
The financial regulations have been put in place to minimise the losses clubs can make as they chase success on the field.
Everton have already been hit this season with a 10-point deduction for exceeding the allowable losses at the end of the 2021/22 season.Premier League clubs are allowed to lose a maximum of £105 million ($134 million) across a three-year assessment period.
However, for every season a club was in the second-tier Championship, that amount is reduced by £22 million.
Forest, therefore, were only permitted losses of £61 million as they were promoted back to the Premier League for the first time in 23 years in 2022/23.
There are a number of deductions allowed for spending on costs that are deemed to be in the general interest of the club and the game.
These include spending on infrastructure, youth development and women’s football.
Clubs also use an accounting tool called amortisation to minimise the impact of transfer fees in their accounts.
