Wfc Finances

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

  1. lowerrous

    lowerrous First Team

    Genuine question, how long after promotion until the PL money actually starts arriving in our accounts? It could also just be that it takes a while, but we're wanting to spend already.

    Based on this article below, the money clubs receive for a PL season arrives mostly in three lump sums paid at different times across the season, alongside monthly payments of £2mil-4mil.

    Therefore, regardless, we don't get most of the money at the start of the season anyway; this loan could just be to help us spend more immediately, before a lot of the PL cash has come in.
  2. Burnsy

    Burnsy First Team

    But I thought the Pozzo finances were just one big murky pot between the two clubs that could be moved around freely making transfer fees between the two a moot point?

    Why are we borrowing funds against money that we are (if peoples theories are to be believed) essentially just paying to ourselves? Just pay it surely?

    Maybe we can afford it. But it’s yet more borrowing.
  3. wfcmoog

    wfcmoog Tinpot

    Here Udinese, take 40m worth of players for 16m quid and then don't pay us. We'll get the loan sharks to cover the shortfall, stock our team with free crap players and our fans will still suck our owners off over it.
    Jumbolina likes this.
  4. lowerrous

    lowerrous First Team

    People in this thread seemingly forgetting that interest rates are pretty much zilch right now.
  5. wfcmoog

    wfcmoog Tinpot

    Hope you warm up or you'll pull a muscle. [​IMG]
    Steve Leo Beleck likes this.
  6. Jumbolina

    Jumbolina First Team

    Good unicorn stuff Rous. The old keep money in an Italian bank account where base rates are lower than 1% and earn more than the cost of bridging finance from an investment bank.
    wfcmoog likes this.
  7. Markoa$

    Markoa$ Squad Player

    What if the money is being used to pay off Deeney and/or Gray?

    What if the money is being used to get a deal/deals done early, so we don’t run into the same problem we do every season where our squad don’t get a full pre-season because we wait until the last week of the window?

    What about if the money is used to get Danilo, Hauge and a *Borre? Being able to offer a little bit more upfront, pay their agents a little bit more than what they are being offered from other clubs? Give them a slightly bigger signing on bonus etc?

    What if it’s to sign someone we thought we could never sign, but have been informed by said players agent that he would join us, but the club want x amount for him?

    Would people be upset with the borrowing then? Genuine questions.

    * I know Borre is on a free but still have to pay his agent and a signing bonus.
    Knight GT likes this.
  8. Jumbolina

    Jumbolina First Team

    The Pussetto extraction happened with minimal comment so if they can do that without backlash then people will accept anything.
    wfcmoog likes this.
  9. lowerrous

    lowerrous First Team

    How do you know it's just sat in a bank account rather than being used somewhere else?

    Oh wait, you don't.
  10. lowerrous

    lowerrous First Team

    How is it a stretch? It's literally true that interest rates on borrowing are currently incredibly low.
  11. Jumbolina

    Jumbolina First Team

    You suggested it. “What if the Pozzos expect they can earn more keeping the money in Italy”

    Apologies for replying to what you actually posted.
  12. lowerrous

    lowerrous First Team

    You can earn interest in other ways than just leaving money in a basic bank account.
  13. Jumbolina

    Jumbolina First Team

    Ah okay. So Pozzo genius makes more money than investment bank bread and butter. That’s why our finances are in such great shape.
    wfcmoog likes this.
  14. Markoa$

    Markoa$ Squad Player

  15. UEA_Hornet

    UEA_Hornet First Team Captain

    So in the 2019 accounts the £55m loan from XXIII Capital had an interest rate of 6.28% above LIBOR. Then we managed to refinance it to 5.35% above LIBOR. That doesn’t sound like zilch to me.
  16. lowerrous

    lowerrous First Team

    The Pozzos have lots of business investments of which football is only one, who knows what returns they're earning.
  17. Jumbolina

    Jumbolina First Team

    Don’t use facts like these. Pozzo’s have lots of amazing business investments and stuff.
    wfcmoog and GoingDown like this.
  18. lowerrous

    lowerrous First Team

    When were the loans originally taken out? What length of term was the loan?

    Different bank, longer term, higher amount, different date could amount to a different fee.
  19. UEA_Hornet

    UEA_Hornet First Team Captain

    I absolutely accept those are valid points. But equally I very much doubt an investment bank is lobbing Pozzo money without a decent cut built in. Football’s an insecure environment at the best of times - that risk has to be paid for and I doubt the lender is shouldering much of that.
  20. lowerrous

    lowerrous First Team

    While trying to find what kind of fee Macquarie might ask for on such a loan I stumbled upon this.

    It appears that other Premier League clubs are also more than happy to take out very similar loans with Macquarie secured against future player transfer fees.

    But oh no, it's just those incompetent blood-sucking Pozzos!

    "Leicester City update bank loan as follow-up to Ben Chilwell's Chelsea transfer fee
    The latest loan with Australian bank Macquarie is secured against Premier League payments up to January 2023, and supersedes a loan taken out in August last year"

    ....And aren't Leicester and their owners meant to be pretty loaded as well?! Perhaps there are actually some advantages to such deals which you're not willing to entertain.
  21. Burnsy

    Burnsy First Team

    I actually want to have healthy debate about this so let’s not fall into petty name calling etc (not saying you are, just setting the boundaries early on!)

    But how do you square this with the opinion you had that transfer fee’s we ‘paid’ for players within the group (Success, Pussetto, etc) can be largely written off because the money was just being moved within the group - why are we borrowing money against payments due from a club within the group?

    I’m not saying there isn’t a good reason. But I just can’t square the circle personally!
    wfcmoog, UEA_Hornet and Jumbolina like this.
  22. lowerrous

    lowerrous First Team

    As I've speculated before, maybe because it's cheap? Maybe because the Pozzos are putting the money to good use in other investments elsewhere? Maybe because it's simply more convenient at this precise moment in time rather than extracting the money from Udinese, and we have an urgent need for it?

    Whatever it is, it can't be that bad of a deal or sinister a decision if moneybags Leicester are happy to do the same thing with the same bank.
  23. Burnsy

    Burnsy First Team

    What’s good for Leicester isn’t necessarily guaranteed to be right for Watford though.
  24. UEA_Hornet

    UEA_Hornet First Team Captain

    Here’s what they were charging Leicester as of last year:

  25. lowerrous

    lowerrous First Team

    Good find.

    So as I thought, much less than that 5.35% for our other old loan.

    Given our loans are for smaller fees and generally a shorter timeframe, then it should be towards the lower end of the similar deal Leicester have.

    So let's say 3.2% on 11.4mil EUR for 2 years for Pussetto = approx 700k EUR
    + 2.8% on 8mil EUR for 1 year for Pereyra = approx 220k EUR

    920k EUR = approx £790k total cost for the loan.

    It's hardly much to get in to a huge bother over, it's less than 3 months of TD's wages. :(
  26. We hate 48

    We hate 48 Reservist

    Indeed. Leicester in those published 2020 accounts show they spent £75m on their new trading ground (with total commitment c£100m) and £100m on players ( Tielemans, Perez etc) . Next season they win the FA cup and narrowly miss out on top 4. The owners put in more money as well.
  27. Knight GT

    Knight GT Predictor extraordinaire 2013/14

    I’m not a financial expert like some but what is the actual problem with this deal? We have borrowed a sum of money which we are owed by somebody else. I think this happens a lot in business but might be wrong. Either way it doesn’t really add to the debt so not sure why there is an issue
  28. Carpster

    Carpster Squad Player

    I thought these were called bridging loans and are common in all walks of life.
    lowerrous likes this.
  29. Arakel

    Arakel First Team

    Seems obvious to me that the intent is to get the money now so we can use it while the transfer window is open.

    Yes, there might be a fee, but that's better than not being able to use the funds to strengthen this window and having to wait until January or later.
  30. Steve Leo Beleck

    Steve Leo Beleck Squad Player

    I don't think it's so much that we took out this loan, which seems to be pretty standard practice, it's the whole 'Pozzo to Pozzo transfers aren't like other transfers/they'll always balance the books/Peñaranda and Success cost us nothing' kind of stuff that is. We sold two of our best assets to Udinese and are now going to lose even more money on those deals due to paying interest.

    Also worth noting that both transfers mention the amount 'after the deduction of solidarity payments', something that frequently appears in our transfers with Udinese. What exactly are these? How much are they? Sounds like a way of giving them a discount to me. Do we get solidarity payments when players move the other way? I'd expect not.

    Anyway, here's an article on the loan being quite a common way of doing business these days.
    wfcmoog and Burnsy like this.
  31. Steve Leo Beleck

    Steve Leo Beleck Squad Player

    The other good news was that when we refinanced that, we combined the £55m loan with the £25m one that we were paying 10% on! So just the £80m of loans our parent company had in the last set of filed accounts...
  32. Steve Leo Beleck

    Steve Leo Beleck Squad Player

    Do they? What are they?
    Burnsy likes this.
  33. AndrewH63

    AndrewH63 Reservist

    I used to work with the team that loaned out over night British Rails cash. The business had huge liquidity at the end of the working day. But we had to borrow money every four weeks to pay salaries. Fortunately there was a very regular pattern to when the business had a deficit and a surplus of cash. They once showed me the benefit of doing this rather than saving up our cash in our own account to pay the wages every 28 days.

    I suspect football clubs have a routine seasonality to the business - simplistically cash flows in when they retail season tickets, the media payments, match day income, and flows out like a drain in the close season.

    The accountancy is beyond me, but it’s interesting that some of the money for the Pereya and Deulofeu transfers are due on 28 February, one lot in 2022 and the other in 2023. Presumably there is some significance to the dates.

    You wonder if the transfers were deliberately structured from the beginning with the intent to use the paperwork as security to get a loan for Watford to provide cash in 2021 that Udinese simply did not have. If the two clubs keep trading players between themselves and borrow the cash against each other’s future payments, it looks like a reasonable strategy to get cash flowing into both clubs. It relies on continued player trading, as presumably even in football one day loans payable have to finally paid back.

    How amortisation works for players and reported on the balance sheet is also beyond me.

    What i think following the Duxbury interview, is that the pandemic more than relegation has thrown the business strategy. And the club has now tacked to a new alignment, whereby routine relegation and promotion has been now been built in to a far greater degree. He seemed keen to point out how perilous the finances were from March 2020. And hints that going down and up as a yo yo would not be a failure. Plus the current talk of relegation clauses in contracts, not mentioned before, seems to suggest a change - at least publicly.

    The mass of supporters rarely care about the finances while the team is successful. Man Utd fans did not mention the glaziers mortgaging the club and failure to invest in the stadium while they were winning championships. Maybe if we settle into a groove as a top 22 club, we won’t care either.
    Vanhorn17, Markoa$ and lowerrous like this.
  34. lowerrous

    lowerrous First Team

    "The Pozzo family had been involved for generations in the woodworking industry at the time of the acquisition [they sold this business in 2008], and today they own and manage an electrical appliance business in Spain. Most recently the Pozzos have become involved in property and finance mergers, in addition to sports club ownership, an area in which they have become globally renowned since Udinese’s rise to glory under the family’s ownership. "

    "“I would not say football is our major activity and the major focus of our attention, but nevertheless, we enjoy doing it and we are very committed to do it the right way,” confirms Gino."
    Steve Leo Beleck likes this.
  35. lowerrous

    lowerrous First Team

    Yes I wondered the same.

    That's way too sensible a point, prepare to get shouted down by the forum misery guts.
    davisp2 likes this.

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