Why do Everton and Nottingham Forest face points deductions? Premier League preparing to stun two clubs with hammer blow

Everton and Nottingham Forest face heavy points deductions for breaking the Premier League's profit and sustainability rules.

The Toffees have already been handed a ten-point deduction earlier in the season for a similar offence from an earlier period, and they are currently appealing that sanction.

But they aren't the only team that could suffer, with Forest in a similar position.

According to the Athletic, both clubs are expecting to be referred to an independent commission over breaches of PSR.

Why do Everton and Nottingham Forest face points deductions?

The Premier League are expected to find that Forest and Everton have breached their strict profit and sustainability rules from the period starting in the 2020/21 season until the 2022/23 campaign.

In those three years, no top-flight club are allowed to lose more than £105million.

Within that, the club can only lose £15m of its own money, and the other £90m has to come from the owners' pockets through buying shares.

The Premier League then investigates teams that exceed this figure to see what the money was spent on, with certain aspects of running a club not included.

These consist of club infrastructure, academy costs and any money that goes towards the women's teams.

Transfer fees can then also be spread out over the length of a player's contract, and that's known as amortisation.

Everton

This could be Everton's second points deduction of the season after the Premier League found they were guilty of breaking the profit and sustainability rules from an earlier three-year period.

However, talkSPORT understands that the Toffees believed they were in the clear this time because they sold Richarlison to Tottenham for £60million in the summer of 2022.

But once an independent panel ruled that interest payments on their new Bramley Moore Dock stadium were not allowable losses, they realised they had breached the Premier League's rules.

This new information came too late for them to sell another player because the transfer window was closed.

Should their appeal against their current ten-point deduction be successful, the Merseysiders are confident they wouldn't have breached the profit and sustainability regulations from 2020-2023.

Nottingham Forest

The Tricky Trees have only been in the Premier League since the summer of 2022.

Since then, they have spent a lot of money on transfers without making too much back from sales.

In total, the club spent over £160m on signings last season, making less than £5m back.

The club intend to use Brennan Johnson's sale to Tottenham last summer as a defence.

However, this deal was concluded after the June 30 cut-off point for the 2020-2023 financial period.

So, that transfer comes into the next set of accounts.

They could have sold Johnson to Brentford the summer before for £30m before getting nearly £50m from Spurs a year later.

But ultimately, their lavish spending might cost them.