Nottingham Forest’s transfer spend this summer is, give or take the odd pound, now in the region of £140million. Or, in other words, more than the entire spending of the Eredivisie, the Dutch top flight, in the same window.
Sixteen signings have been made following the addition of Morgan Gibbs-White from Wolverhampton Wanderers this week. The winger is the latest – and most expensive – purchase in a deal potentially worth £42.5m ($50.3m) when including a range of add-ons.
Gibbs-White joins a small army of new signings sanctioned by Forest head coach Steve Cooper this summer. The team that won promotion in the Championship play-offs in May has been revamped, with a feeling as rare as continuity. Only three of the starting XI who beat West Ham United last weekend have been with Forest for more than eight weeks.
— Morgan Gibbs-White (@Morgangibbs27) August 19, 2022
The promotion’s winning teams have been dismantled and rebuilt before, but rarely at this price. Forest’s spending is vastly higher than that of the other two newly promoted clubs – Fulham and Bournemouth – combined. Chelsea (so far, at least) are the only Premier League club to have spent more.
Barcelona, who continue to find new financial levers to pull, are broadly on par with Forest’s summer spending, but Real Madrid, Paris Saint-Germain and Bayern Munich have all committed less money to bolster their squads – there is now a phrase Forest fans might not have expected to read 12 months ago when preparing for a 23rd season outside of English football’s top flight.
The question is how, in an era of Financial Fair Play (FFP) forcing Everton and Newcastle United deliberations this summer, Forest have been able to spend like few others.
It’s a huge investment signed by Evangelos Marinakis, the club’s majority shareholder. Although the club’s turnover will be transformed by the riches of the Premier League, the money committed for signings alone has already accounted for the estimated TV income for 2022-23. A dramatic rise in wages, including the £110,000-a-week paid to England international Jesse Lingard, will almost inevitably result in losses when the club returns to the Premier League.
“As we seek to build a team capable of competing at the highest level, the commitment (of Marinakis) is evident to all,” chairman Nicholas Randall said in a letter to supporters ahead of City’s first Premier League game. Ground since 1999 last weekend. . “He has been a model owner of the club and has always supported us with the necessary resources and more to achieve our goals.”
Forest will say the latest spending is a necessary roll of the dice to secure the rewards that come with extended stays in the Premier League. Reaching the top flight was estimated at £170m including the promise of parachute payments. Avoid relegation for a season and that jumps to £300m.
But this cavalier approach reportedly upset some guests at the party they eventually joined.
Athleticism has heard concerns from mid-table Premier League clubs that Nottingham Forest have distorted the market this summer. Salaries have been pushed up by this ambitious newcomer and targets have subsequently become more demanding. Signing Gibbs-White to a lucrative five-year deal won’t have done much to redress the balance.
Forest have also raked their recruitment very far. Even with the 16 new signings, there have been talks with representatives of many more. Premier League rivals have since discovered these players had skewed expectations when it came to negotiating a summer move.
Not that Forest cares. They are not there to make up the numbers. Like Aston Villa in the summer of 2019 and Leeds United a year later, large sums are being spent to mitigate the risk of relegation.
“Forest had a lot of players who left and they had to rebuild the team,” says Dr Dan Plumley, sports finance expert and senior lecturer at Sheffield Hallam University. “Their problem is not just being in the Premier League, but trying to compete and stay there to secure themselves an extra £100m next year. That’s the risk and the reward.
“The risk is that if you get relegated you end up with parachute payments in the Championship. It’s a risk clubs are willing to take and that’s what’s happening at Forest this summer.
For all the Forests who have drawn accusations of recklessness with their spending this summer, they will maintain they have come this far without jeopardizing the financial well-being of the club.
“It is a matter of pride that the promotion was achieved without the benefit of the parachute payments and after full compliance with all FFP Championship rules,” Randall said.
This will be the Premier League financial regulations that Forest will now have to adhere to in the spring.
As an EFL club in 2020-21 and 2021-22, Forest will not be able to exceed the permitted losses of £61m for the last three-year accounting period. Clubs that have been in the Premier League for three seasons are allowed to lose up to £105m – or £35m a year – but for Forest’s final two years as a Championship club this is reduced of £22 million.
This summer’s huge investment could result in losses once the 2022-23 accounts are released, but FFP’s calculations are much more nuanced. Clubs are allowed to exclude infrastructure costs and academy costs when filing FFP numbers, meaning Forest could lose well over £61million on their accounts while comfortably complying.
The fee for this season’s rookies also won’t appear quite as bold when their transfer fee is amortized (spread over the number of years of the player’s contract).
Take the £17m fee paid to sign Neco Williams from Liverpool. This will be spread over the length of his four-year contract, ensuring that just £4.25million of those fees show up in the 2022-23 FFP calculations. So will Gibbs-White, Taiwo Awoniyi and Emmanuel Dennis, all signed on long-term contracts.
“By spreading the cost of the players they’ve signed over a long period, with long contracts, it’s a way of approaching FFP,” says Kieran Maguire, co-host of the Price of Football podcast.
“They will probably have losses this season, but if you look at how much Villa spent in their first season in the Premier League or how much Fulham (in 2018-19) spent or Leeds (in 2020-21) they were all spending hugely, but that just wasn’t split across 16 players.
“Next summer you would think it would be a lot calmer for Forest. There was an element of necessity in the Forest squad with the number of out-of-contract or loan deals.
“They’ve had to increase the squad size and there’s no point in doing a bunch of free transfers because you’ll end up like Norwich and back in the Championship.”
COVID-19 is also playing its part in Forest’s ability to spend. The Premier League allows any losses directly caused by the pandemic to be deducted from the FFP calculations. Forest have previously said the negative impact of COVID-19 was £16.7million in 2019-20 and 2020-21.
These two campaigns are also considered one big season for FFP purposes to account for the cost of COVID-19, with the financial result being an average of the two. Forest’s accounts showed an average pre-tax loss of £15.7m for 2019-20 and 2020-21, an improvement from the £25m lost in 2018-19.
As the Premier League assess Forest’s FFP status at the end of this season, they will consider the 2019-20 and 2020-21 seasons as one, as well as the 2021-22 league campaign and the one just started in the Premier League.
Forest’s financial performance for these is not yet known, but revenues of £18.4million for their latest set of accounts in 2020-21 will likely increase seven or eightfold, with broadcast revenue exceeding at they alone £100million this season.
Forest’s wage bill – £37million for 2020-21 – will have soared this summer. Lingard alone is believed to be on an annual salary of around £6million on his one-year deal.
The hope will be that some of that increase will soon be offset by a lucrative jersey sponsorship deal that is still being negotiated. Forest’s total commercial revenue in 2020-21 was just £5.6million, but revenue from a new sponsor – who will replace BOXT – could top that on its own now that they have a Premier following League. Never has so much money left the club, but such numbers have not entered either.
Prior to Marinakis’ arrival, Forest had found themselves in hot water for breaching FFP regulations. They, along with Fulham and Bolton Wanderers, were given a transfer embargo for breaching EFL FFP rules in 2014-15.
It was then that Forest struggled in their attempts to escape the Championship under Fawaz Al-Hasawi. Marinakis provided new direction, but she needed significant financial support. Losses of £62million have been suffered since the Greek shipping tycoon took over, with loans canceled to stem them.
“He underwrote losses of around £400,000 a week, year after year,” says Maguire. “He built the team over that time and that got them to that position in the first place. The owner doesn’t want guaranteed relegation now.
Marinakis’ financial backing has been crucial for Forest so far and this record summer underlines that the owner has no intention of stopping now.
“If Forest have spent £100m then that is effectively their TV money for the season covered,” says Plumley.
“You imagine that at some point they will have to re-evaluate that strategy and if they stick around, with another £100m coming in, you could shape it from there. I’m sure they’re planning for all scenarios, but they’re unlikely to plan to spend that much over the next three years, even if they stay awake.
(Top photo: Simon Stacpoole/Offside/Offside via Getty Images)