Brennan Johnson celebrates during the English Premier League football match between Everton and ... [+]
Nottingham Forest have become the second Premier League team to see a points deduction this season.
They had four points deducted after their hearing, with the Premier League Commission deciding their overspending warranted a six point penalty, reduced by two points for an early plea.
Like Everton’s six point deduction earlier this season, the Commission decided that the mitigating circumstances (apart from the early plea) were irrelevant.
Nottingham Forest’s official statement on the matter lambasted the Premier League and said its original demand for eight points to be deducted was “utterly disproportionate.”
Everton, meanwhile, could see another six-point deduction based on the logic applied to Forest’s case and Everton’s previous case, while Leicester City, should they win promotion, are likely to also face a points sanction.
These cases have a huge impact on the fight to avoid relegation, but they also have a wider impact on the global transfer market.
One of Nottingham Forest’s arguments against a points deduction was that they made up the shortfall by selling key asset Brennan Johnson to Tottenham Hotspur at the start September rather than by the end of June, and so were only outside of their allowed losses for two months, most of which was the summer break. The club called this a “near miss.”
Johnson, as a homegrown player of high value was key to Forest meeting the Premier League’s rules. The club had budgeted based on Johnson being worth $64 million, which was only fractionally more than what Spurs eventually paid for him.
By selling Johnson in September, Forest got more profit for him, and apart from those two months in the summer, their accounts were balanced and sustainable.
The Commission’s ruling ignores this and instead says, if your books aren’t balanced on the Premier League’s specified date of June 30th, you are getting punished.
There is no xG or “near misses” or other context when it comes to Profitability and Sustainability. According to the Premier League, a miss is a miss.
That means clubs wanting to avoid a points deduction must balance their books by June 30th, even if that means selling their top assets on the cheap.
That could be bad news for the likes of Aston Villa, who have already have confirmed a roughly $150 million loss in their end of year accounts. Villa insist they are operating within Profitability and Sustainability rules, but if they are close to the limit, then they might be forced to sell a player for below market value before June 30th to avoid a points deduction.
The lack of activity in the January transfer window suggests there might be other clubs in a similar situation.
Global spending in the January transfer window dropped by more than 8% compared to the year before, with $1.46 billion spent on international transfer fees according to FIFA. But this figure masks a complete drop off in spending by English clubs, whose spending on international transfers dropped by some 80%.
Only Crystal Palace, Manchester City and Tottenham Hotspur spent more than $15 million on a single player. Palace signed Adam Wharton for $21.1 million out of necessity after suffering a midfield injury crisis, Tottenham likely still had plenty of P&S wiggle room after getting a huge fee for Harry Kane in the summer and also getting his wages off the budget, and Manchester City are Manchester City.
Premier League clubs are currently renegotiating their Profitability and Sustainability rules to bring them more in line with UEFA’s rules. But these rules might not be ready for next season, and they certainly won’t be in place until voted on at the June AGM, so Premier League clubs right now don’t know what budget they’ll have for the summer transfer window.
The current limits on spending are so restrictive, and the penalties for breaking the rules so punitive, that some clubs will likely be overcautious this summer.
The result could be gridlock in the transfer market with no club unable to make a major signing without first selling a player for a large fee. With English clubs not buying or selling in the same quantities, other leagues around the world will not see the large cash injections that they have been used to each summer. This could have a knock-on effect around Europe, especially on teams that rely on transfer fees to survive.
Other clubs though will be using some clubs’ need to sell by June 30th to get players for bargain prices. Those clubs, seeing the penalty Forest received for keeping hold of Brennan Johnson, will have to sell star assets for far below market value. Such forced transfers will likely widen the gap between the Premier League’s haves and have-nots even further.
