In this paper, we investigate the effect of power amplifier (PA) nonlinearity on a multi user multiple-input multiple-output orthogonal frequency division multiplexing (MU-MIMO-OFDM) system where the base station (BS) uses linear precoding to transmit data for single antenna users through a correlated channel. The signal to distortion, interference and noise ratio is derived for any order of PA nonlinearity. Our analysis shows that a correlated channel can result in correlated distortions at the output of PAs which increase the received distortion power of users. Approximations for the ergodic achievable rate of the users are provided when the BS transmits data through a correlated channel using maximum ratio transmission or zero forcing precodings and number of BS antennas and users are large. Also, closed form approximations for the ergodic achievable sum rate of the system are provided when the channel is not correlated. The simulation results agree with the derived approximations even when the number of transmit antennas and users are relatively small. The approximations can be used to find the achievable sum rate maximizing number of users or transmit power of the system.