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Due Diligence? Diligence Due!

I hate having to write this. I wish I could be like the vast majority of other Reading fans and rejoice in the signature of Jimmy Kebe on his contract extension, and sit back and speculate on all the players Reading are going to buy.

But sadly I can’t. I don’t know if I’m naturally suspicious, or if I’ve spent too much time with supporters of other clubs across the country, listening to the tales of their ownership changes, good and bad, but one thing strikes me.

Have you noticed that no-one, no-one at all, seems to be questioning things? Reading supporters are being told exactly what they want to hear – almost spookily so. Like everyone else, I desperately want to believe, and I’d be delighted to be proved wrong - but somebody needs to play Devil’s Advocate, and I seem to have acquired that role by default.

I’ll say upfront that I have the utmost admiration for Sir John Madejski, and I recognise the wonderful things he’s done for Reading FC and for its supporters. I also appreciate he is a man of the utmost integrity (and so an extreme rarity in football), who would never knowingly sell to an inappropriate owner. But on one fundamental point I disagree with him – and that’s on his view of football supporters.

Sir John seems to have a very old-fashioned, paternalistic view of supporters, summed up nicely by his quote from the weekend : ".... in these hard times it's great for the fans to come along - see some inspiring football, see an opportunity for them to forget about their worries and come to a darn good game of football ...."

For the majority of supporters today, supporting their football team is more important than just having a little bit of escapism at the weekend. It’s a crucial part of their life, and in these days of social networking and electronic communications, supporters at clubs across the country are a lot more engaged with their clubs, and more joined up with other sets of supporters than ever before, and they bring a range of talents, abilities and available information sources.

So football’s old attitude of "the chairman knows best, trust me...." is an outdated one. These days, supporters are capable of performing their own "due diligence" on potential owners and directors – and I think they have a moral responsibility to do so if they love their clubs. With that in mind, at The Tilehurst End we’re already doing our research and will present whatever facts we discover once we’ve validated them.

In the meantime, there are still a couple of things that aren’t making sense, even at this early stage. I’ll try and keep these brief as I know many are bored by what seem like arcane matters of football finance, but these are important.

Firstly, how is it possible to stop being a "selling club" and to run a Category One Academy, whilst at the same time not changing the club’s ethos or stopping "being prudent, as we’ve always been". It all sounds wonderful, and no wonder everyone’s rejoicing these words - but if you stop to think about it the numbers just don’t add up. To stop players like Shane Long leaving we’d need to be able to offer them Premier League level wages – and for a team in the Championship to do that is anything other than "prudent" as we’d need to have considerable sums coming in. And, of course, in football playing one player higher wages inevitably drives up the wages of all players at the club. Similarly, the cost of running a Category One Academy is estimated by the Premier League to be £2.325 million this season, rising to £2.550 million at the end of the four year commitment period. Even though the Premier League will provide 33% grant support, this is still a sizable outlay for a club of Reading’s income base. I’d love someone to tell me how this circle can be squared, because it doesn't make sense to me.

Regarding the "limited funding" this January, there are still questions here. No-one has yet provided any answers on what form this funding takes or what will happen if the new owners fail the Football League’s "Owners & Directors Test" or if they don’t get past Sir John’s due diligence processes. And when the question was asked of whether this money would be in the form of a loans or a donation, the answer was "When you make an investment in the club, if you're a major shareholder of the club - whether you put the money in by the way of equity or loan is effectively the same thing in a private company. It makes little difference, the Chairman has mostly lent the money in the past but we will do whatever is appropriate so it has a strong balance sheet. " I must say that’s very glib and very reassuring, but it doesn’t actually answer the question, and I’d argue with the basic premise of the answer – it certainly does matter if a club is burdened with debt.

And, sadly, those two words sum up how the press conference came across to me – glib and reassuring. It was all good news, and everyone seemed to be given exactly the answer they wanted, with no disappointments for anyone. There was even the signing of Jimmy Kebe to put a smile on everyone’s face at the crucial time (did he really re-sign on the same terms offered? Quite a volte face if he did!) In fact, it was all as slick as a Tony Blair–era Labour Party conference. And that, I’m afraid, does nothing to reduce my concerns.

So, although I may be the only one doing it – and although it may make me unpopular with those who care mostly about the short-term - I’m going to carry on asking the questions that I think Reading supporters deserve the answers to. Because someone needs to be asking them, and I’m going to take the advice that the Office of Fair Trading gives to consumers : "Remember the cardinal rule – if it seems too good to be true, it probably is."