Reading have been deducted six points with immediate effect due to breaches of budget restrictions.
Reading had previously held an ‘Agreed Decision’ with the EFL in November 2021 but have since failed to comply with various budget restrictions, which had been imposed following a previous breach of EFL’s Profitability and Sustainability (P&S) rules.
Their failure to follow the restrictions consequently activated a suspended six-point penalty, which had been laid out within the terms of their Agreed Decision, with EFL now having applied the six-point deduction with immediate effect.
As a result, Reading has dropped from 18th in the table to 20th position and now sit just one point above the relegation zone with 40 points, having previously held 46 points prior to the deduction being applied.
Reading’s penalty also marked the first time that an EFL club had been subjected to a review by the Club Financial Review Panel (CFRP), which considered matters transferred to them by the EFL’s independent Club Financial Reporting Unit (CFRU).
The investigation was undertaken independent of the EFL Board whilst ensuring that EFL clubs comply with relevant financial regulations, of which the CFRP found that Reading had breached the original Agreed Decision through two methods.
- Reading relies on a ‘related party transaction’ in P&S submissions, which sought to include profit from a proposed sale of an investment towards an entity controlled by the Club owner, which wasn’t completed at time of the club’s P&S subsmissions on 1 March 2023.
- Reading had failed to generate required profit from player sales in line with the set budget, which formed part of the original Agreed Decision.
The club has admitted to both breaches and agreed with CFRU on their decision to impose the six-point deduction.
Reading will also be required to agree a new budget with the CFRU for next season, which aims to ensure future compliance with regulations, with the agreement set to be finalised upon completion of their P&S review for this season.
CFRU Director, John Potterill-Tilney praised Reading for their “transparency and cooperation” during the investigation, plus the CFRU for delivering “an agreed sanction” just over a month since the submissions were provided.
Tilney also iterated that this swift sanction will now provide Reading with “clarity to plan for the period ahead, on and off the pitch.”
Reading are next in action on Good Friday (7 April) as they host Birmingham City at Select Car Leasing Stadium in a 3pm BST kick-off.