that the Appeal Board in the Everton Appeal [228] rejected the idea thatthe points deduction in that case should be suspended, but Forest submitted that: (i) Everton
had not asked for a suspension (as it had already breached its next year’s PSR Threshold); (ii)
it was a serious case involving a deduction of six points; (iii) Everton had clearly derived asporting advantage that required rectification; and (iv) the Appeal Board had regard to the EFL
Guidelines, by which an immediate points deduction is generally applied in contested cases.
However, Forest argued that none of those factors apply here, indeed the relevant factors all
point the other way.

14.21

Forest relied upon a number of EFL cases which suggest that suspended points deductions areoften appropriate in cases where there has been Agreed Decision, i.e. where the breach isadmitted. The main case it relied upon was EFL v Reading (Agreed Decision, 2021/22), wherea six-point deduction was imposed immediately but a further six-point deduction was
suspended on certain conditions. This was in response to serious circumstances, involving
losses of £18.809m in excess of the Upper Loss Threshold under the EFL P&S Rules. A
suspended sanction is, of course, still a significant punishment and deterrent.

14.22

The Commission notes that a suspension of a sanction can be a useful tool, in the rightcircumstances. The Reading and other cases are different to the case at hand. There is no
structured settlement, there is no agreed budget for Forest to work to going forwards, etc.
Suspensions may be used by a regulator or a Commission as part of a “carrot and stick”
approach. The carrot is to comply with the settlement agreement and the suspended points hangover the club like a stick, in case it does not.

14.23

Taking into account the arguments made by Forest, the Commission notes that its breach isserious and its position on sporting advantage has been dealt with above. The four points
sanction is not to punish Forest so much as it is to be fair to the other clubs; to give the publicconfidence that when a club invests as Forest did to compete in the Premier League it still needs
to comply with the PSR Threshold for losses; and that when a club like Forest took the risk ofeffectively ignoring the PSR warning from its Finance Director before the January window in
2023, and rather than looking to sell players, it added players to its squad, ultimately leaving
itself with just two weeks to sell Player A in the summer 2023 window, such risk taking and“sailing close to the wind” needs a proportionate sanction to maintain the integrity of thePremier League; and to hopefully enable Forest to operate a more sustainable business in termsof PSR going forwards. Suspending this sanction would not change anything. If theCommission’s aim was to hold over some punishment to give Forest a chance to change its
ways, then perhaps a suspension could be considered, but here Forest appears to understand its

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PSR requirements for this current season and what it needs to do to avoid being in a similar
situation in a year’s time. It has already told the Commission of its positive trend and that it
will not have PSR issues at the end of FY2024. The Commission hopes that will be the case.
The four points are to be deducted immediately.
15

CONCLUSION

15.1

The Commission finds that Forest shall be subject to an immediate deduction of four points.

15.2

The Commission invites the parties to maintain the levels of cooperation and to attempt to agree
any consequential orders, including the question of the costs of the proceedings. The parties
shall liaise and inform the Commission what they have agreed, and what issues remain for
determination by the Commission.

Mark A. Hovell

18 March 2024

Mr Robert Glancy KC
Mr Steve Holt FCA

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