Built to Break: how English football failed Reading

What happened

Reading spent far beyond its income for years, and the system only intervened once the money had run out.

Dai Yongge and his sister bought 75% of the club in May 2017 (Sky Sports, 2025). Wages then ran at more than twice turnover from 2019 to 2021 (Preston, 2026). The EFL deducted six points in 2021 for losses of £57.8m against a £39m limit (Sky Sports, 2021), six more in 2023 when a suspended penalty was triggered by a breach of an agreed business plan (Swiss Ramble, 2023), and six in 2023/24 over late payments, including wages and tax (Sky Sports, 2024). Reading went down in 2023. Dai was disqualified in March 2025, and Rob Couhig's Redwood Holdings bought the club that May (Sky Sports, 2025; City AM, 2025). Each step is usually told as a story about one owner. The evidence points at the system he was playing in.

From 2019 to 2025, Reading never spent less on wages than it earned

Wages as a share of turnover, years to 30 June

Source: Preston (2026), from Reading FC's published accounts. The club's financial year ends on 30 June (STAR, n.d.).

Why the structure failed Reading

Failure 1

The prize is too big to resist

In 1992/93 the average Premier League club earned 2.7 times as much as the average Championship club. By 2024/25 it earned 8.7 times as much (IFR, 2026), and promotion to the Premier League in 2023/24 and 2024/25 lifted clubs' total revenues by 376% (IFR, 2026). Dietl, Franck and Lang (2008) model what that does. In an open league, clubs overinvest in players, and the bigger the revenue gap between leagues, the more they overinvest. Their paper is theory, not data, but the regulator's figures fit its prediction. By that logic, Reading's 243% was an extreme but rational response to the size of the prize.

Failure 2

The race starts uneven

A club relegated from the Premier League received a first-year parachute payment of £48.7m in 2025/26. A Championship club without one received £5.3m (IFR, 2026; Watson, 2026). To compete, the rest must outspend their income. In 2025/26, non-parachute clubs spent 84% of revenue on player wages, against 57% for parachute clubs (IFR, 2026). How much parachutes distort promotion is disputed. Wilson, Ramchandani and Plumley (2018) found parachute clubs about twice as likely to go up, and insolvency advisers Leonard Curtis put it at four times (Dalleres, 2026). The regulator calls the evidence mixed: parachute clubs took 17 of the 30 promotion places in ten years, which it describes as broadly in line with European and lower-league counterparts (IFR, 2026). The academic study is the most rigorous of the three but ends in 2016/17, before today's payment levels. All three agree on the spending pressure, even where they disagree on the odds.

Failure 3

The owner is the business model

Championship clubs need 57p of outside money for every £1 they earn, and shareholder loans make up 78% of Championship club debt (IFR, 2026). Storm and Nielsen (2012) argue that professional football clubs operate under soft budget constraints: they survive deficits that would sink an ordinary firm. Their paper is about Europe's top-league clubs, yet the second tier fits the idea even more closely. The constraint only stays soft while one person keeps paying. The regulator names Reading among recent clubs that had no contingency plan for an owner ceasing to fund them (IFR, 2026).

Failure 4

The rules measured the past

The profitability rules judged three-year losses after they were made. Reading's 2021 penalty arrived once the money was spent and the contracts signed. Szymanski (2012) found that English clubs' insolvencies are better explained by negative shocks than by reckless overspending, and suggested the causes may be systemic rather than behavioural. His data ends in 2010, before owner funding became the norm. Reading arguably fits his pattern: the shock was its owner's money slowing down. The rules had no way to see that coming.

The cliff between the top two divisions

Average club revenue and central payments, £m

Revenue is for 2024/25: Premier League £6.8bn ÷ 20 clubs and Championship £942m ÷ 24 clubs (Deloitte, 2026). Payments are for 2025/26; the solidarity payment goes to a Championship club without a parachute (IFR, 2026).

Not one club, a pattern

Reading is not an outlier. In seven years, four other well-known clubs went through the same cycle of overspending, late intervention and punishments that fell on the team and its fans.

The same story, five times

EFL clubs in financial crisis since 2019

2019Bury

Expelled from the EFL after a rescue takeover collapsed shortly before the deadline. The first club expelled from the league since Maidstone United in 1992.

Expelled

2021Derby County

Sold its stadium to a company owned by its owner for £81.1m in 2018, then entered administration in September 2021.

−21 points

2021–24Reading

Wages above twice turnover, a broken business plan, late wages and tax. Owner disqualified in 2025.

−18 points

2025Sheffield Wednesday

Entered administration after failing to pay players, staff and HMRC. Former owner banned for three years.

−18 points

2026Leicester City

Breached the profitability rules by £20.8m over 2022–2024, and was docked points in 2026 while in the Championship.

−6 points

Sources: Bury: AFP (2019); Derby: Linklaters (2022); Reading: Sky Sports (2025); Sheffield Wednesday: Insider Sport (2025); Leicester: Premier League (2026).

A global problem of trust

The pattern reaches the top of the game, where the problem shifts from survival to honesty. In September 2026, an independent commission found that Manchester City had used commercial arrangements that "misrepresented the true agreements between the parties" over nine seasons. The Premier League says those arrangements inflated revenue and cut costs by more than £900m (Mishcon de Reya, 2026). City deny wrongdoing and say they will pursue an appeal, and no sanction has yet been set. In Italy, Juventus were docked ten points in 2023 over how they had recorded profits on player transfers (CBS Sports, 2023). Marseille were stripped of the 1993 French title after a bribery scandal (O'Hagan, 2023). The details differ, but the lesson does not: rules only protect a sport's integrity if breaches are caught early and punished fairly. The Business of Sport podcast framed the question after the City decision: whether football can "deliver a punishment that befits the crime and acts as deterrent" (Business of Sport, 2026a).

The case against: the system bends but rarely breaks

Szymanski (2012) found that clubs hit by insolvency survive in one form or another, and that restructuring often returns them to their former health. Reading survived too: the EFL forced a sale, and the new owner bought the club with its stadium and training ground (City AM, 2025). The rules are also changing. From 2026/27, Championship clubs may spend no more than 85% of income on squad costs, monitored during the season rather than after it (EFL, 2026), and the regulator, created by the Football Governance Act 2025, begins licensing clubs from 2027/28 (Football Governance Act 2025; Sport Resolutions, 2025). Yet the new rules still let owners add £33m over three years. That keeps the owner as the safety net, which is exactly where Reading's trouble began. And survival is a low bar. The Business of Sport podcast's recent episode on Torquay United shows the cost lower down: "an owner who decides they can no longer fund the club" leaves a century-old community asset facing closure (Business of Sport, 2026b).

From the stands

I have been to more than 300 Reading games, and I lived through every stage of this. The figures above are accurate, but they do not show what it felt like.

Reading were founded in 1871 (Sky Sports, 2025). After more than 150 years, it felt for a while as though the club might not see many more. At the lowest point there were rumours the club could be liquidated, and none of us could see a way out. So we protested. We threw tennis balls onto the pitch, and we invaded it against Port Vale until the game was abandoned (Sky Sports, 2025). It should never take that for the people in charge to act.

Many of us felt Dai never cared about the club the way Sir John Madejski had. But most fans I know felt just as let down by the EFL. When it finally acted, it punished us. The six points taken in 2023 decided our relegation: we went down five points from safety (Sky Sports, 2025). Transfer embargoes followed, tied up with unpaid tax and overdue payments (Hob Nob Anyone?, 2023b). Dai was eventually forced to sell, but only after the club had been dragged to the brink. At no point did anyone protect the fans.

We felt lost, angry and betrayed, by the owner and by the league that let him stay.

The mood around the club turned toxic, and the crowds thinned. Players came and went, the squad leaned on loans, and academy players were pushed into the first team before they were ready. Whenever we had a good season, our best players left. Michael Olise, Caylan Vickers and Femi Azeez were sold, Josh Laurent left on a free transfer when his contract expired, and Yakou Meïté left after failing to agree a new deal (Hello Rayo, 2021; Hob Nob Anyone?, 2022; 2023a; 2024; Reading Today, 2024). Reading went through at least eight different managers in eight years (Wikipedia, 2026), and none of them had a chance in those conditions. Players, staff and supporters carried the cost. Under the new owners there is hope again for the first time in years. But hope should not depend on luck, and the next club may not be so lucky.

Verdict

The EFL failed Reading, and I say that as someone who watched it happen from the stands. It approved an owner in 2017, then let the club run up losses funded by his loans for four years before it acted (Sports Venue Business, 2017; STAR, n.d.; Sky Sports, 2021). But the EFL's rules were built on sand. In a pyramid where the top division earns almost nine times as much as the one below, and parachute clubs start every season with a head start worth millions, no rulebook can stop clubs gambling on promotion. The rules exist and are clear. The enforcement is slow, and it lands on the wrong people: players, staff and supporters lose points, wages and their club, while the owners who made the bets face fines and, at worst, a forced sale. Every time this happens at Bury, Derby, Reading or Sheffield Wednesday, the integrity of those clubs and of the EFL itself is questioned again.

The fix: catch it at the start, not the end. Before any takeover, and before every season, owners should prove the money exists by placing any planned overspend in a ring-fenced account. Clubs should publish verified finances straight away, so any gap between what they declare and what they spend triggers questions immediately, not three years later. Deals with owner-linked companies, from stadium sales to sponsorships, should be independently valued before they count. And when rules are broken, the sanctions should fall on owners, through bans and personal liability, not on the players and supporters who had no say. A clearer system, applied from day one, is the best chance of restoring trust in the game.

Built to break