Docked for Spending: Everton, Forest and the Premier League's Profit Rules

Timeline

1. Mar 24, 2023The Premier League refers Everton to an independent commission over its PSR results for the period to 2021–22.
2. Nov 17, 2023A commission finds Everton's PSR loss was £124.5 million against a £105 million limit and imposes an immediate 10-point deduction.
3. Jan 15, 2024Everton and Nottingham Forest are charged over PSR results for the period to 2022–23.
4. Feb 26, 2024An appeal board reduces Everton's deduction to six points.
5. Mar 18, 2024A commission docks Forest four points for exceeding its £61 million limit by £34.5 million.
6. Apr 8, 2024Everton receives a further two-point deduction for a £16.6 million breach; it later withdraws its appeal.
7. May 2024Forest's appeal is dismissed; both clubs avoid relegation.
8. Nov 21, 2025Premier League clubs vote 14–6 to replace PSR with a squad cost ratio system from 2026–27.

The ethical issues

• Whether limits on owner investment protect clubs or prevent ambitious newcomers from competing.
• Proportionality and consistency of sporting sanctions for financial breaches.
• Whether points deductions punish fans and players for decisions made by owners and executives.
• The fairness of lower loss limits for promoted clubs without parachute payments.
• Self-regulation by a league whose existing members write the rules.

Stakeholders

Stakeholder	Interests & obligations
Everton and Nottingham Forest	Avoiding sanctions and competing for survival and growth.
Other Premier League clubs	A level playing field and compliance by rivals.
Clubs at risk of relegation	Fair outcomes in a relegation battle affected by deductions.
Fans	A sustainable club and a fair competition.
Owners and investors	Freedom to invest and clarity about rules.
Premier League	Financial stability, credibility of its rules and the integrity of its competition.

The case

Background

English football has long debated how much owners should be allowed to spend. In the 2023–24 season, the Premier League’s Profitability and Sustainability Rules (PSR) produced the first points deductions in their history. Everton lost eight points across two cases and Nottingham Forest lost four, sanctions that shaped the relegation battle. The rules were meant to stop clubs from risking their futures and gaining an unfair advantage. Critics said they protected established clubs from ambitious challengers. The case asks whether financial rules protect competition or entrench incumbents.

The rules and governance

Under PSR, a Premier League club could lose up to £105 million over a three-year assessment period, about £35 million a season. Clubs that had spent seasons in the Championship during that period faced a lower limit; Forest’s maximum permitted loss was £61 million because two years of its period were spent in the second tier.^[6] The rules, and the procedure for enforcing them, “were agreed by all Premier League Clubs.”^[3] Alleged breaches were heard by independent commissions, with appeals to independent appeal boards.^[2][4]

The rules did not set a fixed penalty. Commissions considered the size of the breach, aggravating factors such as misleading information and mitigating factors such as early admission and cooperation.^[1][3][5]

Everton’s first case

The Premier League referred Everton to a commission in March 2023.^[9] Everton admitted a breach for the period ending 2021–22 but disputed its size. The commission found Everton’s PSR loss was £124.5 million, £19.5 million over the limit, and on November 17, 2023, imposed an immediate 10-point deduction.^[1][2]

The commission explained that a PSR breach “will confer a sporting advantage on the defaulting club, to the detriment of competing clubs who have managed their finances more responsibly,” and that the sanction must punish, deter and protect “the integrity of the game.” It said it “must not be swayed by sympathy,” including the fact that the penalty might increase the risk of relegation.^[1]

Everton appealed on nine grounds, all concerning the sanction.^[4] On February 26, 2024, the appeal board upheld two. It found the commission had wrongly concluded that Everton had been “less than frank” about stadium debt and breached a duty of “utmost good faith,” when the Premier League had not alleged that and accepted the misstatement was “an innocent mistake.” It also found the commission should have considered benchmarks such as English Football League sanction guidelines.^[3]

The board substituted a six-point deduction. It agreed that the main reason for the breach was that Everton “did not manage its finances, as prudently it should have done, so as to operate within the generous threshold.”^[3] It noted that six points was broadly in line with EFL guidelines and “not out-of-kilter” with the Premier League’s own nine-point sanction for insolvency.^[3]

Nottingham Forest

Forest were promoted in 2022 and spent heavily, signing a British-record 22 new players that summer; its net transfer spending in 2022–23 was £142.8 million.^[5][6] BBC Sport reported that Forest had lost an average of £3 million across 2020 and 2021, then £40 million in 2022 and £52 million in 2023.^[6] The commission put its PSR loss at £95.5 million, £34.5 million over its £61 million limit.^[5] The Premier League argued that Forest’s breach was 77 percent larger than Everton’s and proposed a starting point of eight points before mitigation.^[6]

Forest argued that the timing of its sale of Brennan Johnson should count in mitigation. On June 30, 2023, the last day of the assessment period, it received a EUR 50 million offer from Atlético Madrid, and Forest counter-offered EUR 65 million, but no sale was completed before the deadline. Brentford offered £32.5 million in July. It sold Johnson to Tottenham on September 1, 2023, for a guaranteed £47.5 million.^[5][6] Forest also argued it was in a “unique position”: recently promoted, subject to a lower limit, and without the parachute payments given to relegated clubs.^[5]

The commission rejected both arguments, treating the Johnson timing as a business decision.^[6] It explained that the lower limit for promoted clubs is meant “to ensure that clubs cannot unfairly compete in the EFL, effectively buying promotion, and then escape sanction in the Premier League.”^[5] It set a starting point of six points, three for a significant breach and three more for its size, then deducted two for Forest’s early plea and “exceptional cooperation,” for a four-point penalty on March 18, 2024.^[5][6]

Forest said it was “extremely disappointed” and that the decision “raises issues of concern for all aspirant clubs.” It said the outcome “has harmed the trust and confidence we had in the Premier League” and called the league’s proposed eight-point starting point “utterly disproportionate when compared to the nine points that [the Premier League’s] own rules prescribe for insolvency.”^[6] An appeal board rejected Forest’s appeal in May 2024, finding the commission was entitled to impose the sanction immediately.^[7]

Everton’s second case

On April 8, 2024, a commission docked Everton two more points for a £16.6 million breach for the period ending 2022–23.^[8] BBC Sport reported that the commission reduced the starting point because of the overlap with the first case and accepted mitigation including the earlier deduction, lost sponsorship revenue from Russian company USM and an early admission.^[9] According to BBC Sport, the commission began from five points, removed two because of the overlap between the assessment periods in the two cases, added two because the £16.6 million breach, 15.8 percent above the threshold, was significant, and then applied mitigation.^[9] Everton appealed but later withdrew the appeal.^[9] In all, the club lost eight points during the 2023–24 season.^[3][8]

Everton secured safety with successive home wins over Forest, Liverpool and Brentford in April 2024, and Forest secured survival with a final-day win at Burnley.^[9][10]

Aftermath

On November 21, 2025, Premier League clubs voted to replace PSR with a squad cost ratio (SCR) from the 2026–27 season. SCR limits spending on player and coach wages, transfer fees and agents’ fees to 85 percent of football revenue plus net profit or loss on player sales, with a multi-year allowance of 30 percent subject to a levy. The league said the system was “intended to promote opportunity for all clubs to aspire to greater success.”^[11] BBC Sport reported the vote was 14–6, the minimum required, with Bournemouth, Brentford, Brighton, Crystal Palace, Fulham and Leeds opposed.^[12]

The core dilemma

Financial rules can stop owners from loading clubs with unsustainable losses and buying success that rivals cannot match. But rules based on losses also limit how fast an ambitious club can grow, and they were written by existing members of the league. The dilemma is how to design and enforce rules that protect clubs and competition without protecting incumbents from challengers.

Competing values

• Sustainability vs. ambition: limits protect clubs’ futures but restrict investment.
• Equal rules vs. equal opportunity: the same rules may affect promoted clubs more harshly.
• Deterrence vs. proportionality: sanctions must deter but should fit the breach.
• Integrity vs. sympathy: commissions refused to consider relegation risk, but fans and players bear the cost.
• Self-regulation vs. independent oversight: clubs write the rules that bind them.

Strongest arguments

For PSR and the sanctions: Breaches confer a sporting advantage on rule-breakers at the expense of compliant clubs.^[1] All clubs agreed the rules.^[3] Everton did not manage its finances prudently within a “generous” threshold.^[3] The promoted-club limit prevents clubs from buying promotion and escaping sanction.^[5] Sanctions considered mitigation, as Forest’s reduced penalty shows.^[5]

Against PSR or its application: Forest argued it was in a “unique position” as a promoted club with a lower threshold and no parachute payments, and that the decision “raises issues of concern for all aspirant clubs.”^[6] Penalties varied, and the first Everton decision was overturned in part on appeal.^[3] Points deductions fall on players and fans, not on the owners and executives who made the decisions.^[1] Clubs themselves later replaced PSR to “promote opportunity for all clubs.”^[11]

Applying the frameworks

Justice & fairness (Rawls)

Behind a veil of ignorance, not knowing whether you would own a long-established club or a newly promoted one, you would want rules that prevent financial collapse but do not lock in existing hierarchies. Rawls’s difference principle would favor rules that improve the position of the least advantaged clubs, which supports scrutinizing lower limits for promoted clubs.

Kantian (duty)

Kant asks whether a club’s conduct could be universalized. If every club overspent beyond agreed limits, the rules would collapse and the competition would be unfair. Clubs that agreed to PSR had a duty to comply. Kant would also require that the league apply rules consistently and honestly, as the appeal board’s correction of the “less than frank” finding illustrates.^[3]

Utilitarian

A utilitarian weighs the benefits of financial stability, such as protecting clubs from collapse, against the costs of limiting investment and the harm of points deductions to fans and players. The move to a squad cost ratio can be seen as an attempt to keep stability while allowing more investment off the pitch.^[11]

Walk it through: the Simple Decision Model

1. Spot the issue: A club exceeds the permitted loss limit and faces a sporting sanction.
2. Gather facts: The size of the breach, the reasons, the club’s cooperation and the effect of any sanction.
3. Test options: Fines; suspended deductions; immediate points deductions; transfer restrictions.
4. Check codes and law: The Premier League Handbook, previous commission decisions and EFL guidelines.
5. Decide and document: Publish full reasons, as the commissions did.
6. Communicate and follow up: Explain sanctions to stakeholders and review the rules’ effects.

What’s settled and what’s contested

• Settled: Everton and Forest breached PSR; Everton received six and then two points in deductions and Forest four; clubs voted to replace PSR with SCR from 2026–27.^{[3][5][8][11]}
• Contested: whether PSR unfairly disadvantaged promoted clubs; whether points deductions are the right sanction; whether SCR will be fairer.^[6][11][12]

Why this case matters

Financial regulations exist in many leagues and industries. The Everton and Forest cases show how rules intended to protect stability can also shape who gets to compete, and why independent enforcement, clear sanction guidelines and periodic review matter.

See also: Manchester City and the ‘115 Charges’: The Commission’s Verdict.

See also: England’s Independent Football Regulator: Fans, Owners and the State.

Key terms

Distributive justice

Fairness in how scarce opportunities, resources, benefits and burdens are shared.

Rules vs. spirit of the game

Rules are the written minimum; the spirit is the fairness and respect the rules exist to protect. Rules set the floor; spirit sets the ceiling.

Stakeholders

Everyone with something at stake in a decision: athletes, coaches, parents, officials, fans, employees, sponsors, media, communities and regulators, including the less visible ones.

Institutional accountability

Structures that make a sport organization explain its decisions and face consequences: clear authority, transparency, appeals, independent oversight and enforcement.

Moral hazard

When someone takes more risk because others will bear the cost.

Due process

Fair procedures before a sanction: notice, a chance to respond, an impartial decision-maker and a right of appeal.

Definitions from the Ethics Cases glossary.

Discussion questions

1. Should owners be allowed to invest as much as they want in their clubs? What risks does that create?
2. Was it fair that Forest, as a promoted club, had a lower loss limit than established clubs?
3. Do points deductions punish the right people?
4. Everton had both an earlier deduction and a later one in the same season. Should overlapping periods be treated differently?
5. Does replacing PSR with a squad cost ratio address the concerns raised by Everton and Forest?

Sources

1. Premier League v Everton FC: Decision of the Commission (PLJP 2023/3) — Premier League
2. Everton FC deducted 10 points by independent Commission — Premier League
3. Everton FC v Premier League: Decision of the Appeal Board — Premier League
4. Premier League statement on Everton appeal — Premier League
5. Premier League v Nottingham Forest: Final Award (PLJP 2024/1) — Premier League
6. Nottingham Forest points deduction: Loss of four points drops club into relegation zone — BBC Sport
7. Independent Appeal Board decision on Nottingham Forest — Premier League
8. Premier League statement: Everton FC deducted two points by independent Commission — Premier League
9. Everton withdraw points deduction appeal — BBC Sport
10. Wood's brace secures safety for Nott'm Forest — Premier League
11. Premier League statement: New financial rules — Premier League
12. Premier League clubs to be banned from selling assets to themselves — BBC Sport