Nottingham Forest’s accounts – calm before a bigger storm

NOTTINGHAM Forest’s 2019-20 annual accounts were issued this week, revealing a net loss of £ 15.9 million – better than 2018-19 but displaying the symptoms of a club paying out more money than it earns.

While the club is actively and demonstrably backed by owner Evangelos Marinakis, who underlined his support recently by converting £ 20.8 million of debt into equity, Forest and their fans can sleep a little easier. Given the backdrop of this pandemic-stricken world, Forest’s losses could actually have been worse, but once again, their wage bill is a cause for concern.

Forest’s wages rose by 5% to £ 38.1 million, more than the growth rate of their turnover, which increased by 1.4% to £ 25.7 million. The wage-to-income ratio went up to 

148%, a wholly unsustainable figure. Although the Championship is a division that has a ratio of 105%, Forest are way above the average. Wages may have climbed, but overall expenses went down by almost 4% to £ 49.4 million.

The club missed out on a play-off place on goal difference last season but have not built on that in 2020-21 and are currently in 17th position. Their coach, Sabri Lamouchi, who joined them in June 2019, was replaced in October 2020 by Chris Hughton after a poor start to his second season.

The elephant in the room is the financial consequences of 2020-21 and how it will affect Forest’s position. Consider that by the time the campaign ends, it is likely the entire programme will have been played out before empty stadiums. This will probably reduce Forest’s revenues by more than £ 7 million. If their wage bill keeps pace with the recent trend, it could come in at double the club’s total income. This sort of scenario could await a lot of Championship members. Hence, the commitment of owners like Mr Marinakis will be vital for the medium-term future of many clubs.

Forest’s operating loss for 2019-20 was £ 32 million, taking their total for the past 10 years to £ 227 million. Although they’ve made around £ 65 million from players sales during that period, averaging around £ 12 million per season over the past four years, such losses are clearly a drain on the club. In 2019-20, they sold home-grown young forward Arvin Appiah to Spanish club Almeria for £ 8 million. 

On the commercial front, Forest’s income dropped by 4% to £ 8.1 million, but looking closer at the figures, their sponsorship and advertising increased by 17.6% to £ 2.1 million. There was a blow for the club on the day they announced their figures for 2019-20 when shirt sponsor Football Index’s platform was suspended and they went into administration. Forest have already removed the company’s name from their strip.

Matchday income for 2019-20 was down by only 4% to £ 7.4 million, but the full impact of the pandemic will be felt in the 2020-21 accounts. Broadcasting revenues totalling £ 10.2 million, up from £ 9.2 million (+4.2%), was a little surprising in the circumstances. 

Public support for Forest is good and before the closing of stadiums, crowds were healthy and season ticket sales were above 20,000. Forest remain one of the biggest clubs outside of the Premier League and the potential is still there to return to the top flight at some stage. The club’s lack of profitability has to be addressed, however, although long-term ownership commitment appears strong at present. The pandemic will probably delay any significant developments off the pitch, but current coach Hughton – a popular figure in the game –  is hopeful the club will invest in playing resources for 2021-22.


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