Wfc Finances

It seems at this stage that promotion 2 years ago has ended up making very little difference financially in the grand scheme of things, it speaks volumes to how bad our business was that we didn't even spend that much, but came back down as most of us expected, but still don't have a pot to piss in

 

Football club finances are like no other companies, Wrexham made a loss of 2.91 million last year ending 30th June on a turnover of nearly 6 million and that's in the National League, with a turnover up 404%! " only in football "

 

Given we are technically insolvent, surely it is time to sack Duxbury and replace him with a 200k per annum COO. No excuse not to save 700k per annum immediately now we are a busted flush?

 

There are so many things to pick out, but a couple of gems in there.

First one, we made £24k in loan fees in 2022, this is an area where apparently Pozzo excels.

Second one, the difference in matchday revenue between 2021 and 2022 was £5m, the same as we wasted on Bayo and less than we wasted on that keeper. So people should remember that the next they or the club want to try and blame Covid for any of our ills.

 

Two other noteworthy items in the accounts;

Termination payments-Ranieri (+his assistants) & Munoz? £7.8m-taking costs of 3 x Head Coaches/support staff pa to £18m over last three seasons !

Commercial income-£36m -wow-they had a deal with Stake.com worth a reported £5m pa-we were in PL so i guess we were profile for Crypto currency but given previous commercial income as an "established club" in 2019 was £18m (£17m in 2020) but £10m and £9m in 2018 and 2017 this was a massive increase. Was £4m when in EFL in 2021. No breakdown and never any quote from club on the value of the Stake deal.

Gino and Duxbury should be congratulated on this massive achievement as it has helped with these termination payments and the very large increase on "other" expenses (football related costs),

Puts into perspective how much income will drop by next season in EFL

Oh and by way of comparison Norwich had other expenses of £17m last season (and season before in EFL like us-ours was £27m that year) and their ground is valued at £32m -of course that may be an undervalued asset.

 

I guess that’s why Ryan Reynolds bought Wrexham and the Saudis bought Newcastle, Qataris Man City etc….

 

Put this in the other thread that had been started:

There are so many things to pick out, but a couple of gems in there.

First one, we made £24k in loan fees in 2022, this is an area where apparently Pozzo excels.

Second one, the difference in matchday revenue between 2021 and 2022 was £5m, the same as we wasted on Bayo and less than we wasted on that keeper. So people should remember that the next they or the club want to try and blame Covid for any of our ills.

 

So what is the total debt, above someone came up with £213 million, I see £124 million in the accounts, could you please explain which figure is correct?

 

Where did you get the £213m from, the accounts state £124m?

 

You need to look at the more informative accounts for Hornets Investment Ltd "HIL" which were also filed on Friday. HIL owns 99.7% of Watford football club ltd and is the vehicle into which Gino puts the loans from his company Diversity Sports (Luxembourg)-they are c£50m of that £124m.

Page 42 note 15 of those consolidated accounts show financial liabilities of £236m-I cant get to that figure but I added to the £124m the outstanding transfers to be paid-they are a real financial liability and were £54m.

Also by a "quirk" of the accounting rules (see note 20 on page 45) a certain type of loan secured by transfer fees due but secured by promissory notes (an obligation by the purchasing club underwritten by the PL/EFL rules) isn't shown as loan but other creditors-see note 18 as other creditors £35.36m so another £89m to arrive at my £213m.

 

No wonder we’re charging the players for food. We’ll be asking them to wash their own kit next season.

 

No need; doesn’t get sweaty or dirty.

 

Are you sure about the Training ground?
It is owned by the University College of London.
We just rent it from them.

 

Not sure it's kindness to allow / require your tenant to maintain and upgrade your property for you at their expense!

 

It's all bleak, I also saw the other thread on finances after I made it so apologies.

 

I played there in the 1990's. Awful trip out from the centre of London
I far as l know , they still own the facility.

 

Training ground. If there is a long term lease then you capitalise the asset under IFRS16. Ie it’s treated as an asset as we hold the economic benefit (to use the site) and obligations

 

Pretty much all property rentals have to be capitalised and depreciated these days (even 2-3 yrs) rather than charged as straight rent through the P&L account. However there is a big difference between say a 10 year lease with an obligation to make good (usually return to the state it was in when lease started - that could be interesting !) and a 25yrs + lease, which looks and feels closer to an outright purchase.

 

Interesting - Watford Buzz podcast just hosted a discussion of the club’s finances with Kieran Maguire, who was more measured on our finances than most on here (and graded them a C+).

 

Apart from the grade, did he say anything else. Are we f****d or proper f****d. I presume he is some financial guru

 

He said there is a lot of debt, but that since much of it is internal debt that isn’t inherently problematic unless the owner goes AWOL (as can happen and appears to be happening with some other championship clubs he didn’t name - WBA?). He was somewhat concerned that the external debt did not seem to be financing capital investment but was impressed with the club’s cost control. He attributed the increase in ‘other costs’ in part to increased matchday. But he certainly didn’t sound concerned as if describing a team on the precipice. I would recommend everyone here listen - easy to understand for beginners and our accountants on here will have some arguments to grapple with.

 

Interesting was the squad investment was almost double in 2020 to that in 2022….and how that has shown on the pitch

 

Thanks for the suggestion -i did listen -my take

Positive

-Kept wages lower than before in PL
-Have Udinese in the background (didn't mention Kamara sale but as we know cash in and a big profit helps)

Negative (he called it concerns)

-Loans from Macquarie to finance current spend rather than long term projects (as you said)
-Classfiying £17m of PL revenue as Commercial income-why-PL website says we got £102m -club say £85m. The total of TV and Commercial is £121m -it was £112m in 2020) so if "true" commercial income was only £19m last year thats in line with what we got before ie £18m when previously in PL.

Incorrect-far be it from me to question him as he has a good reputation but...

-Of the £124m in loans the majority is owed to the Pozzo's he said. Incorrect -they have £50m with £74m owed to third parties (Maquarie) secured on TV money (possibly both the 2 x parachute money for 2023 and 2024!)

He didn't comment on the £36m of other creditors in short term debt secured on player sales-possibly because this is "self liquidating" ie we borrow from Maquarie rathar wait for Udinese to pay us in instalments for Pereya as an example. We had £46m of transfer fees due.

-"Other" football costs-these were £44m-Keiran waffled about larger media costs-ie bigger lorries for PL -also higher amortisation but this is separately quoted so this is n/a and then higher insurance for players. What would have been more instructive was to compare why our spend -and this goes back since we were in PL- is so much higher than comparable teams-Palace, Norwich, Burnley for instance.

Outlook

-Large cost cutting and players sales in the summer
-PL is a billionaires playground-quoting Fulham, Forest and BMuff losing £174m in their promotion to PL-not sure we can compete
-CEO on £1m pa when losing £16m pa looks out of kilter-(@Jumbolina raised this) -BMuff CEO paid £2m pa but this was taking money from a "russian".
When you use "pay day" loans to spend today what you are due tomorrow this only lasts when you have money coming tomorrow

I will leave it there

 

Would be interested to look at other CEO pay; seems like the least of our problems but would be interested to see how other teams stack up.

I have a lot of concerns about our capacity to compete in the PL as you say but that’s a far cry from being on the brink of admin which is what many on here seem to be concerned about/convinced that that is the case.

 

Yeah the other football costs bit made no sense at all, we wouldn't have needed to make all those infrastructure upgrades having only been out of the PL for one season.

But to be fair, busy time for him and he's not a Watford fan so hardly going to look in detail or at the wider picture.

Overall, didn't reassure me much.

 

He may have missed things but I reckon he knows what the portents of administration are and he didn’t see them in the club’s accounts.

 

Does he? I don't know, has he called an impending administration correctly before? If he has, then I'll be a lot more reassured.

And I think we can still be (relatively) screwed without the oblivion of administration, might just consign us to lower reaches of Championship/League 1.

 

I listen to his podcast - I think he regularly flags issues that are about to snowball.

 

If you look at us taking the loans for day to day spending rather than any significant investment, the submission to the Court of Arbitration of Sport that we were in severe financial difficulty and couldn't afford the next instalment of the Sarr transfer, the Kamara deal which looks like it was related to either Financial Fair Play or urgent cash flow problems and the cost cutting/revenue raising measures (increasing food contributions from players, selling match worn shirts and banning hot drinks/food) still think there's plenty to be concerned about.

 

Duxbury pay is definitely the least of our concerns, but for a club going nowhere saving 700k per annum seems a no brainer to me.

It won't happen though as the current set up is designed to extract money for Pozzo and give highly paid jobs to the boys like Duxbury and Giaretta.

 

Doesn't the fact that he got such a simple matter wrong that most debt isn't owed to Pozzo enough to cast serious doubt about how much time he has spent on this analysis?

 

In (slight) fairness to the club, they said that was due to Covid coinciding with relegation affecting cash flow when the payment to Rennes fell due. Not the most unreasonable argument. Though I think there’s enough evidence in the public domain we’re unreliable at paying footballing bills that it seems more like an effort to pull the wool over the eyes of the arbitrator more than anything.

 

No doubt you’d have been singing his praises if he had said we were on the verge of admin. The foremost public figure regarding football club accounts isn’t as concerned as us, and I think that’s a good thing. Would be interested if Swiss Ramble reached a different conclusion but I don’t believe he has.

 

You should just go on Twitter, create the analysis results you’re looking for and then just reference them on here. It’ll be much quicker than waiting for someone else. Might even get a pod spot.