News and Views
Possible Points Deduction - EFL Reviewing Finances
02 March 2023
By Hob Nob Anyone?
Reading could be set for another six points deduction with the Football League again reviewing Reading FC's finances for this season. It's tough to understand with Reading sticking to an incoming transfer ban enforced by the League while also being seemingly transparent with their finances. The impression is that the club have been working with the League to ensure they operate within the guidelines the League set, so it is confusing that the League are now suggesting they have failed to meet certain targets.
The League issued a short statement yesterday following wide reports of a possible points deduction being issued: "In November 2021, the EFL and Reading Football Club reached an Agreed Decision in respect of the Club's failure to comply with the League's Profit and Sustainability (P&S) Rules. As part of the decision, the Club is required to comply with the terms of a Business Plan up until the end of season 2022/23. The plan focuses on a number of financial targets with the objective of improving the Club's financial performance. The League is currently reviewing submissions from Reading to determine whether compliance has been achieved. There will be no further comment on the matter at this time."
The Royals were given a six points deduction in November 2021 after breaking financial rules, with further points deductions said to be suspended if Reading could keep to agreed expenditure. It is now being suggested that Reading have overspent again after continually posting financial losses.
Should Reading see six points removed this season it would see us drop to just six points and three places outside of the relegation zone, after Reading looked to be heading towards safety this season. Reading fans were all set for a season of mid-table nothingness but that could all change depending on the League's review.
Discussion On This Story:
Reading are facing the threat of a second points deduction in 18 months by the Football League.
The Championship club could be punished with sanctions after allegedly breaching the EFL’s business plan, following their six-point deduction in Nov 2021.
Reading were punished for breaching financial rules and agreed to a business plan related to player-related expenditure which the club would have to adhere to.
However, it is understood Reading have broken certain regulations in the plan and are in talks over an agreed punishment with the EFL.
Reading are under threat of being deducted another six points if they are found guilty by an independent disciplinary commission.
In the 2018-19 season it was reported that Reading’s wage bill was £40 million, working out as 194 per cent of their turnover.
For the following campaign their accounts revealed total accumulated losses of £138 million, while their most recent pre-tax loss was £93 million over a three-year period.
The club is owned by Dai Yongge, a Chinese businessman and investor who completed his takeover in 2017.
The EFL declined to comment on Wednesday.
Relegated from the Premier League in 2013, Reading are currently 14th in the Championship table with 44 points. A six-point deduction would currently see them drop down the table below Swansea, Hull, Stoke and Queens Park Rangers, as well as Birmingham City on goal difference.
As revealed previously by Telegraph Sport, Birmingham themselves are facing another charge by the EFL after a lengthy investigation into the club’s ownership structure, with the threat of further sanctions dependent on whether owners Birmingham Sports Holdings Limited (BSHL) have breached regulations by misleading them over the current set-up.
Birmingham were charged last month with allegedly breaking Owners and Director’s Test rules with the allegations including acquiring full control of the club without prior EFL approval.
“A number of individuals” are also facing potential punishment over a collapsed takeover bid last year with Paul Richardson, Maxi Lopez and former Charlton chairman Matt Southall all charged.
It is understood the three men all plan to contest the charges, which will be referred to an independent disciplinary commission later this year.
The EFL are all over the club, we’ve had to get anything we do approved by them.
The joint business plan was agreed between them and us and it’s possible the plan was simply unachieveable but they would carry some of the blame for that.
I’m not convinced , it’s obvious POSSIBLE for the suspended points deduction to kick in it’s hard to see how it might happen. It’s also hard to see how anything could be looked at before the end of the accounting year.
Depends on the level of the agreement breach. If it is something we have already done that we were explicitly told not to do by the EFL it wouldn't matter.
Doubt we could actually do anything the EFL had specifically told us not to, and if we had we would know about it because it would involve large sums of money.
We can’t sign players if the EFL don’t approve them and we can’t pay them more than the EFL sign off on. I really can’t imagine we’d have given Carroll some kind of off the books payment given he was happy here on pretty nominal wages.
Can we fast forward to bargaining and get him down to EFL headquarters?
Exactly, nameless knows everything about everything. He is an expert on all topics. He is the only person to get us out of this mess.
"So Nameless, can you please justify the breach and Reading's flagrant breaking of the set rules?"
"We didn't break the rules"
"Well, that's us convinced. Reading can start next season on +12 points"
Rather bizarre given you’ve made EXACTLY the same point I did !
Well it is clear we have done something wrong, we just don't know what that is yet. Clearly it isn't just speculation though.
It obviously is speculation given how heavily caveated it is.
The points deduction is pure speculation.
No one can answer those questions on here.
a simple example would be the 25 player limit. If we’ve signed 26 we can’t unsign one. But obviously we couldn’t sign 26 anyway…..
If we have blown the wage budget then we can’t reduce it at this stage, but it shouldn’t be possible to blow it (except I’ve never seen an explanation of how bonuses get factored into the budget )
If we are heading to make a bigger loss than allowed obviously in theory we could slash costs and try and increase revenue and might find a way out of it.
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