Points Deduction AGAIN

[Kitsondinho]

EFL are a disgrace and Dai needs to run the club properly or sell up

Sell to who exactly?

I’m sure there are loads of people out there willing to run the club into the ground…the last 3 owners seem to have had that in mind!

[clauski]

Not sure exactly where we've gone wrong but it sounds like we have and another deduction will be agreed. From the club statement "significant progress has been made in aiming to achieve those financial targets" basically says we haven't achieved them. And goes on to imply the non-football side of the business could be the issue. Still, as significant progress has been made in aiming to achieve enough points to stay up, let's hope that is enough.

[Orion1871]

Not sure exactly where we've gone wrong but it sounds like we have and another deduction will be agreed. From the club statement "significant progress has been made in aiming to achieve those financial targets" basically says we haven't achieved them. And goes on to imply the non-football side of the business could be the issue. Still, as significant progress has been made in aiming to achieve enough points to stay up, let's hope that is enough.

No. It says what Ince said in his press conference. We have achieved them, and now we've almost survived, and beat their corrupt system, the league are going back a couple of seasons to find something to stiff us with.

[Clyde1998]

I don't normally post, but from what I'm aware (some of which I've not seen mentioned or need re-emphasising):

1. Points deduction and triggers
   1. The six point deduction we recieved last season related to financial activities from the 2020-21 season, with any points deduction for this season relating to financial activities from the 2021-22 season (last season). The points deduction will not relate to financial activies for this season.
   2. The timing is due to the previous agreement between the EFL and Reading made in November 2021, with documents needing to be filed by 1st March (just gone). Additionally, this time of year is when the club usually publish their annual accounts.
   3. The suspended points deduction could be triggered through failing to comply with the agreement with the EFL, in addition to failing to comply with the normal profit and sustainability rules.
2. Salaries
   1. "Salary" is defined as "such sums as are required to be disclosed in or annexed to the standard player contract (including but not limited to (i) gross basic salary, (ii) signing on fees, (iii) appearance fees, (iv) individual player bonuses, and (v) accommodation, relocation, travel or motor costs) excluding any payments made in accordance with the squad bonus schedule." This is important to note, as bonuses can add up.
   2. The player salary cap for the 2021-22 season was £21.1m, with that reducing to £16m for this season, covering twenty-five 'permitted players' (any player who've played three or more first team matches for any club at Championship level or higher). This excludes youth players, for example, who haven't played in any league matches.
   3. The season in question would've included the contracts of John Swift, Rafael (until mid-January), George Puscas (until late-January), Liam Moore (until late-January) who would've been among the high earners. Additionally, part of the contract for Marc McNulty might've been paid by the club whilst he was on loan at Dundee United.
3. Transfers
   1. While the club was unable to make transfers, there may still have been transfer fees payable for previous transfers: clauses may be activated or transfer fees were spread out (ie. if we signed a player for £3m, that may be spread as three £1m payments over three seasons).
   2. We did sell Michael Olise at the start of last season for ~£8m - which will have helped us reach certain objectives.
4. Standard profit and sustainability rules
   1. Where I believe the club is most likely be in breach of the EFL rules in with the normal profit and sustainability (P&S) regulations.
   2. The P&S rules relate to 'Adjusted Earnings Before Tax' - which excludes costs related to depreciation and/or impairment of tangible fixed assets, amortisation or impairment of goodwill and other intangible assets (excluding transfer fees), women's football, youth development, community development and, for the 2019-20 (up to £5m), 2020-21 (up to £5m) and 2021-22 (up to £2.5m), Covid related costs (including loss of revenue and/or exceptional costs). This means losses accounted under the P&S rules will be lower than the financial report losses for the same period.
   3. Between 2017-18 and 2020-21 (the 2019-20 and 2020-21 seasons were merged into a single reference period due to Covid) inclusive, the club made a P&S loss of £57.8m. This is compared to a total loss of £128.7m, as shown in the club's accounts (the club made losses of ~£42m and ~£35.5m in the 2019-20 and 2020-21 financial reports respectively, however there would've been a loss of revenue due to Covid in both seasons).
   4. Due to the scale of the losses in the 2019-20 and 2020-21 seasons, it's possible we've failed to reduce losses to under £39m over the period. If the same ratio of overall losses to P&S losses is applied, plus the maximum allowable Covid costs are removed, we'll have needed to have made no more than a ~£8.6m loss (under P&S) in the 2021-22 season (and ~£4m without any Covid deductables applied). The aforementioned sale of Michael Olise may have allowed us to reach this, mind.
   5. I would imagine we shouldn't have any issues will complying with the P&S regulations for the next period, unless something very surprising comes up in the 2021-22 accounts.

If there are any noticable errors, feel free to point them out.

[Nameless]

B2 is clearly wrong. The salary budget is for all contracted players, not just the 25 ‘permitted’ players. See clause 1.3 of the appendix to the Agreed Decision.

A1 is wrong. The 6 points relate to actives over a 4 year period ending in 20-21.See point 3 of the agreed decision

It’s a bit hard to know what might trigger the suspended deduction as the Decision says this is set out in paragraphs 19 and 20 of the Appendix which actually only has 10 paragraphs !

Profits and losses on sale of player registration are excluded from the P&S calculation see clause 8.1 of the appendix. This suggests the Olise sale is not relevant, neither would selling any other player have helped other than by reducing wages. It seems a bit odd as most clubs use player sales as income !

[YorkshireRoyal99]

It just leaves a bit of a sour taste in the mouth really. You'd have thought that they would have explored this previously, put this to bed and then we agreed our business plan, knowing that any breach of that would result in an automatic 6 point deduction then.

If this isn't a breach of our business plan and it is something that goes back before the business plan was agreed, does that mean that we could still face another 6 point deduction if we are found to have breached anything in those terms that we agreed to as well?

It all just screams to me as an absolute shitshow, from both the club and the EFL now to be honest.

If you have a suspended points deduction, and that points deduction is activated, it cannot be activated a second time.

Although that doesn't mean that if we commit further offences we can't have further sanctions for them. They'll just be new offences and sanctions.

Going back to the criminal angle. You commit assault while drunk. You get a 20 hour community order with a six months suspended sentence. You are required not to visit licensed alcohol venues for six months and not to associate with your drunk buddies for an additional twelve months.

You are found to have been to a pub in the first six months, 15 months later. You go to prison for six months. If you also associated with your buddies, you don’t go to prison for 12 months. But if you carried out another drunken assault with them, you'll probably be convicted for another, longer, prison term.

This isn't for breaking regulations in our business plan though was it? This was before we agreed to the business plan, so they aren't triggering the suspended 6 point deduction because we've broken the business plan are they? Unless it didn't matter and it was just another 6 points if they found anything although I didn't think that's how it worked.

I'm not griping over it, fair enough if they've found something else then they've found it, but you'd have thought this would have been done and dusted the first time around. To be honest, it might be a bit of a blessing in disguise that it comes off this year as opposed to last season.

[Hound]

It just leaves a bit of a sour taste in the mouth really. You'd have thought that they would have explored this previously, put this to bed and then we agreed our business plan, knowing that any breach of that would result in an automatic 6 point deduction then.

If this isn't a breach of our business plan and it is something that goes back before the business plan was agreed, does that mean that we could still face another 6 point deduction if we are found to have breached anything in those terms that we agreed to as well?

It all just screams to me as an absolute shitshow, from both the club and the EFL now to be honest.

If you have a suspended points deduction, and that points deduction is activated, it cannot be activated a second time.

Although that doesn't mean that if we commit further offences we can't have further sanctions for them. They'll just be new offences and sanctions.

Going back to the criminal angle. You commit assault while drunk. You get a 20 hour community order with a six months suspended sentence. You are required not to visit licensed alcohol venues for six months and not to associate with your drunk buddies for an additional twelve months.

You are found to have been to a pub in the first six months, 15 months later. You go to prison for six months. If you also associated with your buddies, you don’t go to prison for 12 months. But if you carried out another drunken assault with them, you'll probably be convicted for another, longer, prison term.

This isn't for breaking regulations in our business plan though was it? This was before we agreed to the business plan, so they aren't triggering the suspended 6 point deduction because we've broken the business plan are they? Unless it didn't matter and it was just another 6 points if they found anything although I didn't think that's how it worked.

I'm not griping over it, fair enough if they've found something else then they've found it, but you'd have thought this would have been done and dusted the first time around. To be honest, it might be a bit of a blessing in disguise that it comes off this year as opposed to last season.

Which is where peterboro May think they have a point

Though be suprised if what we did adds up to worse than Derby and their 9 point deduction. It may have been 9 points or a 6+6 suspended

[YorkshireRoyal99]

If you have a suspended points deduction, and that points deduction is activated, it cannot be activated a second time.

Although that doesn't mean that if we commit further offences we can't have further sanctions for them. They'll just be new offences and sanctions.

Going back to the criminal angle. You commit assault while drunk. You get a 20 hour community order with a six months suspended sentence. You are required not to visit licensed alcohol venues for six months and not to associate with your drunk buddies for an additional twelve months.

You are found to have been to a pub in the first six months, 15 months later. You go to prison for six months. If you also associated with your buddies, you don’t go to prison for 12 months. But if you carried out another drunken assault with them, you'll probably be convicted for another, longer, prison term.

This isn't for breaking regulations in our business plan though was it? This was before we agreed to the business plan, so they aren't triggering the suspended 6 point deduction because we've broken the business plan are they? Unless it didn't matter and it was just another 6 points if they found anything although I didn't think that's how it worked.

I'm not griping over it, fair enough if they've found something else then they've found it, but you'd have thought this would have been done and dusted the first time around. To be honest, it might be a bit of a blessing in disguise that it comes off this year as opposed to last season.

Which is where peterboro May think they have a point

Though be suprised if what we did adds up to worse than Derby and their 9 point deduction. It may have been 9 points or a 6+6 suspended

I'd expect they will be asking the question if reports are to be believed.

Didn't Sheffield Wednesday have a similar punishment as what we look like we will have, but in reverse? They had 12 off originally which was then reduced to 6, whereas we've had 6 in one season but now looking like 6 in another?

[Nameless]

The deduction isn’t just implemented if we breach the business plan. It can also be implemented if our losses are outside the permitted numbers, which is based on what happened prior to this season.

[Clyde1998]

B2 is clearly wrong. The salary budget is for all contracted players, not just the 25 ‘permitted’ players. See clause 1.3 of the appendix to the Agreed Decision.

Re-reading it, that does appear to be the case.

My interpretation of the P&S regulations, however, is players in the under 21 age group and below, and who have played ten or less matches at Championship (or equivalent) or a higher level, don’t have their wages included in the P&S expenditure calculation (under the definitions at clauses 1.1.3 and 1.1.22 (with the wording in 1.1.22 being comparable to the women’s definition in 1.1.21). Seems odd those players would be included in the Agreed Decision salary calculation if they aren’t included in the P&S calculation.

[YorkshireRoyal99]

The deduction isn’t just implemented if we breach the business plan. It can also be implemented if our losses are outside the permitted numbers, which is based on what happened prior to this season.

Yeah I understand we could be breached under a few different areas, but I thought there was a 6 point suspended sentence if we broke a regulation in our business plan? Which reports are suggesting we haven't done as it's historical. So I'm assuming that we still have 6 points suspended because we haven't breached our business plan?

Unless the suspended 6 points was for any breach, be it historical, the business plan etc.

[Clyde1998]

A1 is wrong. The 6 points relate to actives over a 4 year period ending in 20-21.See point 3 of the agreed decision

It’s a bit hard to know what might trigger the suspended deduction as the Decision says this is set out in paragraphs 19 and 20 of the Appendix which actually only has 10 paragraphs !

Profits and losses on sale of player registration are excluded from the P&S calculation see clause 8.1 of the appendix. This suggests the Olise sale is not relevant, neither would selling any other player have helped other than by reducing wages. It seems a bit odd as most clubs use player sales as income !

Should’ve made that clearer, I did mean the reference period ending in with the 2020-21 season as opposed to the result for the single season (as you say).

Maybe the club’s got some really good negotiators and the triggers got removed from the final copy.

The player sales seem to be specific to the situation then, as I’m fairly certain they’re usually included in the P&S calculations. Would’ve thought player sales would’ve been the best way to resolve the issues!

[Stranded]

I don't normally post, but from what I'm aware (some of which I've not seen mentioned or need re-emphasising):

1. Points deduction and triggers
   1. The six point deduction we recieved last season related to financial activities from the 2020-21 season, with any points deduction for this season relating to financial activities from the 2021-22 season (last season). The points deduction will not relate to financial activies for this season.
   2. The timing is due to the previous agreement between the EFL and Reading made in November 2021, with documents needing to be filed by 1st March (just gone). Additionally, this time of year is when the club usually publish their annual accounts.
   3. The suspended points deduction could be triggered through failing to comply with the agreement with the EFL, in addition to failing to comply with the normal profit and sustainability rules.
2. Salaries
   1. "Salary" is defined as "such sums as are required to be disclosed in or annexed to the standard player contract (including but not limited to (i) gross basic salary, (ii) signing on fees, (iii) appearance fees, (iv) individual player bonuses, and (v) accommodation, relocation, travel or motor costs) excluding any payments made in accordance with the squad bonus schedule." This is important to note, as bonuses can add up.
   2. The player salary cap for the 2021-22 season was £21.1m, with that reducing to £16m for this season, covering twenty-five 'permitted players' (any player who've played three or more first team matches for any club at Championship level or higher). This excludes youth players, for example, who haven't played in any league matches.
   3. The season in question would've included the contracts of John Swift, Rafael (until mid-January), George Puscas (until late-January), Liam Moore (until late-January) who would've been among the high earners. Additionally, part of the contract for Marc McNulty might've been paid by the club whilst he was on loan at Dundee United.
3. Transfers
   1. While the club was unable to make transfers, there may still have been transfer fees payable for previous transfers: clauses may be activated or transfer fees were spread out (ie. if we signed a player for £3m, that may be spread as three £1m payments over three seasons).
   2. We did sell Michael Olise at the start of last season for ~£8m - which will have helped us reach certain objectives.
4. Standard profit and sustainability rules
   1. Where I believe the club is most likely be in breach of the EFL rules in with the normal profit and sustainability (P&S) regulations.
   2. The P&S rules relate to 'Adjusted Earnings Before Tax' - which excludes costs related to depreciation and/or impairment of tangible fixed assets, amortisation or impairment of goodwill and other intangible assets (excluding transfer fees), women's football, youth development, community development and, for the 2019-20 (up to £5m), 2020-21 (up to £5m) and 2021-22 (up to £2.5m), Covid related costs (including loss of revenue and/or exceptional costs). This means losses accounted under the P&S rules will be lower than the financial report losses for the same period.
   3. Between 2017-18 and 2020-21 (the 2019-20 and 2020-21 seasons were merged into a single reference period due to Covid) inclusive, the club made a P&S loss of £57.8m. This is compared to a total loss of £128.7m, as shown in the club's accounts (the club made losses of ~£42m and ~£35.5m in the 2019-20 and 2020-21 financial reports respectively, however there would've been a loss of revenue due to Covid in both seasons).
   4. Due to the scale of the losses in the 2019-20 and 2020-21 seasons, it's possible we've failed to reduce losses to under £39m over the period. If the same ratio of overall losses to P&S losses is applied, plus the maximum allowable Covid costs are removed, we'll have needed to have made no more than a ~£8.6m loss (under P&S) in the 2021-22 season (and ~£4m without any Covid deductables applied). The aforementioned sale of Michael Olise may have allowed us to reach this, mind.
   5. I would imagine we shouldn't have any issues will complying with the P&S regulations for the next period, unless something very surprising comes up in the 2021-22 accounts.

If there are any noticable errors, feel free to point them out.

With P&S - the losses up to 2020-21 don't factor any more. To give us "a chance" and so as to make it harder for us to be punished for overlapping periods, the loses for 20/21 and the 2 years prior (treated as 1 year) were both set to 13m, even though they were bigger. Which meant in 21/22 we could lose up to 13m in P&S terms and still make the budget. Whether that was realistic remains to be seen - it probably wasn't.

[Nameless]

The deduction isn’t just implemented if we breach the business plan. It can also be implemented if our losses are outside the permitted numbers, which is based on what happened prior to this season.

Yeah I understand we could be breached under a few different areas, but I thought there was a 6 point suspended sentence if we broke a regulation in our business plan? Which reports are suggesting we haven't done as it's historical. So I'm assuming that we still have 6 points suspended because we haven't breached our business plan?

Unless the suspended 6 points was for any breach, be it historical, the business plan etc.

Once again I will recommend reading the agreed decision….

[YorkshireRoyal99]

The deduction isn’t just implemented if we breach the business plan. It can also be implemented if our losses are outside the permitted numbers, which is based on what happened prior to this season.

Yeah I understand we could be breached under a few different areas, but I thought there was a 6 point suspended sentence if we broke a regulation in our business plan? Which reports are suggesting we haven't done as it's historical. So I'm assuming that we still have 6 points suspended because we haven't breached our business plan?

Unless the suspended 6 points was for any breach, be it historical, the business plan etc.

Once again I will recommend reading the agreed decision….

Cheers for that you were a great help as always.

[Clyde1998]

With P&S - the losses up to 2020-21 don't factor any more. To give us "a chance" and so as to make it harder for us to be punished for overlapping periods, the loses for 20/21 and the 2 years prior (treated as 1 year) were both set to 13m, even though they were bigger. Which meant in 21/22 we could lose up to 13m in P&S terms and still make the budget. Whether that was realistic remains to be seen - it probably wasn't.

That’s a major help. I read that clause as affirmation of what the threshold will be, as opposed to it being a ‘reset’ for those years. It’s certainly a lot more realistic than if they didn’t adjust those seasons.

[Stranded]

Profits and losses on sale of player registration are excluded from the P&S calculation see clause 8.1 of the appendix. This suggests the Olise sale is not relevant, neither would selling any other player have helped other than by reducing wages. It seems a bit odd as most clubs use player sales as income !

I read that differently - that we have breached if the loss is above the upper threshold once any profit/loss from trading has been accounted for i.e. the final value has them "removed".

So for example, we have a loss of 20m but we have a profit of 8m on Olise, once this is "removed" the loss is only 12m and we go from breaching to meeting the obligation.

If player sales are discounted for us (and I understand why the wording can be read that way), then it removes literally the only way we could have ever met the requirements. Would mean we could have sold say 15m worth of players ( I know) and broken even from a P&S standpoint but when these were removed, we've actually lost 15m and breached. That doesn't seem to make sense.

[YorkshireRoyal99]

Profits and losses on sale of player registration are excluded from the P&S calculation see clause 8.1 of the appendix. This suggests the Olise sale is not relevant, neither would selling any other player have helped other than by reducing wages. It seems a bit odd as most clubs use player sales as income !

I read that differently - that we have breached if the loss is above the upper threshold once any profit/loss from trading has been accounted for i.e. the final value has them "removed".

So for example, we have a loss of 20m but we have a profit of 8m on Olise, once this is "removed" the loss is only 12m and we go from breaching to meeting the obligation.

If player sales are discounted for us (and I understand why the wording can be read that way), then it removes literally the only way we could have ever met the requirements. Would mean we could have sold say 15m worth of players ( I know) and broken even from a P&S standpoint but when these were removed, we've actually lost 15m and breached. That doesn't seem to make sense.

It also wouldn't explain how the likes of Birmingham and Bristol City (and likely many others) have been compliant with P&S regulations.

[Snowflake Royal]

The deduction isn’t just implemented if we breach the business plan. It can also be implemented if our losses are outside the permitted numbers, which is based on what happened prior to this season.

Yeah I understand we could be breached under a few different areas, but I thought there was a 6 point suspended sentence if we broke a regulation in our business plan? Which reports are suggesting we haven't done as it's historical. So I'm assuming that we still have 6 points suspended because we haven't breached our business plan?

Unless the suspended 6 points was for any breach, be it historical, the business plan etc.

No. The business plan related to this season only. We were also required to meet certain things last season.

[YorkshireRoyal99]

The deduction isn’t just implemented if we breach the business plan. It can also be implemented if our losses are outside the permitted numbers, which is based on what happened prior to this season.

Yeah I understand we could be breached under a few different areas, but I thought there was a 6 point suspended sentence if we broke a regulation in our business plan? Which reports are suggesting we haven't done as it's historical. So I'm assuming that we still have 6 points suspended because we haven't breached our business plan?

Unless the suspended 6 points was for any breach, be it historical, the business plan etc.

No. The business plan related to this season only. We were also required to meet certain things last season.

So, if we breach our business plan this season, then there is no guarantee of a further points deduction? Even though it would be likely.