It’s no secret that Reading’s finances aren’t in the best shape at the moment. The latest set of accounts, released at the start of April, revealed that the club made a £30 million loss in 2018/19, following on from a £21 million loss the previous year.
There are multiple reasons for this. From spending big in the transfer market and an astronomical wage bill to the end of parachute payments and an excessive director’s remuneration, the books are certainly not being balanced at the moment. They’re breaking the scales.
But what is not often mentioned is that Reading very rarely make much money from player sales, which is a crucial source of income for many clubs. The latest accounts showed the club only received £2.4 million of profit on player sales in 2018/19, with analysis from Swiss Ramble putting the Royals 18th out of all last season’s Championship teams in this regard. Meanwhile, over the course of the last five years, Reading have received just £21 million in transfer fees - just four of the Championship’s current clubs have acquired less in that period.
No club likes selling their best players, but it can form part of an effective transfer strategy. Brentford are often hailed as the model club in this scenario, and with good reason. The Bees rank fourth in the Championship for player sales over the last five years (£118 million) and combine this with a hugely successful recruitment plan to form an enviable transfer cycle.
Neal Maupay and Ezri Konsa were sold for around £30 million combined last summer, having joined for little over £4 million. Chris Mepham, Scott Hogan and Andre Gray came and went before them, while Ollie Watkins, Said Benrahma and Bryan Mbuemo may well be next. Yet Brentford continue to battle at the right end of the Championship, and were fourth in the table before football came to a halt.
The last player that Reading received a significant transfer fee for was Leandro Bacuna, who left for Cardiff City for a reported £3 million in January 2019. Tiago Ilori’s move to Sporting Lisbon in the same month earned the Royals an apparent £2.1 million - not that bad a fee, but equally not ideal when you consider he was bought for a then club-record fee of £3.75 million two years earlier.
Incredibly, you then have to go back to the summer of 2016 for the last time Reading received more than £1 million for a player, when both Aaron Tshibola and Oliver Norwood departed for pastures new. Tshibola is arguably the club’s best bit of business in recent years - an academy product sold to Aston Villa for £5 million after just eight first-team starts for Reading. Furthermore, in the 12 months leading up to those two sales, the club also earned significant sums for the departures of Michael Hector (£4 million) and Nick Blackman (£3 million), negotiated by Director of Football Nick Hammond, who left his position in April 2016. Perhaps it’s no coincidence that deals like that have dried up since.
Too many players in recent years have departed the club for absolutely nothing. This is less of a problem when the players had arrived at the club for free, such as Paul McShane and Joey van den Berg, but over the last five years, Reading have released 10 players that had been signed for transfer fees - Callum Harriott, Dave Edwards, Pelle Clement, Yann Kermorgant, Jonathan Bond, Deniss Rakels, Danny Williams, Simon Cox, Hope Akpan and Stephen Kelly.
Letting these players remain at the club for the length of their contract is one thing, but in the case of Edwards, Clement, Kermorgant and Akpan - along with David Meyler, Jake Taylor and Pavel Pogrebnyak - the club would have lost further money by agreeing to terminate their contracts early. The 2018/19 accounts, which cover the premature release of Edwards and Clement, stated that this incurred a combined cost of £1.2 million.
The worrying thing is that this is a trend that is set to continue - Reading paid money for Vito Mannone, Chris Gunter and Tyler Blackett but are likely to let all four go for nothing in the coming months. They may also regret not sanctioning Danny Loader’s move to Wolves last year, which probably would have netted far more than any compensation they’ll get this summer. Then in 2021, the contracts of Sone Aluko, Mo Barrow and Sam Baldock all expire. With the trio having cost around £12.5 million between them, a serious effort needs to be made to recuperate at least some of that sum.
Of course Reading’s abysmal performances for most of the last three years haven’t exactly merited high transfer fees for any players. Other clubs aren’t likely to extravagantly splash out on someone who has been battling relegation in consecutive seasons. That said, the Royals’ decision to turn down £10 million from Brighton & Hove Albion for Liam Moore in the summer of 2018 is looking increasingly strange. A leader and good-natured individual he may be, but the defender has been largely disappointing in the last two years, and the club won’t get near that figure for him now. It’s unlikely he was even worth that at the time - Moore himself admitted it was a “substantial fair offer” - and a capable replacement could surely have been found.
Meanwhile, Liam Kelly was attracting interest from numerous clubs after his breakthrough campaign in 2016/17. A couple of underwhelming seasons later, his stock had dropped massively and in selling him to Feyenoord, Reading received perhaps a quarter of what they would have done two years previously. In the case of both Moore and Kelly, the club did not only object to selling, but hand each player a bumper new contract as well, compounding the financial problems. Maybe it is easy to say all of this in hindsight, but it will be worth bearing in mind if any significant offers come in for anyone this summer.
No one quite knows if the Financial Fair Play rules will be adapted in the face of the coronavirus pandemic, or how the transfer market will be affected, but going forward Reading are surely going to have to change their strategy. Having sold both the Madejski Stadium and the training ground to companies owned by Dai Yonnge in recent years, the players themselves are now the only assets that the club have left to generate revenue from.
On BBC Radio Berkshire last month, Chief Executive Nigel Howe admitted that Reading may have to let go some of their star performers in order to comply with FFP regulations:
“The only way that can be done [to stay within profit and sustainability rules] is to sell some of the players that we have bought to help us succeed so it’s a bit of a catch 22 at the moment.”
Looking at the squad, there would certainly appear to be more sell-able assets than there have been in recent years. John Swift, Ovie Ejaria (set to complete a permanent move in the summer) and George Puscas are perhaps the most high-valued individuals and one of those three may have to depart this summer. Liam Moore, Andy Rinomhota and Andy Yiadom could also attract a worthwhile sum.
I’m not advocating that Reading become ‘a selling club’, but they are going to need a way of generating more income than they currently are. Couple that with wiser and more strategic spending, and the financial pressures will begin to ease.
All figures sourced from Transfermarkt and Transferleague.co.uk