Q&A: Reading’s Breach Of FA Intermediary Regulations
This week, the club was fined £200,000 while various members of staff were reprimanded.
It’s been two whole months since we got any bad news about the club, so this statement on Wednesday - confirming Reading had been fined for breaching FA intermediary regulations - was probably a little overdue, given the alarming regularity of problems we’ve seen announced during the season. Never a dull moment.
My first reaction to seeing this was essentially: “What?”. This seemed to come out of nowhere and I didn’t really know what happened, why it happened and what the implications could be. I had a few questions, and I imagined that perhaps there are a few Royals out there with questions too.
On that note, I’ve written up this article to try to wrap my head around what this all means and answer my own questions, which hopefully those of a Reading persuasion will find helpful. If I don’t answer any questions that you might have, feel free to make a note in the comments and I’ll do my best to retroactively add that question into the article, hopefully with an answer. Cool? OK. Let’s proceed to the first question.
What happened?
An independent regulator has found Reading Football Club and four individuals guilty of breaking FA Rule E1.2 between March 1, 2019 and July 16, 2019. What is FA Rule E1.2, I hear you ask?
It’s related to misconduct, specifically “The Association may act against a Participant in respect of any ‘Misconduct’, which is defined as being a breach of the following: the Rules and Regulations of The Association.”
Which isn’t so clear. What rules were they accused of breaking? They were FA Rules E5 and E9. And they are:
FA Rule E9:
“An attempt by a Participant or any agreement with any other person (whether or not a Participant) to act in breach of any provision contained in these Rules shall be treated for the purposes of these Rules as if a breach of the relevant provisions had been committed.”
Regulation E5 of the Regulations on Working with Intermediaries:
“An Intermediary must not have, either directly or indirectly, any interest of any nature whatsoever in relation to a registration right or an economic right. This includes, but is not limited to, owning any interest in any transfer compensation or future transfer value of a Player. This does not prevent an Intermediary acting solely for a Club in relation to a Transaction to transfer a Player’s registration being remunerated by reference to the total amount of transfer compensation generated by solely that Transaction.”
Who is involved?
At club level, there are three people who have been implicated in this punishment: Nigel Howe, Sue Hewett and Michael Gilkes. As a reminder, Howe is currently in charge of handling the sale of Reading FC, but this charge relates to his time as CEO.
Hewett is the club secretary and Gilkes is currently in charge of the academy. At the time of the rule being broken, Gilkes was working as a first-team coach for the club. All three denied breaking rule E5 but accepted that they were in breach of E9.
As well as this, player agent Glen Tweneboah was implicated due to his part in the proceedings.
Which player is this referring to?
The player in question is Michael Olise, now plying his trade at Crystal Palace. The incident occurred during the negotiations for Olise’s first professional deal with the club. It is alleged that the people acting on behalf of the club during the contract negotiations verbally agreed with Olise’s agent that they would give him 10% of any transfer fee received for Olise if he left the club.
As a reminder, Olise left the club in 2021 for £8 million. However, during the proceedings, the club denied the intention to fulfil this request and it was never documented.
How did this case come about?
It seems Tweneboah raised this as a complaint to The FA, for not receiving the money from the club after Olise moved to Crystal Palace. If this is the case, I’m not sure what he hoped to gain from this given the ultimate outcome. He was never renumerated the 10%.
What are the punishments that have been handed out?
The club have been fined £200,000 for allowing those representing the club to be in breach of the rules.
Of all the individuals at club level, Howe has been given the biggest punishment. He’s been fined £5,000 personally and suspended for a total of 12 months. The punishment has been structured that, during the first six months, Howe will be suspended from involvement with player-contract negotiations and transfer-related activity, which is fine, since he’s not involved in that anyway during his day-to-day role at the club.
However, for the latter six months he is suspended from all football-related activity. This raises an obvious red flag which we will discuss momentarily.
For both Hewett and Gilkes, they haven’t received any personal financial penalties or suspensions from duty and were both warned regarding their future conduct.
Tweneboah has been fined £15,000 and suspended for six months from all football-related activity, including intermediary and football agent services, effective from October 4, 2024.
Does this affect the sale process for the club?
No, it shouldn’t do. Fortunately, the independent commission have structured the punishment for Howe in such a way that will allow him to oversee the completion of the sale of the club. For all intents and purposes, it will be business as usual for him and the club with regard to this, given that the target time for the completion of the sale is apparently the end of May.
However, what we cannot know is how Howe will react to this. Reading have said he is currently considering his position, given the sensitivity of it all. We will just have to hope he is able to work past this and see the deal through.
How does this affect the club moving forward?
Football can be a murky world, but the club have been adamant in their statement that this was a one-off incident and has never happened before or since. This being the case, we shouldn’t have to worry about any further investigations related to the club and their transfer and contract dealings.
Which would mean we should be fine, as long as we behave.
Who is actually going to pay the fine?
Well… it should be the club really, shouldn’t it? But Dai Yongge isn’t exactly famous for his willingness to pay fines. However, as part of the exclusivity deal for the club, the new owners will probably have been made aware of this looming in the background long before we were made aware.
I’m not sure what punishment will be handed out to the club if they fail to pay the fine, so it would seem most likely that either the new owners will end up picking up the cost of this or ensure - as part of the deal for the purchase of the club - that Dai Yongge is accountable for ensuring the money is paid to close that out.
Has any other club been caught up in something similar before?
In Reading’s statement responding to this, they say:
“The Club views these sanctions as excessive, in particular when considered in comparison to sanctions handed down in a previous case, which involved another professional football club and multiple breaches of The FA’s Intermediary Regulations over a ten year period. In our view, in that context, the treatment handed down to Reading Football Club, for a stand-alone, one-off incident seems exceptionally harsh.”
However, it’s not completely clear what club they are referring to here and it’s also not clear exactly what rule breaches they are referring to. The only similar breach that I have been able to find within the last 10 years is Brighton & Hove Albion, details of which can be found here.
Summarily, between January 2015 and January 2018, there were alleged to be a number of breaches related to misrepresenting the roles of registered intermediaries in relation to transfers or contract negotiations of players. Not a singular breach, but multiple.
This resulted in the club receiving a fine in September 2022 of £366,600 and their head of recruitment and analysis, Paul Winstanley, was personally fined £6,400. Both of these sums are larger than Reading’s but that could relate to the number of breaches and also the fact that Brighton are a far more affluent club, given their position in the Premier League.
Is it harsh?
The club certainly seem to think so. Their response was:
“The Club would like to state publicly that it is extremely disappointed with the decision and with the fact that, in addition to charges against the Club, charges were brought against individual club officials who were acting to protect a valuable club asset and ultimately the best interests of Reading Football Club.”
They also cite that Howe, Hewett and Gilkes have always represented the club in exemplary fashion and have no prior history of offences, nor any since.
Reading also note that the length of time taken to complete the investigation is not satisfactory and not something that should have taken so long, because they were compliant throughout the entirety of the process.
In my opinion – yeah, maybe it is a bit harsh. It seems like a big amount of money to expect them to pay and, while the individuals have done wrong, they’ve been up front and honest about it and have no prior history for doing so.
I would have expected that Howe’s punishment would be a little tougher given his more senior status within the club, but such a long ban or any ban at all seems quite extreme. Especially given that the person who would have been the beneficiary of the agreement has had half the amount of time issued to him.
When compared to the sanctions handed out to Brighton, who had more breaches over a three-year period, and are more cash-rich, I can understand why Reading feel the punishment handed out to them is severe. However, I guess if you do wrong then you aren’t really on strong ground when complaining about the nature of the punishment you get. Just not doing it in the first place would be the easier thing to do.
However – and this won’t make for pleasant reading – The FA actually recommended a tougher punishment. Their recommendation for the sanction was for a fine of £400,000 (double the actual imposed) and, if the financial penalty were set lower than that, then to add in a suspended suspension from the registration of players for a period of two seasons. Essentially, a transfer ban if we break the rules again.
So, all things considered, it could have been worse.
Where can I get any further information about the details related to the breaches?
The FA have released the meeting notes for the investigation hearing (which took place on November 15, 2023) and the disciplinary meeting (which took place on February 29, 2024). They are available here to view in all their detail.