Reading Deducted Six Points By EFL

It’s been a long road, but we’ve finally reached a conclusion to Reading’s points-deduction saga.

The Royals have confirmed an agreement with the EFL, under which the club will be immediately docked six points. That leaves Reading 19th in the Championship on 16 points, four above the relegation zone and 10 off the play-offs. A business plan has also been agreed: should Reading fail to adhere to the terms set out in that plan, which covers this season and next, a further six points will be chalked off.

The EFL shared an in-depth “agreed decision” in PDF form, which can be found here. In it, they clarified that Reading reported a loss of £57.809m for the four-year period ending with the 2020/21 season, and was therefore in breach by £18.809m. They also shared the terms of the business plan with Reading, with the highlights including:

• Reading have a wage cap of £21.1m this season.
• Next season that will drop to £16m.
• Reading are permitted to register a total of 25 players.
• The Royals cannot pay transfer fees, compensations fees or loan fees in excess of a level agreed by the EFL.

In response, Reading said:

“While there are undeniably extenuating and unforeseeable circumstances that have contributed to this breach, we accept this to be a fair and reasonable punishment and will learn the lessons from our recent past which have resulted in this deduction.

“We would like to take this opportunity to thank the EFL for their co-operation, professionalism and positive, open dialogue throughout this process.”

While owner Dai Yongge broke his long-term silence in addressing the fans by saying:

“As the owner of your club, I am naturally dismayed and disappointed to accept the punishment issued by the EFL. And as a fan, I too am hurt by a deduction of six points this season. However, my determination to succeed has not diminished but has amplified.

“My team and I believe this settlement is just and will still enable us to be competitive as a football club this season and beyond. So, in the short term, our aim is to fight for every point there is to fight for this season.

“In the long term, we pledge to fix the issues of the past and together build a club capable of competing with the very best and challenging for honours. But we can only do that with your support, so I would like to personally thank you for your loyalty to your club! It is truly appreciated by all who cheer on the Royals.”

News of a penalty being agreed on was first partially revealed by Eddie Wallbank, who said on Wednesday afternoon that an immediate deduction of six points was coming. This was followed shortly after by a report from Mike Keegan of the Daily Mail, who added the information of an additional six points being suspended until next season, “pending compliance to an agreed business plan for this season and next”.

Reading have been able to agree the structure of this points deduction with the EFL rather than it being enforced unilaterally, as The Athletic explained in September:

“The Athletic understands that the club is working through the EFL’s ‘agreed decision’ process which falls under the regulation 85 law that allows clubs to reach an agreement with the governing body over sanctions rather than go before a disciplinary hearing.”

As per the Daily Mail, talks between Reading and the EFL have been “lengthy but amicable”.

Historic overspending has been a hallmark of the current ownership. As the below chart from Swiss Ramble shows, losses of £21m (2017/18), £30m (2018/19) and £42m (2019/20 - the latest available year of accounts) combined for an overall loss of £93m. That’s far in excess of £39m, which is the total permitted loss under Financial Fair Play rules.

For more context on the 2019/20 accounts, Olly talked through them with football finance expert Kieran Maguire on the podcast shortly after those accounts were released in April. Or if you prefer text work, you can find an in-depth Twitter thread from Swiss Ramble here.