Reading have been deducted another two points this week, following an EFL hearing that took place earlier this year. The further deduction comes as a result of persistent late payments to HMRC in 2023. This is added onto Reading’s current four-point deduction for the 2023/24 season, taking it to a total of minus six. This means that for the third season in a row, Reading have been deducted six points for three consecutive seasons – a new record!
The first deduction came in November 2021, during the 2021/22 season, due to a breach of the EFL’s Profit & Sustainability Regulations. The breach was calculated to have been over a four-year period, two of which were during the Covid-19 pandemic. Despite this being an obvious hindrance to the club’s revenue, the club did not set themselves up for success entering the pandemic. A six-point deduction from Reading's Championship points total meant the Royals survived by just four points and one place above the drop zone. At the time, Reading were rumoured to have had wages so high that they exceeded 200% of the club’s annual revenue, so for every £1 the club got in, they spent £2 on wages!
As part of the punishment Reading were placed under an agreed business plan for the 2022/23, which if they broke would ensue in another six-point deduction. Reading did go and break this business plan in two ways, and by April of 2023 were deducted the six points. The first way was by not generating enough profit from player sales, up to an amount agreed in the business plan. The second breach was that Reading were not Profit and Sustainability compliant with relying on a “related party transaction” (outside investment) or player sales. As further punishment from the EFL, Reading were again placed under a budget embargo for the 2023/24 season. This season Reading were not so fortunate as the points deduction led to their relegation from the Championship to League One, finishing 5 points from safety.
As part of the existing embargo the club were under significant transfer restrictions during the summer transfer window and were forced to sign players for free or on loan deals. The 2023/24 seemed like an uphill struggle from the get-go, but it was made even harder as just four games into the season Reading were handed another one-point deduction. This charge was due to the club failing to pay its players’ wages on time in October and November of 2022 and April of 2023. As part of this, Reading’s owner Mr Dai Yongge was fined £10,000 and ordered to deposit an amount equal to 125% of the club’s forecast monthly wage bill into a club account. This was the first time that Dai Yongge personally was punished by the EFL.
The previous one-point deduction came with the possibility of a further three deducted should that 125% amount not be deposited by the September 12th deadline. The amount was not deposited and the EFL called for an independent Disciplinary Commission to take place. During the commission, the EFL put forward the suggestion that Mr Dai should be disqualified – a request that was turned down. The commission instead chose to fine Mr Dai £20,000 with a further £50,000 suspended that was activated in January due to the deposit remaining unpaid. In addition, Dai Yongge was required to maintain the 125% amount deposit in a club account until at least August 31st, 2024.
At the turn of the year, the EFL acknowledged Reading’s fans’, players’ and staff’s frustration at the situation and Mr Dai’s disregard for the club. However, they did not take any action against him, instead continuing to “urge” him to sell the club.
Following the on-pitch protest against Dai Yongge on January 13th the match
against Port Vale was abandoned. Reading were issued a suspended three-point deduction as a result; this is activated if another fixture is abandoned due to crowd behaviour up until the end of the 2024/25 season.
The most recent, two-point, deduction comes as a result of Mr Dai’s failure to pay HMRC the liabilities owed. This punishment came again with a suspended two-point deduction should Mr Dai fail to meet HMRC obligations again. Mr Dai was again personally charged, being ordered to fulfil his 125% deposit again with a new deadline of March 18th. He was also fined £100,000 for his failure to pay, if he fails to pay again a further £100,000 will be imposed. If the money for these fines is not received within five weeks, Mr Dai will be charged another £100,000.
Reading currently sit one place above the relegation zone in League One on 36 points, with the potential for a further two, three or even a five-point deduction looming overhead. All of this is out of the control of 99% of people affiliated with Reading Football Club and all bottles down to the careless actions of an individual 5,000 miles away. The continuous message being pumped out by the club is that Mr Dai is looking to sell but the Chinese so-called ‘businessman’ does not seem easy to deal with. Many interested parties have already pulled out of the buying process for various unnamed reasons due to NDAs (non-disclosure agreements) being signed when entering the process. A conclusion is hopefully nearing with reports this week saying a deal with one party is “progressing” but we will have to wait and see if that materialises and hopefully exclusivity will be granted soon.