You are correct in saying that it was in the on-the-field criteria that Dundalk scored insufficient points. More specifically, it was in the category for performances in the previous 4 years, which had a weighting of 30%. The fact that Dundalk ranked in the top 10 in both the combined off-field criteria (50%), and in the 2006 current season on-field performance (20%) was ultimately insufficient.
The argument - which of course you can accept or reject - was that choosing this 4 year period (as opposed to say 0/1/5/15 years), and giving such it a weighting was unfair and unreasonable.
(It was effectively saying that a clubs on-field-performance in the previous 4 years was 1.5 times more important then how they performed in the current season! Can you imagine the ridicule that would be heaped on any league that calculated league titles and promotion/relegation that way?)
While we will probably never know why the FAI/IAG devised the system in the manner that they did, it is inevitable that people cried "foul" at a system that was skewed disproportionately in favour of some clubs from the outset. Speculation and accusations that this was done in a premeditated fashion to aid inclusion of some clubs for geographical/demographical reasons are a natural consequence of such a farcical process.
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