Will Reading Fall Foul of New FFP Rules?

The Football League have today announced that Championship clubs have agreed on alterations to Financial Fair Play. Coming into effect from the 2016/17 season, clubs will be assessed over a rolling three year period, with permitted losses of up to £15 million per season, but no more than £39m over a three year period. The idea is to bring the Championship's own financial fair play rules in line with the Premier League, rather than simply imposing yearly limits.

Speaking on Sky Sports News, various officials stressed that the new proposals would give owners the flexibility to invest more when needed. So for example if you lost 5 senior first-teamers in one season and needed to spend £20m it would be fine, so long as you balanced it out with lower spending in the other two years etc.

The Football League has also said that it will enter into negotiations with the Premier League regarding parachute payments, so nothing on that front can be confirmed as yet. For a full break-down of today's agreement, you can see the official statement here.

Although the new rules do hold some promise for Reading, especially with fans unclear over the state of the club's finances, the timing itself could be a major blow to the club. If the Royals have been operating at a loss which will see them breach the original FFP rules, a transfer ban could be imposed in January.

As such, regardless of today's developments, Reading could be majorly stung by the already existing regulations. With little knowledge of the financial state that Anton Zingarevich left the club in, it's hard to tell if Reading will be allowed to sign anyone in January at all.

According to the Financial Fair Play website, the current rules state that the maximum loss a Championship team can incur in the 2013/14 season is £8 million. However, if there is no equity injected into the club by its ownership, this figure drops to £3 million. As a result, if the total loss is between the £3m and £8m marks, it must be covered by outside investment (such as a Russian oligarch) if the club is to avoid a penalty.

So, what is this penalty? As we discussed on the Tilehurst End last week, a big enough loss could mean a transfer ban. With the first punishments for breaching FFP coming in December of this year, affected teams could be banned from transfer dealings for at least the following month. FFP blogger Ed Thompson discussed how this could affect Championship sides in detail last week.

With terms like 'transfer embargo' floating over the Madejski, the next couple of months could be quite nerve racking for the men in suits on the Reading board. Stay tuned at the Tilehurst End for all the latest developments.