The club’s case was held on 24 April and an appeal board has upheld the original decision of an independent commission to impose the sanction.

The commission found Forest’s losses to 2022-23 breached the threshold of £61m by £34.5m.

It means Forest remain 17th and three points clear of the relegation zone with two games left to play.

The three-person appeal board arrived at a “unanimous” decision to uphold the original ruling by the commission, describing it as “commendably clear and comprehensive”.

“Some of the criticisms of the [original] decision have involved a minute examination of the words used by the commission,” the board said of Forest’s appeal.

“Decisions such as these should not be subjected to microscopic forensic examination and interpreted as if they were statutes which have been drafted by parliamentary counsel.

“Allegations of infelicities of language or errors which are not material to the ultimate decision add to the complexity and costs of proceedings and are rarely likely to lead to a successful challenge of a decision.”

Premier League relegation battle

* -8 points (pending appeal on 2) ** -4 points

Source: BBC Sport

In March, Forest dropped into the Premier League’s relegation zone after the initial points deduction.

The Premier League’s profit and sustainability rules permit clubs to lose £105m over three seasons – or £35m per campaign – but Forest’s maximum loss was limited to £61m as they spent two years of the assessment in the Championship.

The club’s net transfer spend in the 2022-23 season was £142.8m. They lost an average of £3m across 2020 and 2021 with a further £40m loss in 2022 and £52m in 2023, amounting to a total of £95m.

Forest had been due to receive a six-point deduction – three points for the initial breach and a further three for the size of the breach – but their “early plea” and “cooperation” saw the ban reduced to four points.

In November, Everton were docked 10 points for breaching PSR, reduced to six on appeal. The Toffees were hit were a further two-point deduction in March for a second breach, which they have appealed against; however, they are safe from relegation.

The resolution of Forest’s PSR case comes two weeks after their controversial statement on social media following a 2-0 defeat at Everton.

The club have been charged with misconduct by Football Association after the social media post questioned the integrity of the video assistant referee (VAR).

Forest had three penalty claims rejected and the club claimed they told referees body the Professional Game Match Officials Limited (PGMOL) that the game’s video assistant referee (VAR) Stuart Attwell was allegedly a fan of relegation rivals Luton.

Despite the critical post on social media, BBC Sport has been told that Forest did not ask for Attwell to be replaced prior to the match.

Forest host Chelsea on Saturday (17:30 BST) and end the campaign at relegation-threatened Burnley (16:00 BST) on 19 May.

‘It makes a mockery of the Premier League’

Luton midfielder Andros Townsend, who spent two years at Everton before moving to Kenilworth Road, has said the uncertainty over clubs being sanctioned and subsequently appealing “doesn’t make sense”.

“I think it makes a mockery of the Premier League. When you announce the charge, you have to be certain of the points deduction,” Townsend told BBC Radio 5 Live’s Monday Night Club in April.

Timeline guide to Forest & Everton cases

24 March 2023: Premier League refers Everton to independent commission over alleged breach of financial fair play rules for the three-year accounting period ending with the 2021-22 season.

17 November 2023: Everton receive an immediate 10-point deduction after being found to have breached the Premier League’s financial rules.

15 January 2024: Everton and Nottingham Forest are charged by the Premier League for breaches of the league’s profit and sustainability rules.

26 February: Everton’s first penalty for breaching Premier League financial rules is reduced from 10 points to six after an appeal.

7-8 March: Forest’s hearing takes place.

18 March: Forest are docked four points and drop into relegation zone. An independent commission found Forest’s losses to 2022-23 breached the threshold of £61m by £34.5m.

Week commencing 25 March: Hearing for Everton’s second charge, relating to three-year accounting period ending in 2022-23, takes place this week.

8 April: Everton receive second points deduction, this time docked two points.

24 April: Forest’s appeal against their four-point punishment is heard.

7 May: Independent appeal board upholds commission’s decision to deduct Forest four points.

19 May: Final day of the Premier League season.

24 May: Latest possible date for an appeal hearing to be concluded.

Profit and sustainability rules (PSR) permit clubs to lose £105m over three years and an independent commission found Everton breached that by £16.6m for the three-year period to 2022-23.

They drop one place to 16th and are now two points above the relegation zone.

The Toffees had a 10-point deduction reduced to six on appeal in February for the three-year period to 2021-22.

Everton say the club will appeal the decision.

In its written reasons the independent commission said the Premier League had asked for a five-point deduction for the club.

The commission decided that any breach of PSR justifies a three-point deduction, with an additional two points because Everton’s breach of £16.6m – 15.8% above the £105m threshold – is deemed significant.

However, the commission accepted Everton’s arguments for mitigation in relation to the fact the club has:

• Already been deducted points this season
• Suffered a loss of revenue because of the suspension of a sponsorship deal with Russian company USM
• Made an early admission of guilt

The commission concluded that the fact Everton have already been punished this season merits a two-point reduction in punishment, with a further point for the loss of sponsorship revenue and early admission of guilt.

An Everton statement read: “While the club’s position has been that no further sanction was appropriate, the club is pleased to see that the commission has given credit to the majority of the issues raised by the club, including the concept of double punishment, the significant mitigating circumstances facing the club due to the war in Ukraine, and the high level of co-operation and early admission of the club’s breach.”

The Toffees added that the club is “extremely concerned” at the “inconsistency” of the punishments, with four different commissions issuing four different points deductions this season.

Nottingham Forest are the other Premier League club to have been charged with PSR breaches this season and were docked four points in March, although they have lodged an appeal.

Championship club Leicester have also been charged by the Premier League for allegedly breaking spending rules during their last three seasons in the top flight.

There is no guarantee that Everton’s appeal will be heard before the final games of the Premier League season on 19 May when Everton travel to Arsenal.

The 2023-24 season technically remains ‘live’ until the annual general meeting in June when relegated clubs transfer their certificates and 24 May has been selected as a ‘backstop date’ for the appeals process to be concluded.

The new verdict moves Everton up to 15th and five points away from the drop zone.

It also leaves Burnley and Sheffield United an almost impossible task to save themselves.

But there are still more twists to come.

Everton and Nottingham Forest face fresh cases of alleged breaches of the Premier League’s financial rules for the assessment period ending with the 2022-23 season, with Forest’s hearing taking place on Thursday 7 and Friday 8 March while a date for Everton’s is still unknown.

The reality is that for Everton, they have gone over their limit for the three-year cycle ending in 2021-22, and two of those years count for their next hearing.

It will only be when this next process is complete that they will discover what damage their overspending has ultimately caused.

What the rest of the Premier League clubs think about the appeal panel’s new six-point verdict remains to be seen.

There was a desperation not to spend and land in trouble during last month’s transfer window. It will be interesting to see if six points proves to be a deterrent in the future.

BBC Sport looks at the key questions and what happens next.

What happens next in this Premier League season?

With the new six-point deduction determined, the Premier League can now move on to these two new cases which have to be heard by 8 April, although given that is a Monday, they are likely to be concluded the previous week.

On 8 April, there will still be six full Premier League match rounds to play, with the possibility of some rearranged games, meaning it is likely the relegation places will not have been decided.

So any decision that ends in more points deductions is virtually certain to be subject to an appeal, even as a pre-emptive strike by the clubs – and that brings the potential for chaos as there is no guarantee any appeal would be heard before the final games of the campaign on 19 May.

Those final-day fixtures include Burnley v Nottingham Forest and Arsenal v Everton.

In terms of actually playing matches, that is when the season ends. But in terms of regulation, the 2023-24 season remains ‘live’ until the annual general meeting in June when the relegated clubs transfer their certificates.

A ‘backstop date’ for the whole thing to be concluded is 24 May.

What are the financial rules?

The profit and sustainability rules (PSR) are aimed at promoting financial stability within the Premier League.

They were introduced in 2015-16, although the demand to protect clubs from overspending can be traced back to Portsmouth who in 2010 became the first – and so far only – Premier League club to go into administration after failing to find a buyer who would pay off spiralling debts of about £60m.

Current rules limit the losses clubs are allowed to make, although the figure can be inflated by external owner-driven funding.

However, the rules are due to be switched so, like Uefa, spending is linked to turnover.

Opponents of the rules argue they prevent significant investment from wealthy backers and, by definition, maintain the status quo of the biggest clubs remaining the richest and most successful.

How much are clubs allowed to spend?

Essentially, clubs are allowed to incur losses of £105m over a three-year reporting cycle.

The rules were loosened slightly during the Covid pandemic and there are various elements of club business, such as academies, that clubs can spend on without it affecting their profit and sustainability submissions.

It is also a quirk of accounting that selling ‘homegrown’ players – such as Manchester City’s £40m transfer of Cole Palmer to Chelsea last summer – has more of an impact than selling a player that has been bought for a fee.

What has changed this season and what changes are coming?

Everton were first charged in March 2023 over alleged profit and sustainability breaches. Their hearing was in October.

They were deducted 10 points in November and almost 12 months from that initial charge – after an appeal – their case is settled. That is a lengthy process, with Everton boss Sean Dyche saying the case may have had a psychological impact on his players.

Last spring, the clubs threatened with relegation over that period – Nottingham Forest, Southampton, Leeds, and Leicester, plus Burnley who had been relegated as Everton survived the season before – threatened legal action because the potential punishment was not going to impact upon the period when the rules were said to have been broken.

In response to this, the Premier League brought in new rules which meant clubs had to make their profit and sustainability submissions for the football financial year ending in June by 31 December in the same year.

Future changes are still to be confirmed but are set to be in line with Uefa’s Financial Fair Play (FFP) rules, which will eventually allow clubs to spend a maximum of 70% of their income on wages, transfers and agents’ fees.

Will Everton and Forest have points deducted?

Anything from a warning, to a fine, to points deductions is possible. However, in their written reasons over Everton’s appeal, the Appeal Board said an immediate points deduction and nothing less than a points deduction was appropriate.

Everton’s points penalty for essentially exceeding the limit by £19.5m has focused minds and shows why clubs are so keen to keep their spending within allowable limits.

Everton admitted they had spent more than they were allowed but initially put forward several mitigating factors for their breach, including the Covid-19 pandemic reducing the value of their players and the amounts they were able to generate by selling them.

What about Manchester City?

One response from some football fans assessing profit and sustainability charges tends to be ‘what about Manchester City?’

City were charged in February 2023 with more than 100 offences relating to their spending, which date back to 2009 and include allegations of hidden payments and non-cooperation.

Premier League chief Richard Masters recently revealed a date had been set for City’s hearing, but would not reveal when.

Because these are historic charges over multiple years, all of which are contested, the case is fundamentally different to the recently announced ones which are regarded as more straightforward, with the arguments over breaches likely to centre around differences of opinion over actual spending or the amounts that can be claimed back.

The club were immediately docked 10 points in November for breaking profit and sustainability rules (PSR) in the three-year period to 2021-22.

The punishment – the biggest in Premier League history – dropped Everton from 14th to 19th in the table.

The reduction lifts them from 17th to 15th, although the club is facing another possible points deduction.

Everton, who admitted the breach, said they are “satisfied” with the reduction though they now face an anxious wait after being charged in January along with Nottingham Forest for alleged breaches in their accounts for 2022-23.

That case must be heard by 8 April, however, any appeal could take that process to 24 May, the week after the season has concluded.

A Premier League statement read: “Everton FC appealed the sanction imposed against it on nine grounds, each of which related to the sanction rather than the fact of the breach.”

“A three-person appeal board concluded that the independent commission which imposed the 10-point penalty “made legal errors” on two grounds.

It said the commission was “wrong” to punish Everton for being “less than frank” over what it told the Premier League about its new stadium debt.

The appeal board also said the commission was “wrong not to take into account available benchmarks” and that a six-point sanction was “broadly in line” with English Football League (EFL) guidelines, with Sheffield Wednesday’s six-point deduction in 2020 when their losses were rising used as a guide.

Everton said the appeal board’s decision to overturn the commission’s finding that they failed to act in good faith was “an incredibly important point of principle”.

The outstanding charge against Everton could not be heard until their appeal against the 10-point deduction was competed.

Everton say they remain “fully committed to co-operating” with the Premier League over the second charge.

Everton, who have not won in the league win since 16 December, are now five points clear of the relegation zone with 12 games remaining, having leapfrogged Forest and Brentford.

Meanwhile, Luton find themselves four points from safety, albeit Hatters boss Rob Edwards welcomed the “clarity” around the situation and said his players just needed to focus on their own performances.

“We were in the bottom three before it anyway, but now it looks like we’re four points behind Nottingham Forest with a game in hand so the situation is the same from our point of view.”

How did we get here?

PSR, aimed at promoting financial stability among clubs, were introduced in 2015-16.

English top-flight clubs are permitted to lose a maximum of £105m in a three-year spell, or £35m per season, but Everton recorded losses of £125m over three years.

The Premier League referred Everton to an independent commission in March 2023, a month during which they posted financial losses for the fifth successive year after reporting a £44.7m deficit in 2021-22.

The commission said Everton’s issues were overspending – largely on new players – an inability to sell players and a lower than expected 16th-place finish in 2021-22, which caused a loss of expected income of about £21m.

Thousands of Everton fans held anti-Premier League protests following the original deduction, while a several regional politicians raised concerns, including Mayor of Liverpool Steve Rotheram and Mayor for Greater Manchester Andy Burnham.

Everton manager Sean Dyche said on Friday that the wait for a verdict may have had a psychological effect on his players because of the uncertainty surrounding their league position.

What did the appeal panel say?

The initial commission said Everton were “less than frank” in relation to what they told the Premier League about their new stadium debt as development continues for the move from Goodison Park to Bramley Moore Dock late next year.

The initial charges said Everton breached Premier League rule B15, which imposes an obligation of “utmost good faith”.

However, the appeal board said: “Whilst the representations made by the club about the stadium debt were materially wrong, it was not the Premier League’s case that that was anything other than an innocent mistake.

“These errors were material, in that they affected approach and conclusion of the commission in relation to sanction.”

Everton said the appeal board’s decision to overturn the commission’s finding that they failed to act in good faith was “an incredibly important point of principle”.

The appeal panel also said the six-point reduction was “not out of kilter with any other available benchmark, including those under the Premier League rules themselves (such as the automatic sanction for insolvency of nine points)”.

The punishment is the biggest sporting sanction in the competition’s history and leaves Everton 19th in the table on a new total of four points.

The club said it was “both shocked and disappointed” by the “wholly disproportionate and unjust” ruling.

Everton have said they intend to appeal against the decision.

The Premier League referred Everton to an independent commission in March but did not reveal the specifics of the club’s alleged breach.

Everton posted financial losses for the fifth successive year in March after reporting a £44.7m deficit in 2021-22.

Premier League clubs are permitted to lose £105m over a three-year period and Everton admitted to being in breach of the profit and sustainability rules (PSR) for the period ending 2021-22.

Following a five-day hearing in October, the commission found in favour of the Premier League that Everton’s losses during that period amounted to £124.5m.

In a statement, Everton said: “The club does not recognise the finding that it failed to act with the utmost good faith and it does not understand this to have been an allegation made by the Premier League during the course of proceedings.

“Both the harshness and severity of the sanction imposed by the commission are neither a fair nor a reasonable reflection of the evidence submitted.

“The club will also monitor with great interest the decisions made in any other cases concerning the Premier League’s profit and sustainability rules.”

The points deduction comes at a time of significant uncertainty at Everton.

In September, owner Farhad Moshiri agreed to sell his 94% stake in the club to American investment fund 777 Partners. The takeover is going through the regulatory processes and, before this ruling, sources said it was on course to be completed by next month.

‘Irresponsible – a position of Everton’s own making’

Explaining why Everton’s points deduction was so high, the commission said in its written reasons that the cause of the club’s issues was because of overspending – largely on new players – along with an inability to sell players, and a lower-than-projected league finish.

The club’s 16th-place finish in 2021-22 caused a loss of expected income of around £21m, the reasons state.

The commission added: “Everton’s understandable desire to improve its on-pitch performance (to replace the non-existent midfield, as Mr Moshiri put it in evidence) led it to take chances with its PSR position.

“Those chances resulted in it exceeding the £105m threshold by £19.5m.

“The position that Everton finds itself in is of its own making. The excess over the threshold is significant. The consequence is that Everton’s culpability is great.

“We take into account the fact that Everton’s PSR trend over the relevant four years is positive, but cannot ignore the fact that the failure to comply with the PSR regime was the result of Everton irresponsibly taking a chance that things would turn out positively.”

The chair of the commission, David Phillips KC, also referenced applications for financial compensation from current Premier League clubs Burnley and Nottingham Forest and last season’s relegated sides, Leicester City, Leeds United and Southampton.

Phillips said he was “satisfied that the applicant clubs have potential claims for compensation” – but noted the commission holds no “inherent jurisdiction” and it is instead “the role of the Premier League to bring and prosecute complaints”.

Biggest sanction in Premier League history – but can Everton survive?

In Premier League history only two other clubs have received a points deduction.

Middlesbrough were deducted three points for failing to fulfil a fixture against Blackburn during the 1996-97 season, while in 2010 Portsmouth were deducted nine points after going into administration.

Neither club was able to avoid relegation following those sanctions.

The deduction leaves the Toffees level with bottom club Burnley on four points after 12 matches – and two points adrift of safety.

Sean Dyche’s side, who ended last season two points above the relegation places, had been 14th in the standings – and eight points clear of the bottom three.

On the three previous occasions when a Premier League club has had as few as four points after 12 games, Everton in 1994-95 were the only side to stay up.

Manchester City are the only other club to have been charged by the Premier League for financial breaches when they were referred to an independent commission over more than 100 alleged rule breaches between 2009 and 2018.

Treble winners City were charged in February – before Everton – and that case is still ongoing.

Meanwhile, Chelsea could face further scrutiny from football’s authorities over reports of payments connected to the club’s former owner Roman Abramovich.

Chelsea were fined £8.6m by European football governing body Uefa in July for “submitting incomplete financial information” between 2012 and 2019 as part of a settlement for breaking Financial Fair Play rules.