The Political Economy of Football V2

From his Zurich base, the authoritative Swiss Ramble analyses the recently published 2019/20 accounts of Reading FC.  It doesn't make for comfortable reading and brings home the financial challenges facing Championship clubs seeking promotion if they don't have parachute payments. This was the third season that Reading were under the control of Chinese businessman Dai Yongge (and his sister Dai Xiu Li), who own 96% via Renhe Sports Management Co Ltd. Former manager Mark Bowen said, “He has spent a hell of a lot of money on the club and still wants to spend money.” The club’s loss increased from £30m to £42m, largely due to no repeat of prior year’s £8m from sale of the training ground and £2m other operating income. Revenue dropped £3m (16%) from £21m to £18m. Profit on player sales fell £0.8m to £1.6m.   This is one of the lowest gains in the Championship.  The Royals have made very little from player sales, averaging only £4.2m a year since 2011. Much poor recruitm...

Reading have published their 2019/20 accounts.   Operating losses were £43m. Wages were a massive 211% of revenue, way above the Uefa recommended level of no more than 70 per cent. Total accumulated losses are £138m.   Borrowings are £87m. Player signings cost £16m.   Average weekly wage is £17,460. Reading’s creditors include £87m in loans to owner, £9.7m outstanding instalments on transfer fees and  the club has taken advantage of Rishi Sunak’s ‘tax pay delay’ scheme to increase outstanding PAYE due to £6.4m. Loans would have been almost £100m but owner swapped debt for shares.

Former days at Reading.   Elm Park on a winter's day. The authoritative Swiss Ramble has produced an analysis of Reading's 2018/19 financial results, when their loss widened from £21m to £30m, despite some once-off disposals.  He has also produced a two page financial fact sheet available on his twitter account @SwissRamble. the Swiss Ramble states, 'This is an awful set of accounts for Reading , which would have been even worse without many exceptional sales. Like many other Championship clubs, funding from the owners is vital, though this will not help meet FFP targets. Manager Mark Bowen has a tough task on his hands.' Gross debt rose £6m from £62m to £68m, almost entirely owed to the club’s owners. This has nearly tripled from £25m in 2011. The Royals  made a large £32m cash loss from operating activities in 2018/19, then spent £1m on players (net) and £1m capital expenditure. This was funded by £35m from the owners (£28m shares and £6m loans). The Swiss Ramble n...

Football finance expert Kieran Maguire discusses Championship finances and asks whether the coronavirus pandemic could mean the end of the Championship as we know it. David Sharpe, the former chairman of Wigan Athletic, contributes to the discussion: The future of the Championship

Reading had an operating loss of £40.6m in 2018/19, which is after taking into account £1.7m of management charge income to another group company and £3m loan fee for Sone Aluko to a club controlled by Reading owners. Without these losses would have been over £45m, reports Kieran Maguire of the PriceofFootball. Reading reduced losses to ‘just’ £30m through player disposals and selling training ground to club owners for £13m at a profit of over £8m. The previous season Reading undertook a similar exercise with the Majedski Stadium. Reading did not receive any cash for the sale of the training ground, it was offset against the sum due to owners, who put in £28m of shares and increased loans by £6.5m. Reading are paying rent of £1.5m a year for the Majedski Stad after selling the stadium for £26.5m. Reading’s wage bill increased by £5.4 million in 2018/19. Excluding the unusual loan fee Reading therefore paid £225 in wages for every £100 of income which is a Championship record, beatin...

Reading have been placed under a soft transfer embargo which means they must get the green light from the EFL to sign players: Soft transfer ban It is designed to stop clubs' finances going out of control. It is believed that Sheffield Wednesday may have been placed under a similar ban for submitting their accounts late.

Kieran Maguire of the PriceofFootball describes it as a 'jaw dropping week of financial information publication from the Championship' with clubs reporting heavy losses as they chase the Premiership dream. Once again we see how clubs receiving parachute payments from the Premier League are at a clear financial advantage compared to those who do not. Clubs in the Championship lost on average £365,000 a week last season from day to day operations as they chased the gold at the end of the EPL TV rainbow. Reading are the latest club to report their 2017/18 results with losses of ‘just’ £746,000 in 2017/18. An unusual grant receipt of £10m and flogging off some assets then helped reduce these losses to just £21m compared with a profit of £4.7m the previous year. Turnover decreased by £18.8m from £36.7m to £17.9m. Average attendances declined from 17,505 to 15,181. Media revenue was the biggest factor in this decrease, accounting for 71 per cent, down from £20.9m in 2017 to £7.5m ...