WATFORD may have bounced back to the Premier League at the first attempt in 2020-21, but promotion will also help them to improve their financial position after the Hornets made, by their own standards, a hefty loss in their relegation campaign of 2019-20.
Watford’s promotion was obviously assisted by parachute payments of around £ 40 million, but 2020-21 may present challenges of its own as the Hornets went through virtually an entire season without spectators at their Vicarage Road stadium.
Watford made a £ 36 million pre-tax loss in the season they went down, a £ 46 million swing from their £ 10 million profit in 2019. The change of fortunes can be attributed to lower broadcasting and matchday income as well as a higher wage bill and compensation paid to sacked managers.
Although Watford’s losses are substantial by their own standards, they are small compared to other Premier League clubs. Everton, for example, made a loss of £ 140 million and Aston Villa just under £ 100 million. Watford’s loss is their highest deficit over the past decade.
Watford’s overall revenues fell to £ 120 million, a fall of 19% on 2018-19. Broadcasting income dropped to £ 95 million from £120 million, a 20% decline, while matchday was down 21% to £ 7 million. Commercial activity, at £ 17 million, was 6% lower.
Although income, understandably given the economic backdrop, was down, Watford had their fourth consecutive £ 100 million-plus season. In 10 years, Watford’s income has increased more than tenfold, from £11.3 million in 2011 to £ 120 million in 2020.
Watford generated £ 18 million profit from player sales, thanks to the transfer of Dodi Lukebakio to Hertha Berlin (£ 18m) and Obbi Oulare to Standard Liege (£ 3m). This figure was dwarfed by most of Watford’s Premier rivals. However, Watford’s activity in player trading has increased over the past five years. In 2019-20, they spent £ 66 million on new talent, double the amount spent by Liverpool, but only about a third of what Manchester United, Arsenal and Manchester City paid out.
Even though Watford were relegated, their wage bill rose by 14% to £ 96 million, representing 80% of earnings, a rise from 57% in 2018-19. In 2011, Watford’s wages came to £ 9.3 million versus total revenues of £ 11 million.
Watford claim they lost around £ 10 million of income due to the pandemic, but the club has made some adjustments to accommodate the current climate. A loan of £ 5.6 million from the club’s parent company, Hornets Investments, has been written off. Furthermore, two loans of £ 55 million and £ 25 million have been refinanced and consolidated with XXIII Capital at the rate of LIBOR plus 5.35%. The club’s overall debt has gone up to £ 111 million of which £ 75.8 million is owed to Gino Pozzo, Watford’s owner. Net debt was up from £ 74 million to £ 93 million.
Although the figures could have been worse, Watford will be relieved to be back in the Premier for 2021-22, a year in which further financial horrors from the pandemic will surely be unleashed on football. As always, the friendly and popular Hertfordshire club will be welcomed back.