Relegation has less of a financial sting for Hornets

Watford should be able to deal with the drop to the Championship better than following previous relegations.  One part of the post-relegation coping strategy is an intrinsic part of the Pozzo model: player sales. The other is something new, and perhaps evidence of a lesson learned: not being lumbered with high wages in the second tier.

The big change this summer is the financial protection afforded by the vast majority of the squad having significant wage cuts built into their contracts. It is understood up to 80 per cent of the playing staff will see a reduction of 50 per cent in their basic salaries, with the squad’s lower earners seeing a drop of only around 30 per cent.

As Watford only spent one season back in the Premier League (as opposed to five prior to that relegation) they only get two years of parachute payments this time around. That roughly equates to 55 per cent of the basic award (of approximately £100 million) in year one and 45 per cent in year two. Clubs who stay in the top division for more than one season get a final payment in year three at 20 per cent.

The fact that the club have been relegated again means that, while outside investment would come in handy, it’s not deemed the best time to negotiate. Informal discussions have taken place with various parties in recent years — including one with Mexican football group Orlegi — but internally, it’s accepted that seeking external help from a partner needs to be brokered at the right time.

In November, a £50 million loan was taken out with the Macquarie bank, which could be absorbed by a third-party investor if they wanted to come on board, but it’s likely that getting people to the table when Watford are upwardly mobile rather than down in the doldrums may be a smarter negotiating position.

The controversial sponsorship deal signed last year with crypto betting firm Stake.com saw the club earn £5 million up front, with further bonuses due depending on their performance in the Premier League and other competitions. If they’d stayed up, that is likely to have exceeded £6 million, but focusing on what the deal is now worth in the second tier is clearly more pertinent after a disappointing season.

 It’s understood that — although part of the club’s 2022-23 budget — Watford will now receive closer to £1 million for the forthcoming season. It highlights the instant drop in revenue that comes with relegation.

The number of season tickets sold has already surpassed 12,000, with the target remaining above 14,000. Although the capacity is 21,000, the club are required to set a large chunk of tickets aside for away supporters and hospitality sales.