Having kicked off the new Premier League season with a 3-1 home success over Brentford on Sunday, Nottingham Forest swiftly added to their ranks in the hours that followed.
Arnaud Kalimuendo arrived at the City Ground from French side Rennes for an initial £26m, a deal that followed the signings of James McAtee from Manchester City for £30m and Omari Hutchinson from Ipswich Town for £37m on Saturday.
The deals took Forest’s summer spending under Nuno Espirito Santo for a campaign that will include Europa League football, to around £147m, with some £113m coming back through the sales of the likes of Anthony Elanga, Danilo, Ramon Sosa and Andrew Omobamidele.
Forest have had their issues with the Premier League ’s profit and sustainability regulations (PSR), with the club hit with a four-point deduction in 2024 for a breach for the financial reporting period for 2022/23.
But the situation has changed for the better for Forest, aided by last season’s excellent campaign in the Premier League where the club came agonisingly close to securing Champions League football. This season’s foray into the Europa League will, including matchday walk-up money, potentially add more than £30m to the coffers with a strong showing.
In terms of PSR, Forest were compliant for the 2023/24 reporting period, the most recently available set of financial records. The £12m profit for that season gave them, when taking into account the permitted £105m over three seasons and allowable deductions for such things as depreciation, investment in infrastructure, the women’s team, the academy and community initiatives, a net positive PSR position for that season of £25m. When taking into account the net negative PSR years from the previous two accounting periods, Forest were overall net positive by £16m.
The 2024/25 results will be analysed by the Premier League before year end, but importantly for Forest, the 2021/22 financial year will drop off the cycle, as they were only allowed to lose £13m that year due to being a Championship club, so the £105m limit was actually £83m for the club up to 2023/24.
This article contains affiliate links, we will receive a commission on any sales we generate from it. Learn more
Sky Sports deal
The period up to 2024/25 is £105m, and according to figures presented by football finance expert Swiss Ramble, the club could lose £90m and still be PSR compliant. There isn’t likely to be such heavy losses, not even close, and the club are emboldened by an increased revenue from competitive performance, and looking ahead to this season they have European money and more matchdays to come.
The new additions have created some £29.4m in amortisation costs on the balance sheet, with guaranteed transfer sums shown for accounting purposes as assets spread over the life of a contract, which is capped at five years for amortisation, although the contract can be longer.
For 2023/24, Forest’s amortisation costs stood at £62m. That figure will have increased through new additions, although it is mitigated a little by the book value of players diminishing through having served a year of their contract, or those who had remaining book value being sold to remove that cost from the balance sheet.
In terms of sales, clubs can book profit straightaway. In the case of the likes of Danilo the club will have cleared his book value following his 2023 move for £16m to make a modest profit, while the Elanga sale will have made a handsome profit on the £15m paid. He had cleared two years of book value at a total of £6m, meaning that anything over and above £9m will have yielded profit. That means the deal made Forest £46m in profit that they have been able to reinvest.
They are unlikely to have any PSR concerns for the 2025/26 period that they currently find themselves in, especially with profits made being greater than added amortisation costs, and the additional revenue from Europe. Wages will go up, though.
But the £67m loss from 2022/23 drops off, and the club then has a £12m profit, and a potentially strong 2024/25 and 2025/26 to make up the three years, meaning plenty of PSR headroom and the ability to act in the market.
There is a reason they did not want to be bullied into selling Morgan Gibbs-White, as there was never a financial need to do so and Forest have the ability to invest in success in the coming seasons, a compelling argument to be made to the talented Forest midfielder.
There is a rosy financial future for the club if they can invest wisely and build on last year’s success, and they have created the ability to spend and be active participants in the market to a significant extent. This season could see them build further momentum towards being a force challenging for trophies that owner Evangelos Marinakis wants to see.