From his Zurich fastness, the Swiss Ramble casts his forensic eye over Watford's finances. More analysis and detail is available on his Substack page.
Watford swung from a £12.8m pre-tax profit to a £16.0m loss
in 2024/25, a decline of £28.8m in the
bottom line, mainly due to a significant reduction in revenue, which more than
halved, falling £31.6m from £57.6m to £26.0m.
This was exacerbated by lower profit on player sales, which
dropped £13.5m (46%) from £29.3m to £15.8m.
This was partially compensated by a £14.5m (21%) decrease in
operating expenses from £68.9m to £54.4m, as the club “implemented several cost
saving initiatives and made efficiencies across the business”, while net
interest payable fell by a third from £5.2m to £3.5m.
Watford’s loss follows two years when they posted profits,
adding up to an impressive £37m. In
fact, they have managed to make money on five occasions in the last decade,
which is not too shabby in the crazy world of football finance, though their
overall deficit in this period was still £63m, thanks to a couple of
substantial losses.
Watford’s owners, the Pozzo family, are well-known for their
multi-club ownership model, as they also own Udinese in Serie A (while they
owned Spanish club Granada in the past).
Revenue
Watford’s revenue has dropped £102m (80%) since relegation,
falling from £128m to £26m. The reduction is even larger compared to the £148m
peak in 2018/19, when they finished 11th in the Premier League. Obviously, their revenue in the Championship
is dependent on the amount of parachute payments received, so there was a
significant decrease after these stopped. In fact, last season’s £26m is the
club’s lowest revenue since 2014/15.
Following this steep decrease, Watford’s £26m revenue is now
in the bottom half of the Championship, a lot lower than the clubs recently
relegated from the Premier League, thanks to those parachute payments, e.g.
Leeds United £137m, Sheffield United £79m, Burnley £72m and Luton Town £67m. Furthermore, some non-parachute clubs also
earned much more than Watford, such as Bristol City £40m, Sunderland £40m,
Norwich City £39m and Stoke City £35m.
It’s fair to say that Watford squandered the advantages
provided by parachute payments since their most recent relegation, having
received £44m in 2022/23 and £39m in 2023/24.
Watford’s match day revenue was basically flat at £6.4m, so
is only a little less than the gate receipts before relegation in 2021/22. That
said, it is still around a third lower than the £9.2m peak in the Premier
League in 2018/19. Watford’s average
attendance increased from 18,876 to 19,379, which is only 1,500 (7%) lower than
crowds in the Premier League, i.e. the 20,836 peak in 2019/20.
Wages
Watford’s wages reduced for the third year in a row, falling
by £4.9m (15%) from £33.0m to £28.1m, the club’s lowest since 2014/15. There
has been significant cost cutting since relegation, due to relegation clauses
and player departures, so the wage bill has decreased by £51m (64%) in the last
three years. As a result, wages are less
than a third of the £96m peak in the Premier League in 2019/20.
Following the steep reduction, Watford’s £28m wages were on
the low side in the Championship, far below clubs with parachute payments, e.g.
Leeds United £103m (including a hefty promotion bonus), Burnley £82m, Sheffield
United £46m and Luton Town £40m.
Watford’s wages have often been impacted by the cost of
termination payments for all the sacked managers, though this was only £0.5m
last season. Although this is down from the £7.8m peak in 2021/22, the club has
still paid out more than £20m in the last six seasons.
Last season’s £0.2m capital expenditure was just about the
smallest in the Championship, only above Hull City.
Owners withdraw cash
The accounts state, “The club’s owners continue to be
committed to new investment into the business to aid promotion back to the
Premier League”, but these fine words do not really seem to be supported by
their actions. Indeed, in the last six
years, the club repaid a net £34m to the owners, in stark contrast to the £83m
they provided in the previous 6-year period. They did put in some cash in the
last three years, but this only added up to £7m, which was not enough to offset
the £41m repayments in the preceding 3-year period.
Indeed, looking at the last six years, Watford’s owners took
more out than anyone else in the Championship, where only two other clubs had
net withdrawals, namely Sheffield Wednesday £16m and Burnley £14m.
There have been plenty of media reports that the Pozzo
family would be open to selling, either the club in its entirety or a minority
stake. However, it’s doubtful that
anyone would be interested at the £175m valuation that Watford placed on the
club, when it tried to secure £17.5m for a 10% offering last year.
What is certain is that Watford, like almost every
Championship club, will continue to rely on a combination of player trading and
funding (either from the owners or the capital markets).
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