As part of our ongoing football coverage series, we have spent some time looking at UEFA' rules on Financial Fair Play (FFP), as well as the Premier League's rules on Profitability and Suitability. A link to our in-depth analysis of these rules can be found here.
The majority of our coverage has stemmed from the ongoing high profile investigations concerning Manchester City and Everton Football Club, for alleged breaches of the rules surrounding financial fair play and what the rules mean for these two clubs and the sport more generally.
After a turbulent few weeks on the pitch, Reading Football Club have now been subject to sanctions by the English Football League (EFL) for breaches relating to their own Profitability and Sustainability rules. The Royals were not the only Championship club to be subjected to sanctions, with Derby County also receiving a 9-point penalty for a similar offence earlier in the season, adding to their 12-point deduction for entering administration. The EFL stated the following:
“It follows a review of the financial submission from the Club for the four-year period 2017/18 to 2020/21 where it was determined the Club had recorded a loss of £57.8m, £18.8m in excess of the £39m Upper Loss Threshold.”
In November 2021, the EFL had previously imposed a 6-point deduction on Reading, as well as a transfer embargo. Specifically, the sanctions were in relation to losses of over £70 million between 2017 and 2021, above an agreed loss limit of £48 million. The time period was adjusted from the usual three-year period to four, in order to accommodate the impact of the coronavirus pandemic.
Following the breaches, the EFL had then agreed a business plan with the Royals which included specific performance related targets in respect of revenue and expenditure. A further 6-point deduction was then deferred and suspended until the end of the 2021/22 season. However, the EFL issued the sanctions after the club failed to adhere to budgetary restrictions. Reading also faced multiple warnings during this time.
Reading provided the following statement in response to the sanctions:
“In abiding by the EFL rules, the club have not spent a penny on transfer fees since the summer of 2020 and have not paid a loan fee to any club since the summer of 2019. Our squad has been entirely rebuilt from free transfers, free loanees and Academy graduates.”
“Every single professional contract proposed has been scrutinized and ratified by the EFL before it has been offered and we have operated under a mutually-agreed capped wage bill imposed following our breach of the profit and sustainability regulations – our wage bill has been almost halved since the start of the 2019-20 season.”
The director of the independent club financial reporting unit, John Potterill-Tilney, commended Reading’s cooperation during the review process, whilst stating that the decision will help the club’s financial plan moving forward. He also went on to comment:
“This decision and sanction, as confirmed by the Club Financial Review Panel in a short time frame, within the relevant season, will now give the club clarity to plan for the period ahead, on and off the pitch”
Reading have since dropped to 20th in the Championship table, just a point above the second division's relegation zone. Further, the club decided to part ways with Manager Paul Ince just a week following the imposition of the sanction.
It is clear that the need for an independent panel has never been more paramount, with a view to protecting and preserving grass roots football throughout the English game.
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