The Premier League issued Nottingham Forest a points deduction on Monday that immediately sends the club into the relegation zone. The four-point slash comes as a result of Forest breaching the Profitability and Sustainability Rules (PSR) that protect financial fair play (FFP). Premier League authorities noted that Forest’s losses came from exuberant spending upon the club’s return to the Premier League. Now, the club is under the threat of failing to retain its status in the English top flight.

Per Premier League regulations, a club’s total losses cannot exceed $133 million over three years. However, Nottingham’s Forest loss limit was $77 million because it spent two of the three seasons in the Championship. Since earning promotion to the Premier League after the 2021/22 season, Forest spent over $318 million on player transfers.

However, the club’s top defense against the PSR breaches related to the sale of Brennan Johnson. The Forest academy product moved to Tottenham Hotspur for a massive deal worth over $60 million. However, the fiscal year for Premier League clubs runs from the beginning of July to the end of June. Therefore, the revenue brought in from the Johnson sale did not offset any losses from previous player acquisitions as the sale to Tottenham happened in September. The Premier League stated Forest had losses that were $44 million above the PSR threshold. Johnson’s sale to Spurs would have covered those losses.

Consequently, Forest now faces a points deduction similar to that of Everton from earlier in the season. Still, the Toffees dropped six points after an original 10-point penalty.

Forest did use the fact that its promotion hampered its spending as part of its defense against the Premier League’s sanctions. It is possible that affected the severity of the punishment.

Threat of relegation looms as Nottingham Forest suffers points deduction

As stated, striking four points from Nottingham Forest’s record this season has grave consequences on the table. Forest now falls to 18th in the league table, which would mean relegation. The biggest beneficiary of the points deduction is Luton Town, which now rises to 17th in the league table. Ironically, these two clubs met in the Premier League on Saturday. Their 1-1 draw kept the table level, as Forest had a three-point lead over Luton at the time. Now, Luton has the slightest lead in the league table.

There are still nine games remaining for both Luton and Forest, which can dramatically shake up their one-point gap as things stand. Yet, other drama could transpire off the pitch.

Everton is still the subject of an additional charge from the Premier League that could add to the points penalties the Toffees are dealing with. Currently, Everton is 16th in the Premier League table. It is three points above Luton Town and four above Forest following the latter’s drop. If Everton gets the same penalty as Nottingham Forest of four points, Forest would still be in the relegation zone based on goal differential. Yet, Everton’s precedent of suffering a six-point penalty would plunge the Toffees into the relation zone.

Much like Forest, Everton’s official penalty will come before this season’s end.