Bristol City’s Championship rivals Reading have been plunged into relegation trouble after the EFL confirmed the Royals have been deducted six points for a breach of the league’s Profit and Sustainability rules.
Reading, who drew 1-1 at Ashton Gate on Saturday, now lie 20th in the Championship, just a point clear of the relegation zone with seven games remaining. Cardiff City, who are a place below them in the table, have a game in hand.
In a statement, the EFL has detailed how the penalty is resulting to an agreed decision from November 2021 in which the Royals were deducted six points with a further six suspended, and the club has since failed to comply with the imposed budget restrictions and business plan.
In their P&S submissions for 2023, Reading, who have also been under transfer embargo, have been unable to raise enough revenue from player sales in line with the budget agreed, and were therefore relying on the profit of a proposed sale of an investment to an entity controlled by owner Dai Yongge, which has not been completed in time.
A Reading statement said: "Despite radical changes implemented at first team level and right across the structure of the business to its very core - and a rigid adherence to a strict league-monitored wage structure and transfer embargo, the club accepts that it has not sufficiently satisfied certain elements of the planned budget and that, as a result, the independent club financial review panel has been unable to ratify that the club has met its forecast for compliance.
"We have worked closely with the EFL and the independent club financial review unit throughout the process in our aims to achieve the targets set out in the agreed business plan and every reasonable effort has been made to construct a competitive squad of players whilst avoiding further punishment.
"However, despite the substantial progress we have undeniably made and the lessons that have indeed been learned, as promised, we accept that the situation was never going to be easily or quickly fixed."
Reading are the second club to incur a points deduction this season with Wigan Athletic docked three points in March for late payment of player wages.
There had been some concern at City last year that their record losses of £38.4m for the 2020/21 financial year could lead to a future points deduction as the Robins had been unable to offset their unsustainable wage bill with player sales due to the pandemic’s impact on the transfer market.
However, that fear appears to have been alleviated by the sale of Antoine Semenyo to Bournemouth, the continual cutting of the wage bill and the existence of Covid-driven add-backs by the EFL which have allowed the Robins to get under the threshold for losses.
Director of the Independent Club Financial Reporting Unit, John Potterill-Tilney said: “I would like to thank the club for its transparency and cooperation during this process and the Club Financial Review Panel for helping us deliver an agreed sanction in just over one month since submissions were provided.
“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.
“The EFL’s regulations establish the CFRP as an independent panel with the responsibility of reviewing the financial performance of EFL clubs. This decision, the first of the Panel under the new Regulations, confirms its determination that Reading FC breached the terms of an earlier Agreed Decision, and the approval of the sanctions that follow from those breaches.”
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