WE’VE KNOWN for years that clubs in the EFL Championship have dangerously high wage-to-income ratios, but Nottingham Forest’s wage bill now consumes over 200% of their total revenues, the worst in the league. In their 2020-21 financials, Forest revealed that their wages totalled £ 37.2 million while their income amounted to £ 18.4 million. Such a figure, obviously influenced by the impact of the pandemic, should send alarm bells ringing among Forest’s loyal fans.
Forest’s ownership has already written off some £ 73 million in loans, otherwise the club’s net debt would be higher than the current level of £ 36.2 million, a figure that compares favourably to most of the Championship, notably fellow midlanders Stoke City and Birmingham City. They have also converted £ 52 million of debt to equity to ease the situation, including £ 12 million in the last financial year.
Forest’s pre-tax loss for 2020-21 was £ 15.5 million, slightly less than the £ 15.9 million lost in 2019-20. They have only made a profit once since 2005 and have lost over £ 100 million in the past decade, including in excess of £ 60 million since Evangelos Marinakis took over. The operating loss for the season was more than £ 34 million.
Forest’s overall revenues dropped by 27% on 2019-20. This was their lowest income since 2015-16 after four seasons when they generated £ 23 million per season. The current level equates to mid-table levels of earnings, but is way behind clubs like Norwich (£ 57 million) and Cardiff (£ 55 million). Over the past two seasons, covid-19 has cost the club some £ 16 million in lost revenues.
The club has to cancel its shirt sponsorship with Football Index, who went into administration. Furthermore, the redevelopment of the 10,000-seater Peter Taylor stand has been put on hold, but Forest expect planning approval to be granted soon.
Matchday income totalled just £ 1.3 million in 2020-21 owing to empty stadiums for the vast majority of home fixtures. This was an 83% decline on 2019-20. Forest are not alone in virtually wiping out this revenue stream. This was partly compensated by a 12% rise in media income to £ 11 million. Commercial earnings went down by £ 2 million to £ 6.2 million.
Player trading have long been important to Forest and in 2020-21, profit from sales was £ 14.3 million, 27% more than the previous season. This was the second highest in the past 10 years, but way lower than clubs like Norwich City (£ 60 million) and Brentford (£ 44 million). The biggest sale was Matty Cash’s move to Aston Villa, which raised £ 14 million.
Forest spent modestly in a season that saw them finish a disappointing 17th. The signings of Harry Arter (Bournemouth) and Loïc Mbe Soh (Paris Saint-Germain) were all bought for undisclosed fees but Scott McKenna of Aberdeen cost around £ 3.5 million. Transfer income was approximately £ 15 million. Unfortunately, Arter fell out with the club and was sent on loan after just a few months and is currently at Notts County.
The club clearly has a very committed owner, but the wage-to-income ratio is still precarious and can only be unsustainable. Forest, in normal times, have a healthy support base – they have an impressively high percentage of season ticket holders and their average gate in 2021-22 is close to 27,000. This bodes well for the club’s 2021-22 accounts. Forest have made headlines this season in the FA Cup, beating Leicester City and Arsenal, and are not far off contending for promotion. Can they push on and return to the Premier League and transform their financial position?