Wfc Finances

Discussion in 'The Hornets' Nest - Watford Chat' started by We hate 48, Sep 1, 2020.

  1. We hate 48

    We hate 48 Reservist

    As requested by some, here is a new thread on this topic rather than be subsumed within the Sarr thread.

    In the run up to player sales (and maybe purchases) and release of the accounts for last season around December time the finances of the club will dictate how we act.

    Here is a headline from todays FT on 23Capital-the provider (since April 2016) of now £70m in loans to the parent company who have on lent it to the club and taken a charge over the ground and players contracts as security. Also there is a link to a summary of the article as the FT article is behind a paywall.

    https://finanz.dk/soros-backed-football-finance-lender-23-capital-winds-down/

    https://www.ft.com/content/1137c704-929c-40f1-a5ca-3cd453fe22f7

    Basically says its being wound down and restructuring its loans to clubs.George Soros-the billionaire behind the lender is winding down its loan book and has cut staff as the impact of Covid on its business-it lends to football clubs and the entertainment business-takes its toll.

    It does say that one of the partners is to create a new entity lending to European football clubs. However it will be to the "top leagues and clubs"

    IMHO it is unlikely to involve lending to a club like ours in the championship.

    23 Capital has already outsourced the administration of the loan book to a corporate services provider which is often seen as no new lending and please can we have our money back asap.
     
    Timbers, lutonh8a and hornetboy1 like this.
  2. hornetboy1

    hornetboy1 First Team

    Good to post this link. I wouldn't be too concerned about it though and I wouldn't necessary it take it as turning off the lending tap or we want our money back ASAP.

    Clearly Covid has hit everyone financially, but they can't just demand £70m, or whatever we owe them. It will be done in a structured way meeting the terms previously agreed to in contract.

    I'd say we're ok with all of this, as long as we go up this season. Fail to go up, then there could be some issues, however, selling Sarr and a few other "star" players can easily settle the account if we don't go up this season.

    The owner could also pay off the loan with his own money if need be and switch the debt to himself, rather than 23 Capital. Plenty of ways this can be resolved.
     
  3. UEA_Hornet

    UEA_Hornet First Team Captain

    Does he have that amount of readily accessible cash then?
     
  4. hornetboy1

    hornetboy1 First Team

    Probably. But it will be a combination of things. You can get it reduced significantly by selling just Doucoure and Pereyra. Two players will probably get you around £40m.

    That can go towards the debt, and without selling anyone else, you only owe £30m. Selling further players such as Deeney, Welbeck, Deulofeu will easily pay off the rest, but as I said, as long as you meet the repayments, there is no issue.

    If the club reduce the debt I'm sure the owner could pay off the rest and switch the debt to himself if he so wished. There are options and it looks completely under control to me.

    Had the debt been £150m, now that would be a different story, but it's not. It's an amount the club could easily service with player trading.
     
    Klein Lust likes this.
  5. Cassetti's Beard

    Cassetti's Beard First Team

    So the Pozzo's are being sensible in trying to get rid of some of the high earners and getting some £££ into the club?
     
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  6. Jumbolina

    Jumbolina First Team

    That’s my take on it also.
     
    lutonh8a likes this.
  7. nisman94

    nisman94 International Man of Mystery

    The problem with this is, as soon as we get this money, the question will be do we spend that money on new players (transfer fees &/ wages) with the hope that our squad will get us promoted to the land of riches, or do we spend that money on clearing debts? I certainly know what the majority of the fanbase would say...
     
  8. hornetboy1

    hornetboy1 First Team

    We were always going to sell to make up the short fall. The trick is to sell only who you have to, and create a side capable of achieving promotion. I'd say Watford can easily do both, but it does call for good judgement, something they've not shown too much of over the past 16 months or so.
     
  9. Jumbolina

    Jumbolina First Team

    I think clearing 60/70% of the debt would still leave us with a competitive squad for a promotion push and still leave us with saleable assets if we don’t make it to consolidate further next summer.
     
    Vanhorn17 likes this.
  10. Cassetti's Beard

    Cassetti's Beard First Team

    I imagine every other club has worked this out if we have and the club are receiving low ball offers for players.
     
  11. simpleMASH

    simpleMASH Reservist

    The details are boring. Very simply we are making less money in the Championship than we did in the Premier League, so need to make up the difference.

    Every team that ever goes down sells players. Norwich this year may be the exception, but then they went up with a C’ship squad and didn’t spend money improving it. Of course they don’t need to sell. I expect even they will lose a couple (eg Godfrey) due to the realities of player power when they want to leave.

    It’s a shame that our better players will, for the most part, move on. What else can we do though? I hope the Pozzo’s get the balance right between financial prudence and ambition but it’s not easy or we’d see more teams bounce back.
     
  12. Markoa$

    Markoa$ Squad Player

    I see that Liverpool are trying to sign Sarr for £40mil. He’s worth more than that.
     
  13. Burnsy

    Burnsy Squad Player

    What I find an annoying aspect is that Norwich will lose their better players who still at least battled away last season but had utterly sub-standard players around them. We will lose most of ours because they couldn’t be bothered.

    It’s an aspect of the game I hate most - do a sh*t job and get rewarded with a move whilst your former workplaces suffers the results. In a normal environment, there’s no way Doucoure deserves a pay rise and a move to a bigger club after last season. Completely illogical when you think about it.
     
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  14. Steve Leo Beleck

    Steve Leo Beleck Squad Player

    Really? How much more?
     
  15. RMT79

    RMT79 Academy Graduate

    We may we’ll owe £70m to them but we will also owe a huge amount of money to clubs for player transfers as paying for a player is rarely all upfront and normally spread over A period of time or the length of his contract - we may pay 50% up front and the rest over x years so for example if we sell Sarr for £40m I bet we owe Rennes at least £15m still, then there’s agent fees and what not and I bet we will be lucky to get £20m and that may be paid over 4 or 5 years. So I don’t think it’s that easy
     
  16. Shaun

    Shaun Academy Graduate

    Just to update I haven’t heard back from my boss yet she’s inspecting the accounts. Will give you her verdict once it’s in. I know she’s busy checking my invoices
     
  17. Otter

    Otter Gambling industry insider

    This will be my only post in this thread because we just don't have all of the information and expertise to paint a full picture.

    However there are some basic facts:

    FACT: We will not be receiving as much as we have in previous years.
    FACT: If we do go up we would be playing financial catch up.
    FACT: If we don't go up then there will be a massive shake up/fire sale.
    FACT: Selling/loaning some players now will plug the current financial gap with fees + reduce the wage bill, provided it's not overdone to the extent that it will compromise any promotion push.
    FACT: We have large loans from a 3rd party and from the Pozzos.

    The current state may or may not be parlous, we simply don't really know. So while some are saying we are doomed and others burying their heads in the sand saying everything will be OK, we are somewhere in between those positions. Best not to worry about it too much but if we don't offload Doucoure and a couple of others by the time the transfer window closes it will make matters worse. The situation with Deulofeu is such that it's unlikely he will be sold before he's fit, but if the club have injury insurance (something Simpson mentioned in his time) then his wages for now will be partially covered.
     
  18. Cassetti's Beard

    Cassetti's Beard First Team

    Sticky this post, close the thread.
     
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  19. Burnsy

    Burnsy Squad Player

    Exactly.

    But you should expect to get someone having a pop at you tomorrow claiming you’ve said we need to sell/keep everyone when you never have.
     
    Otter likes this.
  20. Burnsy

    Burnsy Squad Player

    Will we also not have money coming in via the same method as well though?
     
  21. We hate 48

    We hate 48 Reservist

    We owed £50m in outstanding transfer fees as at June 19-so before Sarr. No one outside the directors/owners know either by how much you must meet those outstanding instalments each year or who they relate to, so if we sold Docs or RP then if we still owed money for their transfers those would become immediately repayable.

    Its a reasonable assumption to say the revenue from any players sold must be used first to meet any outstanding instalments and then reduce the £70m debt.

    There will be a loan agreement between "the club" and 23Capital so the terms of that must be adhered to but there may be a relegation clause in that contract which accelerates the time allowed to reduce/repay. Of course its conjecture on my part and maybe not helpful but in the commercial lending world such covenants exist in order that the lender can take steps to protect itself if the basis on which they lent the money in the first place (PL status) changes for the worst.
     
  22. What were the payment terms on Richarlison? Have we had all of that yet?
     
  23. Burnsy

    Burnsy Squad Player

    As for the last paragraph - treating the loan as a mortgage of sorts - anyone know the likelihood of renegotiating terms on stuff like this as circumstances have changed? Could we have mitigated the issues with the 23Capital loan with them and come to an agreement to finance it over a longer period perhaps?
     
  24. Jumbolina

    Jumbolina First Team

    We do but unfortunately we have already borrowed against that future money.
     
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  25. Jumbolina

    Jumbolina First Team

    Probably not but it's already been borrowed against.
     
  26. Jumbolina

    Jumbolina First Team

    We already refinanced after the 2019 accounts. We paid £10m back and secured a better rate. I don't think we'd get a better deal now we are a more risky championship proposition. Not clear when it needs to be repaid, but more than 1 year after June 2019.
     
  27. Like invoice financing. Does it show in the accounts? Because even if it has been borrowed against, it is still an asset which will come in to pay back that borrowing. So if we've still got £25m to come, that makes a big dent in the £70m.
     
  28. Invoice discounting shows in the accounts. Normally you'd just have a debtor owed to you. If you factor it, you'd usually have the debtor owed to you, the cash and a creditor owed to the factor. You'd also have a note under the creditors/borrowing note to the accounts which should show interest rate etc.
     
  29. Jumbolina

    Jumbolina First Team

    It's separate from the £70m. It looks like we are owed £28m about in fees, but there is £25m loan from Santander which is secured against that. So yes in that respect it will net out. But that still leaves the £70m to 23 Capital as well as the £50m odd we owe other clubs in transfer fees. On the bright side our assets are valued at £190m and the ground is worth £25m apparently.
     
  30. hornetboy1

    hornetboy1 First Team

    Don’t forget we have the £50m parachute payment which is secured by Barclays. That money could be used to pay money owed on transfer fees, so it all ties up.
     
  31. Jumbolina

    Jumbolina First Team

    But what is going to pay the wages, interest and operating expenses if we use all parachute money to pay the transfer fees owed, especially with no gate receipts?
     
  32. We hate 48

    We hate 48 Reservist

    I agree with this bar this £190m as this isn't per the accounts or is it their estimated market value -per Transfermarket ? as at June19?
     
  33. Jumbolina

    Jumbolina First Team

    It's in account note 18 where all the charges are. Not sure how they arrive at the figure - presumably they have extracted it from the main balance sheet?
     
  34. hornetboy1

    hornetboy1 First Team

    It doesn't work like that. We don't pay everyone in one lump sum. All we've got to cover are the payments for this season.

    That means making guaranteed payments to clubs we owe money to, 23 Capital and all other creditors. This can very easily be achieved with some player sales. We've just got to make sure we honour all our contractual obligations.
     
    Ybotcoombes likes this.
  35. We hate 48

    We hate 48 Reservist

    Thanks-so this looks like the original cost of players-Success, Gray, Cleverly, RP, Janmat and Peneranda-there's £70m there-hopefully the rest are worth the £100m + we paid for them or even more !
     

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