Nottingham Forest have had four points deducted for breaching the Premier League’s financial rules.

The sanction drops Forest into the Premier League’s relegation zone, leaving them 18th with nine games to play. 

The Premier League said Forest admitted breaching profitability and sustainability rules (PSR) by Stg 34.5million ($A67m)  above their permitted threshold of Stg 61million ($A118 m). 

Clubs are usually allowed maximum losses of Stg 105m ($A204 m) over a three-year assessment period but this is reduced by Stg 22m ($A43 m)  per season for any seasons within the period spent in the Championship.

The commission which imposed the sanction on Forest praised the club for their “exceptional co-operation” in their dealings with the Premier League on this issue.

The commission noted Forest’s breach was “serious” and stated in its conclusion: “The four points sanction is not to punish Forest so much as it is to be fair to the other clubs; to give the public confidence that when a club invests as Forest did to compete in the Premier League, it still needs to comply with the PSR threshold for losses.”

The Premier League had pushed for a six-point sanction while Forest argued for a “minimal” deduction because, to maximise value, Brennan Johnson’s Stg 47.5million ($A92m) sale to Tottenham occurred a short period later than was necessary for the assessment period, so their PSR breach was a “near miss”.

But the commission noted he was sold nearly two months after the PSR period ended. 

The commission ruling added: “When a club like Forest took the risk of effectively ignoring the PSR warning from its finance director before the January window in 2023, and rather than looking to sell players, it added players to its squad, ultimately leaving itself with just two weeks to sell Player A (Johnson) in the summer 2023 window, such risk taking and ‘sailing close to the wind’ needs a proportionate sanction to maintain the integrity of the Premier League.”

Forest said they were “extremely dismayed by the tone and content of the Premier League’s submissions”.

“The statement added: After months of engagement with the Premier League, and exceptional cooperation throughout, this was unexpected and has harmed the trust and confidence we had in the Premier League.”

Forest have yet to indicate whether or not they would appeal. Under the ‘standard directions’ for dealing with PSR complaints, any appeal outcome must be known before June 1.

Everton were docked 10 points in November for breaching PSR in the period up to the 2021-22 season, which was reduced to six on appeal.

A second complaint against the Toffees over a breach in the period up to last season is still being dealt with.