Nottingham Forest - From The Ritz To The Rubble

Nottingham Forest have enjoyed a glorious past, albeit largely relating to one magical period under the legendary Brian Clough and his assistant Peter Taylor. After gaining promotion from the old Second Division in 1977, Clough’s Forest become Division One champions at the first time of asking in 1978 and then proceeded to win the European Cup two years in succession. In the same purple patch, they also picked up two League Cups.

This was a remarkable achievement for a club of Forest’s size and was testament to the genius of the manager, as the team featured few superstars. These successes have been wonderfully chronicled in the superlative documentary and book, “I Believe In Miracles”, which is well worth the attention of any football fan.

However, recent history has not been so kind. Next season will be the 18th that Forest have spent outside the Premier League, which is a shocking indictment for a club that once scaled the heights . Chairman Fawaz Al Hasawi agreed with this downbeat assessment in his review of the 2014/15 season, which he described as “a time of missed opportunity”.

The Al Hasawi family purchased the club in July 2012 from the estate of former owner and lifelong fan, Nigel Doughty, after his sad and premature death. Initially, the Kuwaiti businessmen talked a good match, “We know there are challenging times ahead of us to bring the club back to its glory days and we look forward with excitement towards a new successful future.”

"Until I learn to accept my Jamie Ward"

The new owners were also boosted by Doughty’s estate only taking a £20 million repayment against the outstanding £86 million of loans, thus enabling the club to move forward with a relatively clean slate.

However, it is fair to say that the Al Hasawi era has not been a glittering success. While it is true that they have made a substantial investment into the club, amounting to £67 million of loans as at 31 May 2015, Forest are no nearer securing a return to the top flight, as they continue to struggle in the Championship.

Indeed, one damning statistic is that their league position has deteriorated every season under Al Hasawi: 8th in 2012/13, 11th in 2013/14, 14th in 2014/15 and 16th in 2015/16. In other words, they are now closer to League One than the Premier League, which is particularly disappointing, given that they reached the play-offs two seasons in a row as recently as 2009/10 and 2010/11.

The constant managerial upheaval surely cannot have helped matters. In the four years since the new owners took charge, Forest have had no fewer than eight people coaching the team, despite Al Hasawi claiming, “I don’t like to change managers. I like stability.”

"Do your best and don't worry"

They started as they meant to go on, i.e. shambolically, with four different managers in their first six months, as noted in a magnificent paragraph in the 2012/13 accounts: “The year started with Steve Cotterill as football manager. He was replaced in July 2012 by Sean O’Driscoll, who himself was replaced in December 2012 by Alex McLeish. Alex was only in the position until February 2013, when he was replaced by the current manager Billy Davies.” And breathe.

After alienating most people with his somewhat abrasive style, Davies was sacked after a year with Gary Brazil taking the role on a caretaker basis (though arguably that’s the only valid description of the position), before the arrival of fans’ favourite Stuart Pearce. After a promising start, the team’s form collapsed, so “Psycho” also failed to last a season.

Next on the chopping block was another former Forest player, Dougie Freedman, though he was given his P45 in the dreaded February/March period with coach Paul Williams stepping up to the plate until the end of the season. Incredibly, Forest are currently without a manager, though many would understandably think twice before accepting this poisoned chalice.

There has been similar turnover in the important Head of Recruitment role, while the brief experiment with an experienced chief executive ended with the resignation of Paul Faulkner, after the former Aston Villa man claimed that he was not allowed to do his job.

The owners’ strategy has essentially been to throw money at the problem, resulting in much higher wage bills and increasing debt. To be fair, the issue has not so much been a lack of investment, but the seeming absence of any sort of strategic plan, which has resulted in the money being largely wasted.

"Vaughan in a storm"

This impression has been reinforced by numerous financial glitches, including late payments to suppliers, failures to pay football clubs transfer fee installments (e.g. to Peterborough United for striker Britt Assombalonga) and five (yes, five) winding-up orders, including two this year alone for non-payment of tax.

Although the club described these problems as “purely administrative”, this sort of incompetence is never a good sign. One reason offered for slow payment of wages was “a national holiday in Kuwait”, which is only one step above “the dog ate my homework”.

Even if Al Hasawi wanted to spend more on the club, he would not have been able to do so, as the club’s losses resulted in Forest breaching the Financial Fair Play (FFP) regulations, thus being placed under a transfer embargo in December 2014.

This catalogue of woe means that it is not overly surprising that the owners are looking for others to come on board. Indeed, there are strong rumours that Greek shipping magnate Evangelos Marinakis, the owner of Olympiacos Piraeus, is poised to buy 80% of Forest.

Although Forest might seem like an attractive proposition, any new investor would discover a club in a fairly poor financial position, as seen by the 2014/15 accounts, which featured a loss of £21.5 million.

This actually represented a £2.5 million improvement over the previous season’s £24.0 million loss, though that included a £1.1 million restatement following the cancellation of a  sponsorship agreement with the Al Hasawi family (for the shirt and areas around the City Ground).

The main reason for the lower loss was a £4.3 million increase in profit on player sales to £6.1 million, largely due to the sales of Jamaal Lascelles and Karl Darlow to Newcastle United.

Revenue also rose by £2.1 million (14%) to £17.4 million, which Al Hasawi ascribed to “the dedication of the supporters and the work of the commercial department”. This was reflected in match day income increasing by £1.0 million (14%) to £8.2 million and commercial income rising by £0.5 million (18%) to £3.1 million.

However, another important factor was income from player loans climbing £1.0 million to £1.5 million, as a remarkable 12 players were loaned out, including Radoslaw Majewski, Jamie Mackie, Greg Halford, Dan Harding and Djamel Habdoun (amongst others). On the other hand, broadcasting income dropped by £0.4 million (8%) to £4.6 million.

There was another “significant increase” in the wage bill, which rose £2.5 million (9%) from £27.2 million to £29.7 million, while player amortisation was up £0.7 million (13%) to £6.4 million. Other expenses slightly increased to £8.2 million, while interest payable was £0.5 million worse, as the previous year included a credit after interest previously charged by the holding company had been waived.

Despite the improvement to the bottom line, only two Championship clubs reported larger losses than Forest in 2014/15, namely Bournemouth £39 million and Fulham £27 million. In fairness, hardly any clubs are profitable in the Championship with only six making money in 2014/15 – and most of those are due to special factors.

Ipswich Town were top of the pops with £5 million, but that included £12 million profit on player sales. Cardiff’s £4 million was boosted by £26 million credits from their owner writing-off some loans and accrued interest. Reading’s £3 million was largely due to an £11 million revaluation of land around their stadium. Birmingham City and Wolverhampton Wanderers both made £1 million, but were helped by £10 million of parachute payments apiece.

So the only club to make money without the benefit of once-off positives were Rotherham United, who basically just broke even – and ended up avoiding relegation to League One by a single place.

Of course, losses are nothing new for Forest, as the last time they made a profit was back in 2005 – and that was only £1.1 million. Since then the club has suffered a decade of losses, amounting to an extraordinary £126 million.

This was all meant to change with the arrival of the Al Hasawi family: “From the club’s perspective the new ownership represented the end of a period of uncertainty and has allowed the club to once again stabilize its finances.”

In reality, the deficits have increased with £63 million of losses being accumulated in the last three years, averaging £21 million a season. This is more than double the average annual loss of £9 million over the preceding seven seasons.

As we have seen, part of the 2014/15 improvement was due to profits made from player sales. These can have a major impact on a football club’s bottom line, but it’s not an enormous money-spinner outside the Premier League with the most profit made by Norwich City £14 million, followed by Ipswich £12 million, Leeds United £10 million and Cardiff City £10 million.

Forest made £6 million from this activity, which was boosted by the way that player values are accounted, as the major sales (Lascelles and Darlow) were both homegrown products, so had no value on the balance sheet (as no transfer fees had been paid). Against that, the club would have absorbed losses for the large number of players released on free transfers.

Over the years, Forest have made very little money from player sales. In fact, the last time that they registered a profit above £2.5 million from this activity (before last season) was 2005, when the £5.1 million (plus an exceptional £1.5 million gain on finance leases) helped produce the club’s last overall surplus.

In the nine years between 2005 and 2015, the club only generated a total of £11.5 million profits from player sales, i.e. just £1.3 million a season. In some cases, this can be considered a positive, as it means that a club is retaining its best players, but here it is more likely to be because Forest have not had many players that others clubs would want to buy.

There are a few signs that this might be changing, as the 2015/16 accounts will be boosted by the £7 million sale of Michail Antonio to West Ham, though accounting losses will also be incurred for the release of the likes of Jamie Mackie. In financial terms, this might be seen as “running to stand still”, as the reasonably good profits from player sales in 2014/15 did not prevent a thumping great overall loss.

This is because Forest’s underlying profitability is getting worse. Most clubs use EBITDA (Earnings Before Interest, Depreciation and Amortisation) as an indicator of financial health, as this strips out once-off profits from player trading and non-cash items. This has been consistently negative at Forest, but has plummeted from minus £2 million in 2005 to minus £20 million in 2015.

This was one of the worst in the Championship, only better than Bournemouth, whose minus £25 million was heavily influenced by large promotion bonuses. In real terms, Forest had the lowest EBITDA, which means that they are the least profitable club in the division.

To be fair, only three clubs had a positive EBITDA in the 2014/15 Championship (Wolves, Birmingham City and Rotherham) and none of those clubs generated more than £1.5 million. In stark contrast, in the Premier League only one club (QPR) reported a negative EBITDA, which is testament to the earning power in the top flight.

Revenue has only grown by £2.8 million (19%) in the three seasons since Al Hasawi arrived and even that is a bit misleading, as it includes £1.5 million of player loans income. This has only been included as gross income since 2013, as it had previously been netted off against expenses.

Excluding the effect of this accounting restatement, the real revenue growth is just £1.2 million (8%), which is a long way from the increases implied by the owners’ 3-5 year plan.

Part of the problem was actually highlighted by the club in the 2012 accounts, as it explained one of the reasons for the revenue reduction that year as being “the lower performance of the first team”.

Even after the rise in Forest’s income to £17.4 million, this is still on the low side and clearly bottom half of the table in the 2014/15 Championship. Although Blackpool and Bolton Wanderers are yet to publish their accounts, we can safely say that their revenue was higher than Forest, as they both received £10 million parachute payments.

Therefore, Forest only had the 16th highest revenue in the Championship, only above eight clubs, though one of these (Bournemouth) did manage to get promoted. To further place this into perspective, four clubs enjoyed revenue higher than £35 million (more than twice as much as Forest): Norwich City £52 million, Fulham £42 million, Cardiff City £40 million and Reading £35 million.

Of course, these revenue figures are distorted by the parachute payments made to those clubs relegated from the Premier League, e.g. in 2014/15 this was worth £25 million in the first year of relegation.

However, if we were to exclude this disparity, Forest would still find themselves back in tenth place. The revenue differentials would be smaller, though they would be behind different clubs, e.g. the top three would then be Norwich City £29 million, Leeds United £24 million and Brighton and Hove Albion £24 million.

The most important revenue stream for Forest is match day, which contributes 47% of total revenue, followed by broadcasting 26% and commercial 18%. Player loans accounted for as much as 9% of 2014/15 revenue.

In fact, no club has a greater reliance on match day revenue in the Championship than Forest’s 47%, ahead of Charlton Athletic 43%, Brighton and Hove Albion 42%, Millwall 41% and Ipswich Town 40%.

Forest’s match day revenue actually rose by £1.0 million (14%) to £8.2 million in 2014/15, even though they hosted four fewer cup games, as the average attendance increased from 22,630 to 23,492, largely due to having Forest legend Pearce at the helm.

This meant that Forest’s match day revenue was the fourth highest in the Championship, only behind Norwich City £10.7 million, Brighton £9.8 million and Leeds United £8.8 million.

In terms of attendance, it was a similar story, as Forest were the fifth highest, though it would have been somewhat galling to see that the league leaders were local rivals Derby County with 29,232.

However, to add to Forest’s concerns, attendances fell by a massive 3,800 (16%) in 2015/16 to 19,676, even though season ticket prices were frozen, due to a combination of several factors:  unhappiness with the owners, the poor football on display and high ticket prices.

Whatever the reasons, this is the first time that attendances have dipped below 20,000 since the club was in League One in 2007/08, which is clearly bad news, given how important gate receipts are to Forest’s business model.

Indeed, Forest have decided to cut ticket prices by 5% for the 2016/17 season with Al Hasawi explaining the rationale thus, “With loyal supporters making a financial commitment to support this club I feel it is our duty to extend the (early bird) offer.” Fair enough, but it could just as easily be a straightforward acknowledgment of the need to do something to prevent the crowds falling any further.

Of course, in the Premier League, the vast majority of all but the elite clubs’ income is derived from broadcasting, but this is not the case in the Championship. Here, most clubs receive just £4 million of central distributions, regardless of where they finish in the league, comprising £1.7 million from the Football League pool and a £2.3 million solidarity payment from the Premier League.

However, the clear importance of parachute payments is once again highlighted in this revenue stream, greatly influencing the top eight earners, though it should be noted that clubs receiving parachute payments do not also receive solidarity payments.

Nevertheless, it should be noted that these payments are not a panacea, so Middlesbrough secured promotion last season, even though their broadcasting income of £6.2 million in 2014/15 was less than half the size of those clubs boosted by parachutes.

Looking at the television distributions in the top flight, the massive financial chasm between England’s top two leagues becomes evident with Premier League clubs receiving between £67 million and £101 million, compared to the £4 million in the Championship. In other words, it would take a Championship club more than 15 years to earn the same amount as the bottom placed club in the Premier League.

The size of the prize goes a long way towards explaining the loss-making behaviour of many Championship clubs and to some extent justifies Forest’s profligacy. This is even more the case with the astonishing new TV deal that starts in 2016/17, which will be worth an additional £30-50 million a year to each club depending on where they finish in the table.

As an example, I have (conservatively) estimated that the club finishing bottom in the Premier League next season will receive £92 million, which is £87 million more than a Championship club not receiving parachute payments. Forest might well be a big club, but the TV deals in the Premier League have risen to stratospheric levels since they last graced the top flight, so they now have to compete against the realities of the modern footballing world.

From 2016/17 parachute payments will be even higher, though clubs will only receive these for three seasons after relegation. My estimate is £75 million, based on the percentages advised by the Premier League (year 1 – £35 million, year 2 – £28 million and year 3 – £11 million). Up to now, these have been worth £65 million over four years: year 1 – £25 million, year 2 – £20 million and £10 million in each of years 3 and 4.

There are some arguments in favour of these payments, namely that it encourages clubs promoted to the Premier League to invest to compete, safe in the knowledge that if the worst happens and they do end up relegated at the end of the season, then there is a safety net. However, they do undoubtedly create a significant revenue disadvantage in the Championship for clubs like Forest.

Surprisingly for a club of Forest’s admirable tradition, their commercial income of £3.1 million, up from £2.6 million the previous season, was one of the smallest in the Championship in 2014/15, way behind Norwich City £12.8 million, Leeds United £11.3 million and Brighton £8.9 million. In fact, it was only ahead of four clubs: Charlton Athletic £2.5 million, Brentford £2.4 million, Millwall £1.9 million and Wigan £1.5 million.

Forest’s commercial income is made up of sponsorship, royalties and advertising £0.8 million, match day hospitality, events and catering £1.8 million and merchandising £0.6 million.

One of the reasons for Forest’s low commercial revenue is their merchandising deal with Kitbag, though this ended in June 2015, so next year’s accounts should see some upside. That said, there is considerable room for improvement in the commercial arena when you consider that local Midlands rivals, Derby County and Wolves, both generate around £8 million a year from this activity.

"Shout, shout, let it all out"

For the past three seasons Forest’s shirt has been emblazoned with the name of one of the owner’s companies, namely Fawaz Refrigeration & Air Conditioning. Although the chairman described this as a “lucrative” deal, he did admit that he would have preferred to secure an external sponsor, and he has now done so. From the 2016/17 season, Forest will have online betting firm 888 Sport as its shirt sponsor.

It remains to be seen whether some of the sponsorship areas around the stadium will be continued to be utilised by companies controlled by the Al Hasawi family at no charge. Either way, it feels a long way from the days when Fawaz claimed that Forest’s revenue issues would be addressed in the form of new sponsorship from several companies in Kuwait.

The current three-year kit supplier partnership with Adidas runs until the end of the 2016/17 season.

Forest’s wage bill rose by 9% (£3 million) from £27 million to £30 million in 2014/15, which means that wages have increased by a staggering 69% (£12 million) in the three years since Al Hasawi arrived, while revenue only grew by 19% (£3 million) in the same period, thus pushing the wages to turnover ratio up to an awful 170%.

As the club observed, “the owners gave significant support to football management in an effort to support the promotion bid.” In a way, that is laudable, though it is unclear how much is included in the wage bill for pay-offs to all the sacked managers (and their backroom staff).

This is the price Forest have paid for their frequent changes at the top, perhaps the worst example being Billy Davies being sacked just six months after being awarded a four-year contract.

In any case, the last time that Forest had a wages to turnover ratio below 100% was back in 2009. Of course, wages to turnover invariably looks terrible in the Championship with no fewer than 10 clubs “boasting” a ratio above 100%, but Forest’s 170% was the third highest (worst), only behind Bournemouth 237% and Brentford 178%.

Given that, it might come as something of a surprise then to see that Forest’s wage bill of £30 million was actually only the seventh highest in the Championship, behind Norwich City £51 million, Cardiff City £42 million, Fulham £37 million, Reading £33 million, Bournemouth £30 million and Blackburn Rovers £30 million – though it was almost £10 million more than Watford, who were promoted that season.

Stop me if you’ve heard this before, but this was once again because most of these clubs enjoyed the benefit of parachute payments. If we look at clubs who did not receive such payments, then Forest had the second highest wage bill, only £700k behind Bournemouth, whose wages were significantly inflated by substantial promotion bonus payments, but £8 million above Derby County. In other words, Forest's wages were effectively the highest of any club not receiving parachute payments - and by some distance.

It is likely that the wage bill will fall in 2015/16 following the departure of some high earners (and  lower termination pay-offs), but it will still be a real challenge for the club to control this while giving themselves the best chance of promotion.

Another aspect of player costs that has been steadily rising at Forest is player amortisation, which is the method that football clubs use to expense transfer fees. In line with the higher sums spent on bringing players into the club, player amortisation has grown under the current ownership from £2.5 million in 2012 to £6.4 million in 2015.

As a reminder of how this works, transfer fees are not fully expensed in the year a player is purchased, but the cost is written-off evenly over the length of the player’s contract via player amortisation. As an illustration, if Forest were to pay £5 million for a new player with a five-year contract, the annual expense would only be £1 million (£5 million divided by 5 years) in player amortisation (on top of wages).

Although Forest’s player amortisation might not seem a huge charge, it was actually the fourth highest in the Championship, only surpassed by those clubs relegated from the Premier League in recent times, i.e. Norwich City, Cardiff City and Fulham. Of course, this expense should have come down in 2015/16 following the transfer embargo and release of many players.

The other side of that coin is that player values on the balance sheet have also increased, more or less tripling from £3.1 million in 2012 to £9.2 million in 2015. That is the accounting value in the books, but the actual market value would obviously be much higher if Forest were to sell any of its players, as homegrown players have zero value in the accounts.

It will not have escaped the supporters’ attention that the performances on the pitch have actually worsened as both wages and player values have increased, which is not how these things generally work. As The Blow Monkeys once sang, “It doesn’t have to be this way.”

In fairness to Al Hasawi, one thing that he cannot be accused of is failing to back his managers in the transfer market. Even with the impact of the transfer embargo, Forest have made gross purchases of £23 million in his four seasons, compared to only £9 million in the preceding four seasons.

On the other hand, there has also been an increase in player sales from virtually nothing between 2008 and 2012 to £17 million in the last four years, so net spend has overall decreased.

Clearly, Forest have had to act smarter since the embargo was put in place, so they have made some astute free signings such as Matt Mills, Jamie Ward and Daniel Pinillos. They have also dipped into the loan market with good contributions from the likes of Nelson Oliveira, Ryan Mendes, Bojan Jokic and Gary Gardner.

As a result of the transfers of Antonio, Lascelles and Darlow, Forest had £4 million of net sales over the last two seasons. This meant that they were comfortably outspent by the likes of Derby County £29 million, Middlesbrough £23 million and Burnley £14 million.

In fact, the two automatically promoted clubs and the four that qualified for the play-offs filled six of the seven top places in the net spend league, which underlines how much Forest have been hit by the transfer embargo, so it is good news that the chairman has confirmed this has recently been lifted (though there is nothing to this effect on the Football League website).

Forest’s net debt significantly increased in 2015 from £52.0 million to £82.1 million, as gross debt rose by £29.5 million from £52.6 million to £82.2 million and cash fell £0.5 million from £0.6 million to just £0.1 million.

Virtually all of the debt is owed to the club’s owner, either directly to the Al Hasawi family (£67 million) or indirectly via the loan from the parent company, NFFC Group Holdings Limited, £14.9 million. No interest is charged on these loans, which are only repayable when the club “is in a position to do so”, so this could therefore be considered “soft” debt. Other football club owners have gone a stage further by converting much of their debt into equity, though last month Al Hasawi did convert £8 million into capital.

Indeed, after the takeover the estate of Nigel Doughty allowed £66 million of their outstanding debt to be capitalised. As the club said, that represented a “considerable and significant improvement to the balance sheet.” The remaining balance of £20 million was repaid using funds provided by the parent company. However, just three years later, Forest’s debt is back up to the pre-capitalisation levels.

Forest’s was by no means the largest debt in the Championship, being lower than six other clubs. In fact, four clubs had debt over £100 million, including Brighton £148 million, Cardiff City £116 million and Blackburn Rovers £104 million. Bolton Wanderers have not yet published their 2015 accounts, given their much-publicised problems, but their debt was a horrific £195 million in 2014.

That said, the vast majority of this debt is provided by owners and is interest-free, so the amounts paid out by Championship clubs in interest is a lot less than you might imagine.

In addition to the financial debt, Forest owed £2 million in transfer fees, while they also had quite high contingent liabilities of £6.6 million, up from £4.3 million, for player purchases and first team management changes.

The accounts state that the club “relies on the continued support of the Al Hasawi family for its day to day funding and funds its working capital requirements through a facility provided by the Al Hasawi family.” This is clearly seen in the 2015 cash flow statement.

Even after adding back non-cash items such as player amortisation and depreciation, then adjusting for working capital movements, Forest made a substantial cash loss from operating activities of £23.9 million. They then spent a net £5.7 million on player recruitment and £0.5 million on capital expenditure. This was funded by an additional £29.7 million loan from Al Hasawi.

One other point worth noting is the increase in creditors in 2013 and 2014, which meant that the club was effectively funding some of its expenditure by the old trick of paying suppliers later.

Of course, it is nothing new for Forest to rely on their owner for financial support, as it was much the same story under Doughty with the only real source of funds being additional shareholder loans. In fact, since 2005 around £127 million has been provided by the club’s owners with almost 70% (£88 million) of that money being used purely to cover operating losses.

Only £14 million was used for player purchases (net), while over £18 million went on sorting out the finances: reduction in overdraft £9.8 million, loan repayments £6.7 million and interest payments £1.8 million.

What is striking is how little money (only £6.6 million) has been spent on infrastructure investment, so there have been virtually no improvements to the stadium or the academy. This is in stark contrast to clubs like Brighton and Brentford where the owners have also provided ample funding, but large amounts have been invested in their long-term future.

It is also true that there has been an increase in financial dependency under Al Hasawi with the family needing to pump in £67 million in just three years. As a comparison, Doughty had to stump up a similar sum (£65 million) over the preceding eight years.

"It looks like Daniel"

As we have already noted, Forest’s 2013/14 loss meant that they breached the Financial Fair Play regulations, resulting in a transfer embargo. The Football League simply stated that the club had “exceeded the maximum permitted deviation of £6 million – consisting of a maximum adjusted loss of £3 million plus a further maximum of £3 million of shareholder investment.”

It should be noted that FFP losses are not the same as the published accounts, as clubs are permitted to exclude some costs, such as youth development, community schemes, promotion-related bonuses and infrastructure investment (such as stadium improvements and training ground). That said, this does not really  help Forest’s FFP calculation that much, as they have spent so little in these areas.

Instead, this will remain a major issue for the owners, as they noted in the accounts: “Preparation to meet the challenges of FFP also adversely affected the season as management worked tirelessly behind the scenes to thrive in the changed environment.”

That may be, but it is somewhat surprising that they took so long to wake up to the realities of FFP, given that the 2012 accounts explicitly stated that this “will be a challenge for the new owners.”

From the 2016/17 season the regulations will change to be more aligned with the Premier League, so that the losses will be calculated over a three-year period up to a maximum of £39 million, i.e. an annual average of £13 million. This will likely encourage clubs to “go for it” even more.

"Many Happy Returns"

Any renewed spending may well be under new ownership, as Al Hasawi has tired of the criticism: “If people are pushing and always negative, and there is no appreciation, why should I continue? Maybe there are some people better than me and I am doing it wrong.”

The obvious answer would be that few could do worse, but it might be a case of “out of the frying pan and into the fire” if the rumours are true about Olympiacos owner Evangelos Marinakis buying into the club. He is currently banned from any “football activity” in Greece with the public prosecutor’s dossier containing a lengthy list of allegations, including blackmail, fraud and bribery.

In any case, Forest fans would not have seen the last of Al Hasawi, who would like to stay on as chairman: “Whatever happens, it is not going to be a sale of the club. I want this club to win promotion and I want to be here when it happens.”

Even after all the misadventures on his watch, Al Hasawi is still optimistic, “I hope this will be a positive summer, because I want to do things right. I want this to be the time we get it right.” On the plus side, key players like Assombalonga and Chris Cohen are returning from lengthy injuries, but the lack of a manager does not exactly inspire confidence.

Realistically, the chances of  a return to the Premier League appear further away than ever. The Championship is a tremendously competitive league and Forest seem ill-equipped to mount a serious challenge against those clubs benefitting from hefty parachute payments – or even those with wealthy owners who have a good understanding of the game. Unless, of course, you do believe in miracles.

Nottingham Forest - Shadows And Tall Trees

Last season was a bit of a déjà vu experience for Nottingham Forest fans, as their team looked a good bet for promotion to the Premier League for much of the campaign, only to be defeated in the Championship play-off semi-final for the second year in a row. Their disappointment was not lessened by the fact that they lost to the eventual winners, Swansea City and Blackpool, on both occasions.

Yet again, the team’s performances had promised so much, built on the formidable partnership of Wes Morgan and Luke Chambers in central defence providing solid protection to goalkeeper Lee Camp, whose form was good enough to win a couple of international caps for Northern Ireland. The experience of midfielder Paul McKenna and forward Rob Earnshaw was complemented by the emergence of the exciting young Lewis McGugan, who was the club’s leading scorer with an impressive 13 goals.

Nevertheless, football is the ultimate results-based game, so it was no huge surprise when manager Billy Davies was sacked in the summer, to be replaced by Steve McClaren. Inevitably, the appointment of the so-called “wally with the brolly” raised eyebrows, but apart from his ill-fated reign as England manager, McClaren has a pretty good record and is an experienced coach. He revived his reputation by guiding FC Twente to the Dutch championship after the England debacle, though his time managing Bundesliga side Wolfsburg was not so successful.

"Return of the Mac"

His misfortune in Germany certainly hasn’t dented his confidence, as seen by his prediction during his first press conference, “I wouldn’t be sat here if I didn’t think I was the man to fulfil everybody’s dream of playing in the Premier League. That is the ultimate goal.” In order to boost Forest’s promotion prospects, McClaren has brought in Rob Kelly, the former Leicester City boss, as assistant manager and Jimmy Floyd Hasselbaink, the old Chelsea and Holland striker, as first team coach.

Many felt that Davies, described by Forest owner and chairman Nigel Doughty, as “probably the best manager, at this level, in the game”, was unfortunate to be dismissed and there is little doubt that he did a fantastic job in turning round the fortunes of a team that was struggling in the Championship relegation zone when he took over, after only winning twice in 19 league games under Colin Calderwood. Indeed, Doughty admitted, “Billy Davies was unlucky to lose his position and unlucky in two play-offs, when we came close. In the end, we felt that to motivate the squad for a third time, under the same sort of leadership, would have been difficult.”

However, that’s only part of the story, as Davies’ public grumbling about lack of funds and frequent sniping at the club must surely also have been a contributory factor to his demise. Quite frankly, statements like “there is not a job that I would not consider” were just asking for trouble, especially given that Davies has plenty of previous for similar outspoken rants against the board at Derby County and Preston North End.

"The always appealing Billy Davies"

Eventually, these shenanigans proved too much for Doughty, who relieved Davies of his duties. A co-founder of the leading private equity firm Doughty Hanson, he is known for his financial expertise, which stood him in good stead when he took over the club in 2002. In fact, it’s probably not over-stating the case to say that without his guarantees, Forest would almost certainly have ended up in administration.

The club had been in financial turmoil for many years, finally abandoning their membership structure in 1997, leading to an ill-fated takeover by the Bridgford Consortium, featuring former Tottenham chairman Irving Scholar, serial entrepreneur Nigel Wray, businessman Julian Markham and author Phil Soar. Their ambitious plans effectively collapsed after a disastrous flotation on the Alternative Investment Market, which raised just £2 million – about £18 million less than they had predicted. However, Doughty’s initial attempts to take over the club were strongly resisted by Scholar and Markham, and his investment was only confirmed after he won a bitter court case.

That was not the end of Forest’s financial woes, as the collapse of ITV Digital left them with substantial levels of debt. Indeed, in 2004 Nottingham City Council threatened the club with winding-up proceedings after Forest failed to make a £200,000 interest payment on their £4.3 million loan.

"Nigel Doughty - money can't buy him love"

These days, Forest are in a more robust financial position, but that is very largely due to Doughty and the funds he has injected into the club. Despite this investment, he is not universally popular with some of the Forest supporters, who believe that his cautious approach has held the club back, but the reality is that they owe him a great deal – quite literally, in terms of the club’s debts, which have been steadily increasing from £25 million in 2005 to £64 million in 2010.

Virtually all of this debt (£63 million) is owed to Doughty. Although the loan is secured by a debenture over the clubs assets and earns interest at “market determined rates”, Doughty has not been paid any of the accrued interest of just under £10 million. Instead, the date for the repayment of the principal and the accrued interest has been continually pushed back with the latest extension to 31 May 2013. In fact, Doughty has stated, “I am not looking to get my money back. I look at it as some sort of community investment”, though that’s not quite the same as a formal agreement.

The other £1 million debt is the residual amount owed to Nottingham City Council from the original £4.3 million six-year loan (at 5.25% per annum), which was due to be finally repaid last season.

It is notable how the make-up of the debt has changed since 2005, when it largely comprised an expensive bank overdraft and short-term loans. If Doughty had not stepped up to the plate, it’s doubtful whether this funding would have been renewed. Even if the banks had agreed to extend more credit, it would certainly have been more costly for the club, as the interest rate would have been higher (and needed to be paid).

Forest also owe £1.8 million in transfer fees plus have a similar amount in contingent liabilities: £1.5 million to be paid if certain players make an agreed number of international appearances and £0.5 million signing-on fees to players if they are still at the club on specific future dates.

Of course, this leads to one of the major criticisms that fans have of Doughty’s regime, namely that they have not been very active in the transfer market. Like so many things, this depends on how you look at it. In fact, in the last three years, only three clubs in the current Championship have spent more than Forest – and two of those (Birmingham City and Burnley) have had the benefit of Premier League money, with Birmingham now holding a fire sale of their more expensive players and question marks over their very existence. The other club ahead of them is Leicester City, who have effectively bet the farm on securing promotion, as it is questionable how their new Thai owners would react if they failed to achieve this objective.

With the exception of Leicester, very few other Championship clubs have really gone for it, as a new financial realism is being embraced. As Doughty put it, “Leicester don’t seem to have got the memo, but everyone else seems to get the idea, which is why there has not been that much activity.”

On the other hand, Forest’s net spend in this period was only £7.5 million, so their high position in the net spend table is more a case of them standing still, while others have balanced their books by selling players. In other words, if Forest have strengthened, they have done so more in relative terms than absolute terms, though the switch from Forest being a selling club should not be under-estimated, e.g. in the four years up to 2005 they had net sales proceeds of £22 million, but since then they have been net spenders every single year, adding up to £16 million.

Then again, Forest’s recent transfer spend is a little misleading, as most of this (£10 million) came in 2008 and 2009 with hardly anything in the following two years. In particular, Forest backed Davies in the summer of 2009 by signing nine players, many of whom played for the club on loan the previous season, including Dexter Blackstock, David McGoldrick, Dele Adebola, Chris Gunter, Lee Camp, Paul McKenna, and Radoslaw Majewski, giving them the unwanted reputation of being big spenders. Many of these players significantly improved the side, but it was unreasonable for Davies to expect similar investment every year, especially when he talked about needing “four or five stellar signings.”

That said, it was disappointing that Forest did not manage to sign anyone in the January 2010 transfer window, when they were in the Championship top two, as this might have made the difference between automatic promotion and the play-offs. It was an open secret that they were after Nicky Shorey (Aston Villa), Darren Pratley (Swansea City) and Victor Moses (Crystal Palace), but they failed to secure any of their targets. It’s unclear why this was the case, nor why there was a similar lack of purchases in the following two transfer windows.

The much-maligned chief executive Mark Arthur argued, “You cannot force people to sell. We tried everything we could possible try to get the players in, but it didn’t come off.” It’s hard to know for sure, but there is a suspicion (to paraphrase Hamlet) that he “doth protest too much”, especially as the board must have been tempted to keep their hands in their pockets when Davies was effectively a dead man walking.

"Jonathan Greening - the face of experience"

In any case, it’s always better to watch what people do, rather than listen to what they say: actions speak louder than words. Since McClaren’s arrival, very little money so far has been spent, as Forest have adopted a policy of buying in older, experienced Premier League players on the cheap. Former Forest star, Andy Reid, and Dutch midfielder George Boateng were acquired on free transfers, while Jonathan Greening only cost £600,000 from Fulham. Furthermore, quite a few players have been released, including Kelvin Wilson, Nathan Tyson, Earnshaw, Adebola and McKenna.

It’s possible that some Forest fans have unreasonable expectations, which are heightened by a glorious past, though in truth this largely relates to one magical period under the legendary Brian Clough and his assistant Peter Taylor, whereas the rest of the club’s history is not so impressive. After gaining promotion from the old Second Division in 1977, Clough’s Forest become Division One champions at the first time of asking in 1978 and then proceeded to win the European Cup two years in succession, first beating Malmö 1-0 in 1979 with a header from Trevor Francis and then retaining the trophy by overcoming Hamburg 1-0 with a John Robertson strike the following year. In the same purple patch, they also picked up two League Cups.

This was a remarkable achievement for a club of Forest’s size and was testament to the genius of the manager, as the team featured few superstars, though the likes of Peter Shilton, Martin O’Neill, Viv Anderson, Archie Gemmill and Kenny Burns would yield to few. As Steve McClaren said, “You can smell the history and tradition of this football club.”

"Brian Clough - legend"

However, recent history has not been so kind. Although Forest played in the first Premier League in 1992/93, they were relegated at the end of that inaugural season, which was also the end of the Clough era. They immediately bounced back, but dropped back down a couple of years later, a feat they repeated before falling back into the Football League in 1998/99. Since then, Forest have spent 12 long years away from the Premier League and the riches that accompany playing in the “best league in the world”, which goes a long way to explaining the reasons for their financial challenges.

In fact, the situation got even worse, as Forest became the first European Cup winners to fall into their domestic third division, when Gary Megson’s team was relegated in 2004/05. It took the Tricky Trees three years to get back into the Championship, which makes the board’s prudent policy a little more understandable.

Recently, Doughty described the approach in this way, “We are trying to push the boat out, but in a gentle fashion.” This reasonable desire for sustainability has led some fans to condemn the board for a lack of ambition. In particular, many have never forgiven them for failing to support former manager Paul Hart, who built an attractive young team, but was not given the funds to strengthen the squad and actually had to sell some of his key players.

"Lewis McGugan - helping Forest fire"

One specific source of frustration has been the clumsily named Transfer Acquisition Panel, which comprises the chairman, chief executive, manager, finance director, chief scout and football consultant David Pleat. The idea is to avoid the club wasting precious funds on a manager’s whims. As a concept, this sounds fine and many other clubs have something similar, e.g. Lyon who are past masters in the transfer market.

However, there are three potential problems with Forest’s version: (a) It seems far too bureaucratic with no fewer than six people involved. (b) It is not entirely clear what role the football consultant has – is he meant to be a de facto director of football? If so, the temporary nature of a consultant could cause problems. (c) Having had their fingers badly burned by former manager David Platt who wasted £12 million, largely on obscure Italian veterans, it looks like the club’s stance might have swung too far the other way, so they’re now loath to pull the trigger on a deal.

To a certain extent, Forest have tried to compensate by making good use of the loan system with a number of signings having an impact last season, including Scottish striker Kris Boyd (from Middlesbrough, six goals in 10 games), England U21 defender Ryan Bertrand (Chelsea), Wales captain Aaron Ramsey (Arsenal), left-back Paul Konchesky (Liverpool) and forward Marcus Tudgay (Sheffield Wednesday).

"Lee Camp makes his point"

Many Championship clubs have taken advantage of new rules that allow them to take up to six players on loan at a time, a trend that has been exacerbated by the introduction of a 25-man limit in the size of the squad for Premier League teams. The reason for this might not seem immediately obvious, but that cap does not include players aged 21 and under, resulting in Premier League clubs taking on more quality young players. They need playing time, so clubs are now more willing to loan players to the Championship, even funding some of the wages during the loan period.

While Forest’s attempts to move towards a sustainable business model are admirable, there is a nagging belief that if they were just to spend a little more then they could finally reach the Premier League, which would transform their finances. Obviously, spending would be no guarantee of success, but it is worth considering the size of the prize.

The Championship play-off final has been described as one of the most lucrative matches in world football with the value estimated at £90 million. Although this is a little misleading, given that this money is spread over a few seasons, the difference in revenue following promotion is still spectacular.

Even if the promoted club were to finish last and come straight back down, it would still receive £40 million from the TV deal plus £48 million in parachute payments over the next four years (£16 million in each of the first two years, and £8 million in each of years three and four). On top of that, gate receipts and commercial income will also certainly be higher, hence at least £90 million more revenue.

It’s incredible to think that just one place in the football pyramid can make such a difference. Of course, if the club finished higher in the Premier League, it would receive even more TV money and every season survived adds another £40+ million to the coffers.

The concern is that the club might eat into that higher revenue by increasing wages and other costs, but the net effect is still likely to be positive. If we look at the three teams that were promoted to the Premier League in 2008/09, using the last available financial figures from 2009/10, we can see that all of them (Wolverhampton Wanderers, Birmingham City and Burnley) transformed operating losses in the Championship to profits in the Premier League. In particular, Wolves’ revenue of £18 million (broadly similar to Forest) increased to £61 million in the Premier League.

As it stands, Forest’s profit and loss account is not a pretty sight, as they consistently make losses. All too appropriately, the bottom line is a sea of red with losses reported in each of the last five years. In that period, the total losses add up to more than £40 million. Furthermore, the losses have been steadily rising, from £5.1 million in 2007 to a seriously uncomfortable £12.3 million in 2010. In other words, the loss is almost as much as the turnover of £14.7 million, which means that the club spends almost £2 for every £1 it generates. As the accounts state, this can only be “sustained with the continuing financial support provided to the club by its chairman, Nigel Doughty.”

Alternatively, some clubs compensate for such shortfalls by player sales, but this is not the case at Forest, as they have made less than £5 million from the transfer market in the last five years, including just £91,000 in 2010. Some clubs can point to their losses being caused by non-cash expenses, such as amortisation and depreciation, but again Forest do not have that comfort, as their EBITDA (Earnings Before Interest Taxation Depreciation and Amortisation) is also negative every year.

Not even the promotion from League One to the Championship was enough to improve the club’s finances, as the £4.5 million increase in revenue in 2009 was more than offset by investment in the squad, resulting in wages rising by £3.5 million and player amortisation by £1.1 million. Similarly, the 22% revenue growth in 2010, largely from the new television deal, was eaten up by £4.4 million extra on the wage bill and a further £1.1 million on player amortisation. These numbers should give pause for thought to those who censure the board for not investing in the playing side.

Of course, the vast majority of Championship clubs make losses. In fact, only four reported a profit before tax in 2009/10 and one of those, Burnley, had the benefit of Premier League money. The total losses in the Championship worsened for the sixth consecutive year to a record of around £130 million, while the total net debt rose to £875 million.

That said, Forest’s loss of £12.3 million was one of the highest and only surpassed by four clubs: Sheffield United, Ipswich Town, QPR and Portsmouth. Incidentally, the size of the loss appears to have little bearing on a team’s chances of success, as the three promoted clubs in 2010/11 represented all points on the spectrum: granted, QPR made a large loss, but Norwich City only had a small loss, while Swansea City were actually profitable.

But, as Bob Dylan said, the times they are a-changin’ following the Football League’s recent decision to adopt a Financial Fair Play (FFP) framework from the 2012/13 season. Football League chairman, Greg Clarke, explained the reasons for the move, “It’s a perfect storm in that a lot of things have come together to make this happen, including of course the level of debt in the game and big losses being racked up by the clubs.”

"You'll never beat Wes Morgan"

Details of how the scheme will work have not yet been finalised, but essentially clubs will only be allowed to spend what they earn. In the early years, clubs will probably still be permitted to make small losses, but these will be limited and the amount of money that owners like Doughty are allowed to put in to cover losses will be severely curtailed. Any club breaking the rules is likely to be punished with fines and a transfer embargo.

The impact on Forest, whose business model is essentially large losses funded by the owner, will be dramatic, as Doughty explained, “With the advent of financial fair play, we are going to have a very strict budget. We are talking about drastic cuts. It is going to change things. This year, we cannot afford to be throwing around three or four-year contracts for Premier League players.”

However, one logical result of the new rules is that those Championship clubs with parachute payments will have a significant financial advantage, as can be seen by the revenue “league table” for 2009/10. As you would expect, the three clubs that were in the Premier League the previous season (Portsmouth, Hull City and Burnley) have the highest revenue (between £45 and £60 million), while the next three teams in the (Middlesbrough, Reading and Derby County) still had the benefit of parachute payments.

However, Greg Clarke argued that the effect would not necessarily be so distorting, “Largely the parachute payments are absorbed by the club paying their debt and players. Last year three clubs came down and did not make the play-offs.” This is true, but the previous season was a different story with Newcastle and West Brom returning to the Premier League at the first attempt.

Forest’s revenue of £14.7 million places them in the bottom half of the money league, so they have actually outperformed their budget by twice reaching the play-offs. That said, two of the promoted teams (QPR and Swansea City) had less revenue than Forest, so a well-managed and organised team can still succeed in the face of financial disparity.

Any growth in Forest’s revenue in the last few years has basically been down to the promotion from League One (average £8 million) to the Championship. This is partly because of the better TV deal in the higher division, but is also due to higher gate receipts and more commercial opportunities. Indeed, gate receipts remain the most important category at Forest, accounting for 48% of total revenue. This increases to almost 60% if you include hospitality and catering income, which is largely generated on match days.

Gate receipts of £7.1 million in 2009/10 were 56% higher than the £4.6 million in League One, partly due to the decision to reduce ticket prices in the lower division, but also influenced by cup runs and participation in the play-offs. Forest have a large, loyal following, as evidenced by their 2010/11 average attendance of 23,275 only being bettered by four teams (Leeds United, Derby County, Norwich City and Leicester City). Even when Forest were playing in League One, they attracted a mighty impressive 20,000 on average.

In fact, Forest have the 22nd largest attendance in England, higher than three Premier League clubs. It’s not generally appreciated that the Championship is actually the third best-attended league in Europe, ahead of the top divisions in Spain, Italy and France. Even though crowds declined 6% in 2010/11, mainly due to the “Newcastle factor”, Doughty has confirmed that season ticket sales at Forest are still selling well.

Last week Forest revealed plans to expand the capacity of the City Ground, which is owned by the council, from 30,600 to 37,000 by rebuilding the Main Stand, but only if they reach the Premier League. Corporate facilities would also be revamped to help increase turnover. This was an interesting change of approach, as chief executive Mark Arthur had previously said that the costs of redeveloping the City Ground would be prohibitive, as it is located in a dense urban area, surrounded by private housing, businesses and industry.

Indeed, four years ago the club explored the possibility of building a 45-50,000 capacity stadium in Clifton to the south of the city, but switched their plans to Gamston, due to logistical problems. Following objections by residents, the club then looked at Eastside, though plans were abandoned after the failure of the FA’s bid to host the 2018 World Cup in England.

"You are going in the Trent"

Television revenue in 2009/10 of £4.3 million was largely derived from two payments given to all clubs in the Championship, the £2.47 million distribution from the Football League and the £1 million solidarity payment from the Premier League, plus money for cup runs and facility fees (each time a team is shown live is worth £100,000 to the home team, £10,000 to the away team).

In 2010/11, this figure is estimated to increase to around £6 million, as the solidarity payment rose £1.2 million (up to £2.2 million) and each Championship club was given £0.5 million as their share of the parachute payments for Newcastle and WBA, because those two clubs went straight back up to the top tier.

However, clubs relegated from the Premier League still have the advantage of considerably higher TV revenue, as we can see by comparing Burnley’s TV revenue of £34.4 million last year, which was significantly higher than Forest’s £4.3 million. Even after relegation to the Championship, Burnley’s projected revenue will still be more than Forest, purely due to the £16 million parachute payments.

The other cloud on the horizon is the new Football League three-year TV deal that kicks off in the 2012/13 season, which will be £69 million lower than the current contract at £195 million, a reduction of 26% or £23 million a season, reflecting what Greg Clarke called, “a challenging climate in which to negotiate television rights.” As there was no interest from BBC, ITV or even ESPN, the only game in town was Sky, who could accordingly lower their bid.

Given that most of the money is allocated to the Championship, this is where the impact will be most keenly felt. The annual reduction for each club was estimated at £766,000 by the Ipswich chief executive, Simon Clegg. This is another reason, if one were required, to push as hard as possible for promotion.

Commercial revenue of £3.3 million includes around £1 million from sponsorship and advertising. Shirt sponsorship is provided by Victor Chandler, the gaming group, who replaced long-term partner Capital One in 2009 with a one-year deal that has since been extended by a further two years to 2012. Figures have not been divulged, but it was originally a “significant six-figure sum”, now rising to “seven figures”. Interestingly, if Forest had won the Championship in 2010, that would have cost the sponsor around £6 million, as it had promised to pay for season ticket renewals if that happened. The kit supplier is Umbro, but merchandising revenue is only £1.1 million. The club state that this is partly dependent on which kit is replaced, the home version being more popular.

Like most football clubs, Forest’s greatest challenge is how to restrain their wage bill while remaining competitive. Transfer activity caused this to rise a staggering 40% in 2009/10 from £11.2 million to £15.6 million, resulting in an unsound wages to turnover ratio of 106%, second only to the 121% in 2006, when the board sanctioned the purchase of players on Championship wages in order to secure promotion from League One as quickly as possible.

This is a common problem in the Championship, but Forest’s wage to turnover ratio is well above the divisional average of 88% and was only surpassed by five other clubs (Bristol City, QPR, Portsmouth, Ipswich and Preston). It is easy to see how the club arrived at this sorry state, as wages increased by more than 70% (£6.5 million) in the last five years, while revenue only grew 20% (£2.5 million) in the same period.

To give an idea of the magnitude of Forest’s challenge, if they wanted to get in line with the 60% salary cap employed in League One, they would have to either increase their revenue by 77% (£11.3 million) to £26 million or cut their wage bill by 43% (£6.8 million) to £8.8 million, neither of which seems very realistic (though FFP may play a part here).

In fairness, Forest’s wage bill is by no means the highest in the Championship, placing them more or less in the middle of the league table. However, unlike the Premier League, the wage bill does not necessarily correlate with success on the pitch, as Doughty pointed out, “If you look at our roster and our salary bill and you look at the teams who were promoted, we were way ahead of Swansea, we were ahead of Norwich in terms of cost and, until Christmas, we were on a par with QPR.”

Forest’s finance director, John Pelling, clearly spelled out the situation, “The club can only spend the level it does on transfers and wages with the continuing support of Mr. Doughty.” The chairman’s commitment can be seen in the cash flow statement, which shows that Doughty has advanced £46 million of loans in the last six years, including £13.4 million in 2009/10 alone. Pelling noted, “That is pretty much the total loss for the year”, while Mark Arthur observed, “It is double the amount we received from season ticket and match day ticket revenue.”

So what will Forest’s strategy be going forward?

In a recent interview, Doughty indicated the club’s future direction when talking about its youth policy, “What is coming out of the academy may help us, when it comes to financial fair play, because those players are not going to be as expensive. We have a wonderful conveyer belt of young players coming through. Not just one or two or half a dozen, but maybe as many as a dozen good prospects, many playing internationally already.” Forest have a reputation for a terrific academy, as evidenced by the emergence of former graduates Lewis McGugan and Wes Morgan, which should be further strengthened by the appointment of McClaren, who has a fine reputation for developing young players.

Perhaps the bigger question, as posed by John Pelling, is “what would happen if (Doughty) wasn’t around to provide the backing that he does?” The benefactor model works fine, so long as the money-man does not exit stage left for whatever reason. Like his father, Doughty is a Forest fan, born in Newark, near Nottingham, and maintains that he is still committed to the club. However, Mark Arthur has hinted that his presence should not be taken for granted, “When you are putting in that sort of money and getting the abuse he has received, it must make you think about it.”

"Guy Moussi - shout to the top"

Of course, this may not be such an important issue in future with the advent of FFP, but there's many a slip 'twixt cup and lip, so Doughty’s financial support may still be necessary for a while yet. Doughty himself has not ruled out selling, “I am not going to say never. If the right sort of potential owner with hugely deep pockets came along, you would have to consider it.”

It is clear that some fans would prefer a new owner with a more cavalier approach to spending, but there are two problems with this way of thinking. First, it’s not as if billionaires are queuing up to invest in football clubs; second, be careful what you wish for. Forest fans only have to look at the calamitous experience their neighbours Notts County endured with Munto Finance to realise that all that glitters is not gold.

The easiest way of solving Forest’s financial problems would be to gain promotion to the promised land of the Premier League. While it is fair to say that the club’s prospects of achieving that objective would be enhanced by some astute player purchases, it is equally true that spending in itself is no guarantee of success in the extraordinarily competitive Championship. That said, Doughty has actually promised to back McClaren “as far as new acquisitions are concerned”, and there is talk of Ishmael Miller and Wesley Verhoek arriving from WBA and Den Haag respectively.

"Pre-match tension from Chris Cohen"

However, those fans hoping for a major loosening of the purse strings are likely to be disappointed, as Doughty recently summed up his ethos, “If you look at the teams who have been promoted in the last few years, such as Watford, Burnley, Swansea and Norwich – they have all done it with sensible budgets. They did not do anything too risky or expensive.”

So, there you have it, more of the same for Forest. And in the current economic climate, who can really blame them?