How mismanagement has ruined Reading FC

FOLLOWING the ownership fiasco at Reading FC over the last six years has been a full-time job.

Forget the football correspondent’s staple diet of hamstring strains, refereeing decisions, transfer gossip and six-pointers — now it’s winding-up petitions, tax bills, points deductions and administration that fill a typical working day.

I never wanted to become a business or legal correspondent, but that is where the last six years has taken me. The football has been a sideshow while money and politics have been in the spotlight.

To understand where we are now we need to turn the clock back 15 years, to happier times.

John Madejski wlas about to be knighted. Steve Coppell was manager. Reading were punching way above their weight, top of the Championship after a couple of seasons in the Premier League.

The club had a still newish stadium and were enjoying a high profile existence with regular capacity crowds making for some memorable Saturday afternoons.

Then the global financial crisis took hold. Unfortunately for Reading FC, those affected included the owner, who had so astutely built the club since the Eighties. Only now is his wise tenure being fully appreciated.

In Sir John’s day multi-millionaires could run their local clubs but in 2010 he told us “only billionaires need apply” to buy the club from him, so high were player salaries and such were football’s market forces.

Anton Zingarevich appeared to be the answer but turned out to be anything but. The Russian bought a 49 per cent stake in the club but made some huge overspends, ran up some colossal debts and then failed to buy the remaining 51 per cent as agreed, leaving Sir John with half a club and huge debts to clear.

A Thai consortium arrived just in time — “Tiger”, with his garish garb, “Lady Sasima”, with her unforgettable anthem, and a couple of others, all with their grand plans to turn the car park into a retail and leisure complex.

At that point Reading fans were not in a position to be fussy. Without the Thais the club and Sir John were in a heap of trouble.

They arrived just in time and despite their primary interest being the real estate rather than the football, they did a reasonable job stabilising things.

During their three years from 2014 they appointed Steve Clarke as manager, which was definitely a shrewd move, they saw Reading reach an FA Cup semi-final and there was a tour to their homeland. At half-time in a play-off semi-final second leg game at the Madejski Stadium in May 2017 there was the most distracting and chaotically timed announcement.

Dai Yongge and Dai Xiu Li had bought the club from the Thais.

A couple of weeks later Reading lost the play-off final on penalties against Huddersfield. They had missed out on the Premier League by a single kick.

But that wasn’t going to deter the mega-wealthy Chinese pair spending as if they had won the match.

Millions were splashed on grossly overpriced and overpaid players. Sone Aluko, Mo Barrow and Dave Edwards came in for an eye-watering £10 million. They landed incredible contracts that made even their agents blush.

On the field the players were totally ineffectual and during every transfer window the recruitment policy had all the strategy of a Supermarket Sweep contestant charging up and down the aisles.

The pandemic exacerbated the financial problems. The income from gate receipts, merchandise sales and TV rights was not close to matching the outgoings on wages and player deals.

All clubs suffered financially during the 2020/21 seasons but any clubs already living beyond their means were particularly hard hit.

Reading were top of the list. At one stage they were spending 225 per cent of their turnover on staff wages. You don’t need to be top brass at KPMG to recognise the poor accounting.

One set of accounts showed they were losing £350,000 a week for years on end. Even by football standards these debts were starting to look ridiculous.

Chelsea and Manchester City rose from the second tier to the very top of European club football by spending big but their fanbases were bigger, their potential income was far greater and they did the speculating at a time when “financial fair play” wasn’t really a thing.

Now called “profitability and sustainability”, football rules are tighter, limiting how much money a wealthy and ambitious owner can throw at a lower league club.

The rules are in place now to prevent repeats of individuals like Anton Zingarevich running up huge debts, committing clubs to expensive contracts, and then walking away to leave the club in financial ruin.

Reading’s issue has, until the last few months, not been about a shortage of money.

Dai Yongge made his money converting former air raid shelters in China into lucrative shopping malls. A couple of years ago he was reliably valued to be worth $26 billion. For those who, like me, struggled with GCSE maths, that’s being a millionaire 26,000 times over. If you have a disused air raid shelter in your back garden, get in contact with me.

Yongge was happy to spend a few million on Reading FC. He didn’t seem to care too much, though he did attend games post-pandemic, when we could all travel again.

The crux of Reading’s issues, though, was not a shortage of money, it was the advisors who swarmed round him.

When word gets out you have that sort of money, attracting friends cannot be all that challenging. The nail in the coffin for Reading was the agents, the advisors and all those who wanted a slice of Dai’s billions.

Every time he did another deal, an agent would be able to buy a new car or in some instances quite a few cars.

A British-Iranian self-proclaimed super-agent, who went to school at Shiplake College 35 years ago, was a prime mover and shaker.

Thirty-five years ago Shiplake students had a reputation for being, shall we say, less academically ferocious than those at some other similar institutions. If Kia Joorabchian failed his economics A-level I would be most surprised.

He has been at the heart of the club since 2017, advising Yongge how best to spend his millions. Judging by the number of race horses Joorabchian now owns, he hasn’t been doing this out of the kindness of his heart.

In the last couple of years Reading FC have not been playing by the profitability and sustainability rules. The English Football League has punished them for their overspending.

As if that wasn’t bad enough, the political situation in China and Hong Kong shifted.

Back in 2017 owning a British football club was a good way for wealthy Chinese individuals to curry favour with Xi Jinping, general secretary of the Chinese Communist Party and effectively the nation’s leader.

That policy shifted, Yongge’s popularity waned and he now finds it almost impossible to get his billions out of the banks in China and across to the UK to pay the Reading FC bills.

That meant tax bills went unpaid. On four occasions HMRC have issued winding-up petitions. Dates have been set for showdowns in the High Court but so far at least it has not quite gone that far.

The outstanding bills have always been paid before the court date has been reached, the most recent example of which took place on Tuesday last week when a couple of months of tax was cleared.

Transfer embargoes are now in place, probably for the next couple of years, because of the late payment of those tax bills.

Wages have been paid late, though that has always been put down to administrative hitches. There have been points deductions for three consecutive seasons for this and other profitability and sustainability transgressions. Only Reading have netted this unwanted hat-trick.

Amid the protests, which have included tennis balls being thrown on to the pitch mid-match at the SCL Stadium, a demonstration march, fans wearing black to games and unprecedented vitriol on social media, Yongge has stated via the club website that he is now prepared to sell the club.

It is worth noting that throughout this unhappy six-year debacle not once has he given an interview.

The search is now on for someone willing to pay enough to satisfy Yongge’s seemingly unquenchable thirst for dollars.
Trying to find anyone wealthy and crazy enough to take on the debts and the general chaos is, perhaps unsurprisingly, proving to be a
challenge.

Plenty of individuals and parties have made enquiries. Former Newcastle United owner Mike Ashley seems to lead the way and there are several consortiums from America sniffing about.

Some less serious players have already dropped out of the race. Some potential owners may be waiting to see the club fall into administration and then pick it up for a song but with administration comes a further 12-point deduction, which would surely consign Reading to League Two football next season.

It’s a sorry tale that has unfolded over the last 15 years. I only hope whoever is at the helm for the next chapter allows me to get back to hamstring strains and six-pointers.