Sheffield Wednesday central to Nottingham Forest defence against points deduction that impacts Sheffield United

A 'final award' report released on Monday confirmed Forest have received an immediate four-point deduction for contravening Profit & Sustainability (P&S) Rules, a finding that plundered them into the Premier League relegation zone. An independent commission found Forest's losses to 2022/23 breached the threshold of £61m by £34.5m. They have seven days to appeal the decision, which is expected to be launched.

It is nearly four years since Wednesday received a 12-point deduction ahead of the 2020/21 campaign for breaking spending rules, a sanction that was halved to six points on appeal in November 2020. Wednesday were informed they would start the 2020-21 season on -12 points in August 2020, having been told by the league they "should not have included profits from the sale of Hillsborough in financial statements for the period ending July 2018".

Part of the reason the appeal was successful was that an independent commission found that while the EFL had been notified of Wednesday's intention to sell Hillsborough stadium to a third party company owned by chairman Dejphon Chansiri - a move that would have pulled their accounts in-line with P&S regulations - they did so 'less than three weeks' too late for the transaction to be considered as part of the relevant accounting period.

This was considered a 'significant mitigation' and was a basis for the halving of the sanction. Sheffield Wednesday were named 10 times in the 'final award' report released this week and were repeatedly used as a precedent case in point by Forest with regard to their case against heavy sanction. The sale of Wales international Brennan Johnson to Tottenham Hotspur would have served a similar purpose to the sale of Hillsborough in terms of bringing accounts in-line with loss limits, with Forest arguing a precedent was set on what could be described as a 'near miss' given the sale came weeks after the accounting deadline.

Section 12.32 of the report reads: "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 the Commission thinks would be appropriate in this type of case, a similar 50% deduction should be made."

It was shown that Forest had passed-up on a number of bids from Brentford and Atlético Madrid for the player earlier last summer, who would eventually move to Spurs for £47.5m on deadline day, September 1 2023. The club submitted that they believed the sale of Johnson within the same transfer window represents a 'near miss' despite the two-month lag and therefore falls into the same jurisdiction as the sale of Hillsborough.

The Premier League argue the sale of Johnson - which came two months after the deadline - is not a fair comparison to the sale of a stadium given Wednesday "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." With more parties involved in the sale of a player, the suggestion is that Forest were not equally in control of the proposal and that the 'near miss' was in fact on the sale going through ahead of the transfer deadline.

Section 12.42 of the report reads: "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 is distinguishable. 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."

Forest were represented by Nick De Marco KC, a lawyer well-versed in the Owls case having represented Wednesday during their back-and-forth with the EFL over their 2020 controversy. The club argued a points deduction was not appropriate but that if one were to be enforced 'it should be minimal', using Everton's 10-point sanction as a yardstick and arguing their breach was 'far less serious' despite Forest's breach being 77 per cent larger.

The points deduction - and outcome of any forthcoming appeal - could have an impact on the fate of Wednesday's city rivals Sheffield United, who are bottom of the Premier League and after Forest's deduction now sit eight points shy of the safety spots with 10 matches remaining.