The Premier League confirmed on Monday that both Everton and Nottingham Forest have been charged for allegedly breaking their profit and sustainability rules (PSR) as of their accounts for the 2022/2023 season.
PSR states that if Premier League clubs record losses of more than £105 million over three seasons or above £35 million each campaign, they will have been in breach of the financial rules.
For clubs that play in the Championship during the three-season period, the threshold for losses drops to £13 million for each season spent in the league. Nottingham Forest's participation in the Championship during the 2020/2021 and 2021/2022 campaigns meant that the club was only allowed to lose £61 million from the past three full seasons.
Now, the cases for both Everton and Nottingham Forest have been referred to independent commissions to decide on the necessary punishment. Fines and points deductions are among the most likely sanctions for the two Premier League clubs.
Responses must now be submitted by the two clubs in the next fortnight and league rules state that the hearing for the cases must reach a conclusion within the 12 weeks that follow. Any hearings for appeals must take place before 24th May 2024, with a resolution in place before 1st June 2024.
Everton has already faced significant punishment this season for breaching PSR as the club was deducted 10 points last November for being £19.5 million above the threshold in their accounts for the 2021/2022 season. This was the largest points deduction in Premier League history and at the time saw Everton drop from 14th to 19th in the league table.
Everton are appealing the 10-point deduction and there is expected to be a decision on the matter before the end of the 2023/2024 campaign.
Following Monday's announcement of another financial breach by the club, Everton released a statement, which read: "The club must now defend another Premier League complaint which includes the very same financial periods for which it has already been sanctioned before that appeal has even been heard. The club takes the view that this results from a clear deficiency in the Premier League's rules."
Everton are unhappy that the payments made for the construction of their new stadium, which is set to open in 2025, were not written off against PSR and the club is essentially being punished for building a new stadium.
Also, Everton believe the Russia-Ukraine conflict strongly impacted their losses as a potential naming rights deal for the new stadium worth £200 million with Russian investment group, USM Holdings, could not go through.
Nottingham Forest put out a statement in response to their charges, reading: "The club intends to continue to cooperate fully with the Premier League on this matter and are confident of a speedy and fair resolution."
Leading sports lawyer, Nick De Marco KC, has been chosen to argue Nottingham Forest's case and the defence is set to revolve around the club's £47.5 million sale of Brennan Johnson to Tottenham Hotspur last September.
Nottingham Forest had the opportunity to sell Johnson to Brentford in June of last year for £35 million and the club believes doing that would have meant they were in compliance with PSR. However, the decision not to sell Johnson in June meant they were in breach of PSR as June 30th is the end of the accounting period for the year.
The club is of the belief that delaying Johnson's move to ensure they received a higher fee for the player was more important than meeting a financial requirement and it shows that they are still trying to protect the club's financial state and ensure sustainability.
However, the Premier League is likely to argue against Nottingham Forest's defence as the whole idea of PSR is to make sure financial risks are not taken. An injury to Johnson could have scuppered the club's plan to receive more money for its prized asset.
Elsewhere, the Premier League's Chief Executive, Richard Masters, has confirmed that a date has been set for Manchester City's case that involves 115 charges filed against them over financial breaches between 2009-2018. However, Masters did not publicly reveal the date for the trial.
Manchester City were charged 11 months ago for alleged breaches with PSR as well as UEFA's regulations, including Financial Fair Play.
