As a result of recent financial problems, Reading FC are now in danger of going into administration and is up for sale. What are the lessons from elsewhere and what are the best outcomes for the club now ?

Reports in the Telegraph and elsewhere point to a £50m agreement with fantasist William Storey, who, as far as anyone can tell created an energy drinks company in the vein of Red Bull that never existed or traded properly (we have seen the filings at Companies House for both Rich Energy and its phoenixed successor. He agreed to invest in an F1 team, but no payments were reportedly ever made, and made bids for Coventry City and Southampton with what seemed to be little backing. It is almost certain that he would not meet the Owners & Directors' Test. The club itself also quickly denied any deal.

So, if a rich Wrexham-like sugar daddy does not appear on the horizon, would going into administrationbe a tragedy. Probably not.

Administration is a process that is used to protect a company's assets when it is unable to pay its debts. If Reading FC go into administration, the club would be placed under the control of an administrator, typically an accountant, who would be responsible for trying to find a new owner for the club or selling the club's assets to pay off its debts.

But things aren’t totally dire. A number of companies have bounced back from administration and relegation.

Teams from the Premier League, Championship, and EFL that have gone into administration have typically faced a number of challenges, including points deductions - for example, Leeds United were deducted 10 points in 2007-08, while Portsmouth were deducted nine points in 2009-10; transfer embargoes, making it difficult for teams to compete and leading to further relegation; and ongoing financial problems: Teams in administration are often struggling to pay their debts, which can lead to further problems, such as staff redundancies and the sale of assets. HMRC tax bills have often featured as catalysts in teams going into administration.

A number of teams have also managed to recover from administration and return to success. For example, Leeds United were promoted back to the Premier League in 2020, 16 years after entering administration (although were again relegated in 2023).

Perhaps no top team has fallen further than Bolton Wanderers. The Trotters were promoted to the Premier League in 2001, and spent 11 seasons in the top flight before entering administration in 2012. Bolton were relegated to League One in 2019, and went into administration in 2020, but have since bounced back and rejoined the Football League.

 

You have to mention Wrexham, of course, who are also now back in the EFL after nearly two decades away thanks to the largesse of their star owners who bought the club from a fans’ trust.

Other teams that have been through the mill include: Portsmouth, Wolverhampton Wanderers, Crystal Palace, Bolton Wanderers, Wigan Athletic, Derby County, and Bury FC, Coventry City, Charlton Athletic, Birmingham City, Luton Town, Oldham Athletic, Bradford City, AFC Wimbledon, and Notts County.

Less happy have been outcomes for Bury FC, but even Newport County bounced back to the lower leagues after going into liquidation.

But perhaps the most heart is to be found from north of the border and the Scottish side, Rangers.

Rangers FC entered administration in 2012 after a series of financial mismanagement scandals. The club was liquidated and reformed as The Rangers Football Club Ltd, starting in the fourth tier of Scottish football.

Rangers won three promotions in four years to return to the Scottish Premiership in 2016. In 2020, Rangers won their first Scottish league title in ten years, and their 55th overall, a then world record for a top-flight league.

The club's recovery has been remarkable, and they are now one of the most successful teams in Scotland. Rangers have won the Scottish Premiership twice in the last three seasons, and they have also reached the final of the UEFA Europa League in 2022.

This success has been built on a number of factors, including sound financial management - Rangers have learned from their past mistakes and are now managing their finances carefully. The club has a break-even budget and is reinvesting in the squad. A strong manager: Steven Gerrard was appointed manager of Rangers in 2018 and has been a huge success. A passionate fan base: Rangers have one of the largest and most passionate fan bases in Scotland. The fans have played a big role in the club's recovery, and they continue to support the team in large numbers. Reading FC may not have the reach of Ranger, but they certainly have a passionate fan base in the Thames Valley and beyond.

So, the options open to Reading seem to be either to find an owner with deep pockets, or to enter administration and be bought out by a fans’ trust - or a combination of the two It is reported that Supporters Trust at Reading [STAR] have revealed that they have been 'in contact' with two potential new investors for the football club, and with the proposed introduction of salary caps in the EFL (or rather caps to prevent clubs from spending more than a proportion of their revenues on salaries), a more pragmatic level for running EFL clubs may be achieved.