Skip to main content

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.

Labels:

Comments

Post a Comment

Popular posts from this blog

Threat of financial calamity removed from Baggies

West Bromwich Albion had effectively been in decline ever since the club was sold to a Chinese consortium in August 2016, paying a figure north of £200m to buy former owner Jeremy Peace’s stake. Controlling shareholder Guochuan Lai’s ownership was fairly disastrous for the club, but his unloved tenure finally came to an end after Bilkul Football WBA, a company ultimately owned by Florida-based entrepreneur Shilen Patel and his father Dr Kiran Patel, acquired an 87.8% shareholding in West Bromwich Albion Group Limited, the parent company of West Bromwich Albion Football Club. This change in ownership was urgently required, due to the numerous financial problems facing West Brom, including growing high-interest debt and serious cash flow concerns, following years of no investment from the former owner. Indeed, West Brom’s auditors had already rung the alarm bell in the 2021/22 accounts when they cast doubt on the club’s ability to continue as a going concern without making player s...
1 comment
Read more

Spurs to sell minority stake

Tottenham Hotspur is in talks to sell a minority stake in a deal that could value it at up to £3.75 billion and pave the way for Joe Lewis and his family to sever ties with the Premier League football club. Tottenham chairman Daniel Levy is seeking an investment that values the club at between £3.5 billion and £3.75 billion, including debt. While the terms of any deal have not been finalised, City sources expect Spurs to sell about 10 per cent. The club is being advised by bankers from Rothschild on the sale. Tottenham wants to raise fresh capital for new player signings and to help fund the development of an academy for its women’s team, as well as a 30-storey hotel next to its north London stadium. The financier Amanda Staveley, who brokered the deal for Saudi Arabia’s Public Investment Fund to take over Newcastle United, is understood to be among the parties to have expressed an interest in Tottenham. Staveley’s fund, PCP Capital Partners, has raised about £500 million to ...
Post a Comment
Read more

Millwall punch above their weight

Millwall’s season was overshadowed by the tragic death of owner John Berylson following a car accident. The American had been an exemplary owner, beloved by the fans for his leadership, passion and generosity. Millwall’s finances had been pretty good during his tenure, which we shall explore by looking at the most recent accounts from the 2022/23 season, when the club narrowly missed out on a place in the play-offs after finishing 8th. Millwall’s pre-tax loss slightly reduced from £12.6m to £12.2m, as revenue rose £0.8m (4%) from £18.6m to a club record £19.4m and player sales improved from a £0.1m loss to £2.5m profit. However, other operating income dropped from by £1.1m from £1.3m to £0.2m, while operating expenses increased £1.7m (5%) from £31.6m to £33.3m. The main driver of the revenue increase was broadcasting, which rose £1.1m (12%) from £9.1m to £10.2m, though match day was also up £0.4m (7%) from £5.8m to £6.2m. In contrast, commercial fell £0.7m (19%) from £3.7m to £3....
Post a Comment
Read more