Reading: Championship club deducted six points for breaking EFL financial rules

Reading's £8m summer sale of forward Michael Olise went some way to bringing down the club's level of debt

Reading have been deducted six points by the English Football League for breaching financial rules.

The EFL determined the Royals lost £57.8m between 2017 and 2021 - the EFL's limit for that period is £39m.

A further six-point deduction is suspended until the end of next season, provided they comply with a business plan which includes player spending.

Reading drop from 16th to 19th in the Championship, on 16 points, four clear of the relegation places.

The Berkshire club have been under a transfer embargo since the summer as a result of their breach of profitability and sustainability rules.

Reading are the second Championship side in as many days to have a points deduction imposed on them after Derby were docked a further nine points for breaches of EFL accounting rules, taking their overall deductions this season to 21 points.

"The EFL's profitability and sustainability rules are in place to discourage short-term overspending and it is appropriate that the league takes the necessary action on behalf of its membership when a transgression occurs," said EFL chief executive Trevor Birch.

"The league is satisfied that the sanction for the breach, being imposed by way of an Agreed Decision, is proportionate having considered all the relevant factors and will continue to work closely with the club as it seeks to meet its obligations moving forward."

Owner remains committed

According to Companies House Reading have issued £82m worth of shares since Dai Yongge took control of the club in May 2017

Chinese brother and sister Dai Yongge and Dai Xiu Li took over the club in May 2017 and have financed the spending.

Reading have spent more than double their income on wages since their ownership began, but finished 20th in their first two seasons before a 14th-placed finish and then seventh last season.

According to figures at Companies House Reading posted losses of £42m in the year to 30 June, 2020, £30.1m in the previous year and £21m in the 12 months to 30 June, 2018 - a total of £93.1m

The EFL has averaged the club's losses for 2019-20 and 2020-21 and allowed for Covid-19 costs to give the lower figure of £57.8m, but that still triggered a sanction.

"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," a club statement said.

"Our owner, Mr Dai Yongge, remains wholeheartedly committed to the club.

"His commitment to our club remains unequivocal; having supported the club throughout a period of unprecedented disruption when key revenue streams for all clubs were suddenly severed.

"His investment has been overtly evident to all who visit our new multi-million pound Bearwood Park training complex - an environment tailored to attracting the best players to our club, helping our existing players flourish and ensuring our developing young players can reach their maximum potential."

Reading drop to 19th in the Championship

Yongge will be in attendance when Reading host Nottingham Forest this Saturday having been unable to watch games in person due to the Covid-19 pandemic.

"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," the Hong Kong-based businessman said in a statement on the club website.

"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.

'It could have been worse'

Analysis - BBC Radio Berkshire's Reading commentator Tim Dellor

This is a blow, but it could have been worse.

Most fans will feel Reading have managed their way out of this situation quite effectively, they've been negotiating with the EFL for the past few months to minimise the punishment.

Clearly they've overspent dramatically during the last three to four years so a punishment was inevitable.

The Reading owners need to be applauded for their ambition, but need a serious look who they take advice from when it comes to their transfer dealings.