What City Ground redevelopment means for Nottingham Forest financial future

Nottingham Forest’s plans for the redevelopment of their City Ground home took a major step forward on Thursday night when planning permission was granted for the first phase.

Proposals that were first presented to Rushcliffe Borough Council back in 2019, which would see the demolition of the Peter Taylor Stand and the building of a new 10,000-seater stand in its place, were given full approval by councillors on Thursday evening.

It will take some time for the plans to come to fruition, and increasing the capacity of the City Ground by 5,000 seats is the beginning of grander plans for the stadium that owner Evangelos Marinakis has, with his ultimate goal to see it at 50,000, but it is a step on the way to enabling Forest to grow revenue streams to give them a better chance of being able to sustain investment into the football team year in, year out.

Forest are the latest in a flurry of Premier League clubs that have sought to either redevelop an existing stadium or seek a site for a new stadium altogether, and there are reasons behind that.

For so long the Premier League’s broadcast revenues have been the lifeblood of club's finances. The boom in value of the domestic and international rights in the 2010s saw the Premier League pull well clear of their European rivals and the billions that the deals brought in filtered through to clubs through central payments. As of 2023/24, the distribution of wealth from those deals among Premier League clubs was worth between £125m and £185m dependent on success and the amount of times clubs appeared in live broadcasts.

But while the latest domestic deal saw an uplift in value from £5bn to £6.4bn, the reality is that it was now over four years instead of three, and there were 270 games per season live instead of 200. That actually results in a diminution of value on a per game basis, pointing to some challenging economic times for rights in the future, with broadcasters not going to be able to meet ever-increasing costs at a time when they face issues with piracy, loss of subscribers and challenges from streaming platforms.

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With this in mind, for some time now clubs have been looking to reduce their reliance on broadcast revenues and look at ways that they can drive up other revenue pillars such as matchday and commercial.

Increasing matchday revenue takes investment, but investment into infrastructure is an allowable deduction when it comes to profit and sustainability rules (PSR), so won’t count against clubs. With owners looking at long-term revenue opportunities, that has sparked a large number of redevelopment projects, from Liverpool’s Anfield Road expansion, to Manchester City’s redevelopment of the Etihad Stadium, to projects in the pipeline at Leeds United, Chelsea, Manchester United and Newcastle United.

There is a phrase ‘sweat the asset’, and that is what owners want to do. The bricks and mortar that they own, that is only in use every other week for matchdays and hasn’t traditionally been set up to attract footfall beyond that, now needs to be not just a stadium but a conference space, a hospitality and retail space, and a venue that can host music concerts that all add revenue to the bottom line away from what the football does.

But Forest, under the ownership of Marinakis, have plans to build on and off the pitch and become a staple of the Premier League for the long term, challenging for honours and European football. That has brought demand, and satisfying demand is important, and with a stadium capacity that currently sits just under 30,500, places them 15th of the 20 Premier League clubs that will line up for 2025/26.

For the 2023/24 financial year, Forest brought in £14m in matchday revenue. Only Crystal Palace, Sheffield United, Brentford, Bournemouth and Luton Town were below them on that list. The club’s average attendance was 29,363, with the club bringing around £600,000 per game across the 24 matchdays, four of which were in domestic cup competitions. It was the highest average annual attendance for 50 years at the City Ground.

Last season saw the stadium at capacity week in, week out, as Nuno Espirito Santo’s men challenged for Champions League football until the final day. There is now the expectation that Forest’s ambitions will be greater than they have been in seasons past, and in order to bring in more money and reduce the reliance on broadcast revenues, increased capacity helps to impact both matchday revenue and commercial income.

An additional 5,000 seats will likely raise Forest’s matchday revenue closer to the £20m per year mark, but a redeveloped stand will also improve the commercial aspect through greater food and beverage sales on a matchday, and how sponsors and commercial partners can leverage their deals as part of it.

It is the first phase of a grander plan that Forest have for the City Ground, one that they will hope over time could see matchday revenue start to challenge the £45m to £50m mark that Newcastle United and West Ham United currently enjoy.

That takes time and significant investment, but it points to a long-term plan for success that will place the club on a much firmer financial footing if they can make the stadium into a multi-purpose venue that can accommodate 40,000 to 50,000 people in time.

As one of Britain’s biggest and most populous cities, Nottingham has the demographics to support such a development, and Forest will want to be the beneficiaries of that to make it work for them beyond just football every other weekend. That plan has played out.