Reading are locked in talks with the Football League over a points deduction which is likely to plunge them into a Championship relegation battle.
Negotiations between Reading and the EFL are understood to be at an advanced stage, with an agreed sanction close to being finalised over breaches of financial rules.
It is understood that Reading, currently 14th in the table, are facing a potential deduction of six to nine points, which will drop them into a relegation scrap if, as expected, the punishment is applied later this year.
Like crisis-hit Derby County, Reading are working to the EFL’s regulation 85 in their sanctions, which allows both parties to strike an amicable settlement and avoid going before a disciplinary commission. Reading will also have to agree on a future business plan.
In July it was announced that Reading had broken the EFL's profit and sustainability rules and they were placed under a transfer embargo, which restricted them to signing only free agents and loans during the summer window.
The rules do not allow clubs to exceed losses of £39 million over a three-year assessment period, but it appears Reading’s accounts have breached that amount by some distance.
In the 2018/19 season it was reported that Reading’s wage bill was £40m, working out as 194 per cent of their turnover.
For the following campaign their accounts revealed total accumulated losses of £138m, while their most recent pre-tax loss was £93m over a three-year period.
Relegated from the Premier League in 2013, Reading have operated in the Championship for the past nine seasons.
The club is owned by Dai Yongge, a Chinese businessman and investor who completed his takeover in 2017 and has conducted no media interviews in that time.
Last month Reading issued a statement to reiterate Yongge’s commitment and confirmed they “remain in positive, constructive dialogue” with the EFL.
Managed by Veljko Paunovic, Reading face Middlesbrough at home in the Championship on Saturday.
On Tuesday the EFL declined to comment. Reading were also unavailable for comment.