The Unraveling of Reading FC: How Mismanagement and Debt Are Destroying a Historic Club
The Battle to Save a 154 Year Old English Club from Disappearing from the Footballing Landscape, Amidst Debt and Legal Challenges.
** This is a translated version of the original article published in spanish in the Mexican Sports Journal “Medio Tiempo” found here**
At the start of the week, The Sun published a striking headline: “Reading FC could become one of the most tragic stories in football history if EFL lose game of chicken with Dai Yongge.”
“One of the most tragic stories in football history” was a bold claim and one that immediately caught my attention. But was it just sensationalism, or was there real weight behind it?
However, after just a few minutes of sifting through Reading’s recent, and not-so-recent, headlines, it became clear that this was far from mere hyperbole. The club has been locked in a battle with its owner for at least five years, and they are now hurtling toward a breaking point. If Dai Yongge does not sell the club by originally April 5, and now extended to April 22, the English Football League (EFL) will have no choice but to suspend, and possibly even expel, Reading from the league, a fate that once seemed unthinkable.
Before we dive into the chaos unfolding at Reading, let’s take a step back. Who is this club, and why does it matter? Who is Dai Yongge? And how has a team in England’s third tier found itself making national headlines?
A Club with Deep Roots
I, like many, was unaware of the club’s rich history until I began looking further into its current struggles. Reading FC may not command the same global recognition as England’s footballing giants, but its story is one of resilience, community, and tradition.
Founded in 1871, Reading FC is one of England’s oldest football clubs, predating even the formation of the Football League itself. To put its longevity into perspective, Queen Victoria had already reigned for 34 years when the club was established. It’s considered the seventh oldest club in England and Wales. Yet, despite its historic legacy, Reading now faces one of the darkest chapters in its existence.
Reading, a large town in Berkshire, lies west of London and has evolved significantly over the years. Once known for its industries in beer, biscuits, and bulbs, the town has transformed into a hub for business and technology, attracting global corporations like Microsoft and Oracle. With a population of around 178,000, Reading has also built a reputation as a footballing nursery, with its academy ranking among the top ten in England, according to OLBG’s Best Academy Index.
For decades, the club’s youth system has been a breeding ground for talent, producing stars who have gone on to shine at Reading and beyond. Notable players such as James Henry, Michael Olise, Gylfi Sigurdson, Omar Richards, and, more recently, 26-year-old Sam Smith have all emerged from its ranks.
Originally, Reading FC was nicknamed The Biscuitmen as a nod to Huntley & Palmers, one of the town’s key industries. However, in the 1970s, following the factory’s closure, the club adopted its current moniker, The Royals, a reference to Berkshire’s status as a Royal county.
A Club That Has Fought for Survival Before
This is not the first time Reading FC has faced an existential threat. On 16 April 1983, fans were stunned by the announcement of a potential merger between Reading and Oxford United. The mastermind behind the proposal was Oxford’s chairman, Robert Maxwell, who envisioned a new super club called the Thames Valley Royals, with a stadium built between Oxford and Reading.
Maxwell was adamant that the merger was necessary. “I think we have to consider the future of both clubs,” he argued. “It is in the best interests of the club, players, and supporters that we secure league football in the area by establishing one substantial club.”
Unsurprisingly, his plan was not met with enthusiasm by either side. Reading FC survived, retaining its identity and place in the footballing landscape. But now, four decades later, the club faces an arguably greater threat, one that could see its long-standing history unravel if decisive action is not taken. Perhaps Maxwell wasn’t completely mistaken…
One could argue that clubs like Reading should be protected not only for their sporting achievements but also for their deep cultural significance. There are families who have supported this club for at least six generations. To lose it would be to lose a piece of footballing history.
Club Destroyers
On the 21st of March 2024, the English Football League (EFL) announced that Reading FC’s owner, Chinese businessman Dai Yongge, had until 5 April to sell the club or risk severe consequences that could seal its fate.
However, on April 3, the EFL announced an extension of this deadline until April 22, stating that:
“The Board recognised that these matters are further complicated by the structure of assets held across different companies, and various competing security interests, and therefore deemed it appropriate to allow more time for them to be resolved. In the meantime, the League will continue to monitor those discussions and the Club's immediate cash flow requirements.”
The EFL, also known as Sky Bet for sponsorship reasons, is a football system in England that consists of three divisions: the Championship, League One, and League Two, occupying the second, third, and fourth tiers of the English football league system.
But Who is Dai Yongge?
Dai Yongge was born in Harbin, the capital of China’s northernmost province, Heilongjiang. Known as the Ice City, Harbin endures brutal winters, with average temperatures plummeting to minus 22 degrees Celsius. A city famous for industries such as boiler and turbine manufacturing, electronic machinery, pharmaceuticals, petroleum, cigarettes, beer, automobiles, and aircraft production.
The Yongge family is one of the wealthiest in northern China. Dai Yongge’s fortune was primarily built through Renhe Commercial Holdings, a real estate empire that employed an unconventional business strategy. The company specialized in converting underground air raid shelters into shopping malls, a tactic that allowed them to bypass taxes and regulatory hurdles imposed on above ground retail developments.
Renhe’s first underground shopping center opened in 1992, and by 2016, the company had expanded into a vast network of 23 malls. The success of the business was remarkable, so much so that in 2014, Forbes listed Dai Xiuli among the world’s wealthiest women, with an estimated fortune of $1.2 billion (approximately £715 million).
While the Dais’ business sharpness is well known, they also have a deep passion for football. This interest is said to have been sparked during the early 2000s when Dai Xiuli lived in England and became captivated by the sport. Her admiration for football grew further when she watched Chinese defender Sun Jihai play for Manchester City. Sun’s presence in the Premier League seemed to have a lasting impact, and by 2007, the Dais had ventured into the world of football by purchasing Chinese club Shaanxi Chanba. The club was relocated in 2012 to Guizhou, and then again in 2016 to Beijing, where it was renamed Beijing Renhe.
Sun Jihai’s connection to the Dais went further, as he joined Beijing Renhe towards the end of his playing career, further solidifying the family’s involvement in football. Despite their ambitions, Beijing Renhe struggled financially, and by 2021, the club had been fully dissolved as a business.
In 2016, the Dais made a failed attempt to purchase Hull City, a deal that ultimately collapsed. However, by May 2017, they had completed the takeover of Reading FC, marking their official entry into English football. They bought the club for £24.5 million on the eve of the Championship play-off final (a match that ultimately was lost on penalties).
The 2017 Sale
In 2017, Dai Yongge and his sister, Dai Xiuli, took control of Reading FC by purchasing a 75% stake in the club from its previous Thai owners. Originally, the sale was viewed by many as a fresh start for the club. Former and renowned owner Sir John Madejski reassured fans that the future of the club was secure in the hands of the Dais, and the EFL confirmed that it had no objections to the change in ownership. This seemed like a promising new chapter for Reading, as supporters hoped the new owners would inject much needed stability into the club.
However, as time has passed, questions have arisen about the integrity and transparency of the deal. Although the EFL approved the Dais' takeover, speculation began to rise about their past business dealings, particularly their failed attempts to purchase other clubs.
One of the most notable examples was their bid for Hull City, which had failed due to concerns about the Dais' ability to meet the Football Association's "fit and proper person" test, a crucial requirement for club owners.
As BBC Radio Humberside’s David Burns explained, the problem was not so much Hull City's rejection but the difficulty the Dais’ faced in passing this test. According to Burns, Premier League officials were unwilling to comment on the situation, but it was widely believed that this was a significant roadblock in their attempts to expand their footballing empire.
Amid these revelations, the Dais also made significant financial moves with the club. According to an investigation by The Guardian, during the 2017/18 season, they sold Reading’s home, the former “Madejski Stadium”, to Prestige Fortune Asia Limited, a company owned by Dai Yongge, for £24.5 million. This sale would later become a point of strife, as it is now widely seen as one of the many financial maneuvers that contributed to Reading’s ongoing struggles.
Fast forward to 2022, and the club’s financial situation had grown increasingly dire. Accounts for the year ending June 2021 revealed a net loss of £35.5 million, raising serious concerns about the long term viability of the club. The report filed with Companies House openly questioned Reading’s ability to continue as a going concern, with auditors noting a "material uncertainty" that could cast doubt on the club's future.
However, the auditors were careful to note that the club’s survival was somewhat reliant on the continuing support of its shareholders, who had agreed not to demand repayment of their loans unless the club’s cash flow allowed it. This arrangement provided a temporary cushion, but the underlying financial instability remained a cause for concern.
Despite these assurances, Dai Yongge soon found himself trying to offload the club. In 2023, it was reported that Dai had actively sought a buyer, stating that he was losing more money than he was earning from the club. This admission sent shockwaves through the fanbase, many of whom were already frustrated with the lack of progress under his ownership.
However, Dai’s attempts to sell Reading have been hampered by more than £55 million in unpaid debts to Haitong International Securities, a state backed Chinese investment bank.
This debt has proven to be a major obstacle for potential buyers. In one significant incident, Haitong’s loan had a direct impact on american businessman Rob Couhig’s £30 million bid for the club.
The bank, which holds security over Reading’s stadium, has the right to seize ownership of the property if the club is sold without clearing this debt. Even though Dai’s team announced exclusive negotiations with a new potential buyer, the unresolved stadium issue has cast doubt on whether any sale can be completed.
Haitong, which is set to merge with Guotai Junan Securities to form China’s largest investment bank, has taken legal action to prevent the sale of the club. The bank filed a stop notice in the British Virgin Islands (BVI), where Reading’s stadium is registered for tax purposes, effectively blocking the transfer of the stadium as part of the club’s sale. This move blocked Couhig’s takeover, as he was not made aware of the debt until late in the negotiation process.
Adding to the confusion, reports suggest that the English Football League was not informed about the loan, raising questions not only about the club's financial transparency but also about the league’s oversight and due diligence processes.
The situation has become more politically charged as well. The potential for an EFL stadium to fall under the control of a Chinese state backed bank has prompted discussions in Westminster.
This issue comes at a time when the government is considering the Football Governance Bill, which could lead to the creation of an independent football regulator. The ongoing legal battles in Hong Kong and the BVI have only intensified concerns over the club’s future and the broader implications for the English football landscape.
Furthermore, Mike Gow, a lecturer in business and management at Edge Hill University, released a tweet on the 25th of March on how legal documentation in China shows that actually Dai may owe as much as £850 million. As he has at least 2 out of 6 cases against him worth over £200 million.
The Downfall
Since Dai Yongge took over Reading FC, the club has endured years of financial turmoil, racking up massive losses, missing key payments, suffering multiple points deductions, and ultimately being relegated to the third tier in 2023, for the first time in 21 years.
The women’s team has also seen a steep decline, dropping from the Women’s Super League (the equivalent to the Premier League) into the fifth tier.
A stark contrast to one of the previous owners, Sir John Madejski, who in his 22 years of ownership helped the club move to a top end new stadium and amassed a record 106 points to clinch the Championship title and gain promotion to the top tier for the first time in 135 years.
Dai has bankrupt two clubs, KSV Roeselare in Belgium and Beijing Renhe in China. The similarities between Roeselare and Beijing’s downfall and Reading’s current struggles are alarming.
Roeselare fans watched as financial instability dragged the club down to the third division before it was ultimately dismantled in 2021, forcing a merger with another club.
By 2023, Dai’s financial mismanagement had cost Reading a total of 16 docked points in under two years. The 2023/2024 season alone saw the club deducted six points for breaching EFL regulations, including failing to meet HMRC payment obligations, which is the UK's tax authority. This played a key role in their relegation to League One.
The club’s financial struggles were further exposed when Reading’s 2022/2023 financial accounts were submitted 12 months late. The reports revealed a staggering pre tax loss of £21.7 million, up from £17 million the previous year, despite a revenue increase. Reading also spent more on wages than they generated in income during their relegation season.
As a result, the club was placed under yet another transfer embargo, a restriction preventing them from signing new players, by the English Football League. The embargo lasted six months as a penalty for their financial mismanagement. Though it has since been lifted, it could be reinstated if Reading fails to submit their 2023/2024 accounts by the new deadline.
This alone could be disastrous. With no ability to strengthen the squad, Reading’s best players have little incentive to stay, and any emerging talent is swiftly picked off by other clubs. The team is already heavily reliant on youth, with 18 of its 26 players aged 23 or younger, leaving them vulnerable both on and off the pitch.
Despite these struggles, the team finished 17th in League One last season, enduring further points deductions along the way. This season, however, Reading has mounted an impressive resurgence. Currently sitting sixth in the division and just barely in a play-off spot, the club had an 11 game unbeaten run.
The EFL's Owners and Directors Test (OADT)
According to the EFL, when a club is being sold or undergoes a change of control, it is the club’s responsibility to inform the league. The EFL then assesses whether the prospective owners meet its regulations. This process consists of three key elements:
Owners and Directors Test – Ensures that no disqualifying events prevent individuals or entities from owning or running a club.
Future Financial Information (FFI) – Evaluates how the new owners plan to operate the club financially.
Source and Sufficiency of Funding – Verifies both the amount of money available to the new owners and its origins.
Only when all these criteria are met does the EFL approve the change of control. The league does not provide fixed timelines for this process, as each takeover has its own complexities.
The specifics of the Owners and Directors Test state:
“The test’s role is to try and prevent persons (both individuals and entities) that may have disqualifying events against them from being involved in or influencing the management or administration of football clubs. The test consists of those persons completing a self-declaration, which must be countersigned by the club, and the EFL then carrying out various background checks in order to verify the accuracy of that declaration.
The EFL and the Premier League have aligned their tests to ensure consistency between the leagues. It must also be clarified that it is an eligibility test, not a suitability test, and it has to be compliant with UK law.”
On February 11, Dai Yongge was disqualified as an owner under the league’s Owners and Directors Test, though this decision was only made public on March 21st during a commercial court hearing in London.
During the proceedings, lawyer Martin Budworth, representing Dai and Reading, referenced a letter from the EFL that detailed its decision to disqualify Dai. In 2023 the EFL had previously attempted to disqualify him after multiple regulatory breaches, but an independent panel overruled the decision, opting instead for a financial sanction.
The reason for Dai’s disqualification is understood to be linked to business matters in China rather than his management of Reading FC. An EFL statement read:
“Following its disclosure in open court earlier today, the league can confirm that Mr Yongge has been recently disqualified under the EFL’s Owners and Directors Test. The disqualification requires Mr Yongge to divest his interests in the club, and in the event that he fails to do so within the agreed timeframe, the league will consider all options available within its regulations to bring the matter to a conclusion.”
Reading has now been on the market for over 500 days, yet with less than 10 days remaining until the EFL’s deadline, there is little optimism that Dai will finalise the increasingly complex sale in time to avoid severe consequences.
Although he remains in an exclusivity period with American private equity expert Robert Platek, last week’s London commercial court ruling has further complicated the transaction.
Additionally the EFL appears to be strategically timing Dai Yongge’s disqualification to avoid disrupting the current season. While Dai is set to be disqualified on the 22 of April, he will have 30 days to divest his holdings, after the regular season ends.
This timing suggests an effort to ensure the final league table remains intact. If Reading were to qualify for the play-offs, it is likely that the seventh placed team would replace them rather than risk legal or logistical complications. If a takeover appeared to be nearing completion by the disqualification deadline, the EFL may allow some flexibility to prevent Reading from being expelled from the league, as such an outcome would be highly embarrassing for both the EFL and the Premier League. It could also accelerate the establishment of an independent football regulator with significant authority.
The EFL seems determined to avoid Reading’s collapse mid season, ensuring the club can at least finish its League One campaign.
For this reason, the EFL has justified extending the deadline until April 22, arguing that the club's asset structure, spread across different companies, further complicates the sale process. The league believes that this additional time will help resolve these obstacles and ensure a smoother transition. However, extending the deadline by two more weeks should not have a significant impact unless there is currently a serious purchase proposal under consideration.
However, what happens after that remains uncertain. If a new owner is not in place by early May, the club’s future could be in serious jeopardy. While an extreme measure like expulsion remains unlikely, history has shown that it is possible. In 1992, Aldershot FC went bust before the season ended, and all their matches were declared void.
Reading now stands on the edge of a defining moment, with the coming weeks set to determine whether the club can fight its way back or become yet another cautionary tale in football history. English football is often hailed as the pinnacle of the sport, yet Reading’s decline raises troubling questions: How have the very leagues regarded as the best in the world allowed club ownership to spiral so disastrously out of control? And what does this mean, not just for football, but for sports worldwide? The implications of such mismanagement could ripple across the global sporting landscape, challenging how clubs are governed, how financial oversight is enforced, and whether fans ever truly have a say in the futures of the teams they love.