The strange decline of Reading

The Athletic analyses what has happened to Reading following their points deduction.

The Dai family have little to show for their enormous investment in the club. Total debts owed to Reading’s owners stood at £87 million by the end of June 2020 and a team now led by former Atletico Madrid midfielder Veljko Paunovic — there have been three other full-time managers since Stam was fired in March 2018 — continue to see the Premier League as a distant dream.

The Dai family continue to offer their vast financial support but Reading’s balance sheets have been ruinous. Wages have consistently represented twice the club’s total revenue and pre-tax losses for the last three accounting years have been close to £100 million. And all that without tangible returns.

This had not been the Reading way. A club transformed by Sir John Madejski across two decades of ownership used to have ambition underpinned by pragmatism. They would strive to be clever and make every investment count.

And now? “It’s not been run well at all,” one former employee tells The Athletic. “It’s cash in the wrong areas. It’s aimless. Throw big wages at players who don’t have a hunger to do well. The whole culture of the club is absolutely shot.”

Reading are rebuilding under spending caps and, according to a club statement on Wednesday, “Mr Dai Yongge remains wholeheartedly committed to the club.” The owner added: “My determination to succeed has not diminished but has amplified.”

Mistakes, though, have been commonplace and costly during the reign of the Dai family.

An investigation by The Athletic revealed:

• Extravagant spending saw 12 Reading players earning more than £1 million a year in the 2019-20 Championship season
• Agent Kia Joorabchian has played a central role in recruitment, acting as an informal “advisor”, and continues to have an influence on player trading
• How other clubs owned by the Dai family in Belgium and China hit financial trouble and ceased to exist
• Madejski’s sadness at the “weird” state of the club and his wish he could help or at least be an ambassador
• How team spirit unravelled in the years that followed that play-off final defeat.

Madejski, whose stakeholding in the club ended in 2014, continues to watch on from the sidelines.

“I do believe that football clubs are not what they used to be in terms of being a real part of the community, with local people that own them and so on,” he tells The Athletic.

“And I don’t suppose local people these days could own it, because it’s far too expensive. God knows what the debt is at this club. Fortunately, I don’t know and I don’t want to know because it’s not my business.”

 Three years of lavish spending, with wages unsustainably standing at £37.5 million, landed Reading with little else but an EFL charge for breaching its profit and sustainability rules.

These permit clubs to report a £39 million deficit over any three-year period but Reading’s losses for a four-year period, extended by the impact of COVID-19, stood at £57.8 million — £18.8 million above the threshold.