Watford’s 2018/19 financial results covered a season that the club understandably described as “successful”, improving their position in the Premier League from 14th to 11th and reaching the FA Cup Final (beaten by #MCFC). Some thoughts in the following thread #WatfordFC
#WatfordFC made a £9.8m profit before tax, compared to a £31m loss in the prior year, as revenue rose £19m (15%) to a record £148m, and profit on player sales increased from £3m to £22m. Also boosted by a £4.5m settlement following Marco Silva’s acrimonious move to #EFC. 
#WatfordFC £19m revenue growth was mainly due to a £15m (14%) increase in broadcasting to £124m, thanks to the higher Premier League finishing position and FA Cup run, while there were also rises in commercial, up £3m (28%) to £13.6m, and match day, up £1.3m (16%) to £9.2m.
#WatfordFC staff costs were actually lower: the wage bill decreased £2m (3%) to £84m, while player amortisation and impairment were down £5m (13%) to £36m. On the other hand, other expenses rose £8m (28%) to £34m and net interest payable was up £1.4m to £6.6m.
#WatfordFC £10m profit is particularly impressive, given that 4 of the 7 Premier League clubs that have published 2018/19 accounts to date have lost money, including huge losses above £100m at #EFC and #CFC. Both Manchester clubs were also profitable: #MUFC £27m and #MCFC £10m.
#WatfordFC bottom line benefited from £22m profit on player sales, up £19m on prior year. This was largely due to the sale of Richarlison to #EFC, but also included Amrabat and Zarate. However, some clubs made even more, e.g. #CFC £60m in 2018/19 and #LFC £124m in 2017/18.
Since returning to the top flight, #WatfordFC have reported profits in 3 out of 4 seasons, though there is an overall deficit of £14m in this period, due to the hefty £30m loss in 2018. In the Championship, they tended to lose money, though the losses were quite small.
#WatfordFC larger profits have been driven by exceptional items: 2011 £10m profit was due to waiver of £13m inter-company debt; 2019 £10m was boosted by the £4.5m payment for Marco Silva’s move. Against that, 2015 £5m loss was impacted by £8m promotion payments.
#WatfordFC have rarely made big money from player sales, though annual average has risen to £13m in last 4 years, while the club says there will be £19m “net income” in 2020, mainly from the sale of Dodi Lukebakio to Hertha Berlin.
#WatfordFC EBITDA (Earnings Before Interest, Tax, Depreciation & Amortisation), considered as a proxy for cash operating profit, as it excludes player sales and exceptional items, more than doubled from £16m to £35m, which I believe is a club record.
#WatfordFC revenue has grown by £54m (56%) in the 3 years since their first season following promotion to the Premier League from £94m to £148m. The vast majority of this growth (£44m) has come from broadcasting (new PL deal in 2017), but commercial also up £11m. Match day flat.
Following the growth in 2019, #WatfordFC £148m revenue is 14th highest in the Premier League, just behind #CPFC and #SaintsFC. However, for some perspective, the Hornets are still nearly a quarter of a billion below the Big Six (#AFC £393m) with #MUFC generating £627m.
That said, #WatfordFC £147m, excluding player loans, is only £7m below the £154m needed for 30th place in the Deloitte Money League, which ranks clubs worldwide by revenue. The famous Porto are not too far ahead with £155m.
#WatfordFC TV money from the Premier League rose £8m to £114m, mainly due to finishing 3 places higher in the league (merit payment up £6m), though overseas TV also increased £2m. The club has received just under £400m from the PL in the last 4 years.
A hefty 84% of #WatfordFC revenue comes from TV, but this is far from unusual in the Premier League with many clubs heavily reliant on this revenue stream. In fact, no fewer than 7 clubs in the Premier League earn more than 80% of their total income from TV.
If #WatfordFC are relegated, their revenue will dramatically fall, despite receiving parachute payments for 3 years. TV money in Premier League was £114m, while Championship would be £46m (year 1), £38m (year 2) and £19m (year 3). That said, other clubs only get around £8m.
#WatfordFC match day income rose £1.3m (8%) to £9.2m, partly due to a 4.4% price rise, even though they staged 1 home game less (most matches in the FA Cup run were away). Stull firmly in the bottom half of the Premier League table for this revenue stream.
#WatfordFC average attendance fell for the third year in a row, declining from 20,231 to 20,016. Crowds are just over 3,000 (20%) higher in the Premier League than the Championship, even though ticket prices were raised in the top tier. Have again increased 2-4.5% in 2019/20
#WatfordFC 20,016 attendance is second lowest in the Premier League, only ahead of Bournemouth. Club “continues to review options for further development of the stadium to increase capacities in both hospitality and general seating areas” – up to 32,000, though could cost £40m.
#WatfordFC commercial revenue rose £3m (28%) to £13.6m. This revenue stream has increased in three consecutive years, though this is still on the low side in the Premier League, around the same level as Burnley and #BHAFC.
From 2019/20 Sportsbet.io have replaced FXPro as #WatfordFC as shirt sponsor, reportedly increasing annual payment from £3m to £6.5m. Agreement extended to also include sleeve sponsorship. Adidas have been the kit supplier since the 2017/18 season.
#WatfordFC wage bill fell £2m (3%) from £86m to £84m, with playing staff dropping from 75 to 65. Wages to turnover ratio decreased (improved) from 67% to 57%. Despite the fall in 2019, wages are up by £26m (44%) in the last 3 years.
Following the decrease, #WatfordFC £84m wage bill is the 3rd lowest in the Premier League, only higher than Burnley and Huddersfield Town (though those two clubs are yet to publish 2018/19 accounts. As a n interesting comparison, #BHAFC wages were £18m higher at £102m.
#WatfordFC wages to turnover ratio of 57% is one of the lowest in the Premier League, only higher than 4 clubs: #MUFC 53%, #NUFC 52%, #HTAFC 50% and #BHAFC 39% (though the latter 3 are all 2017/18 figures).
The remuneration of the #WatfordFC highest paid director increased by 19% from £631k to £752k, which is 11th highest in the Premier League, exactly in line with the club’s position in the league table last season.
#WatfordFC player amortisation, the annual charge to expense transfer fees over the length of a player’s contract, fell £4m (10%) to £34m, though significantly higher than £1m in the Championship. Also booked an impairment charge of £1.9m to reduce the value of certain players.
Following the decrease, #WatfordFC player amortisation of £34m is now in the bottom half of the table in England, around the same level as #BHAFC £33m. However, for some perspective, it is £134m less than big-spending #CFC £168m.
#WatfordFC other expenses rose £7m (27%) from £27m to £34m. These have surged from £8m in the Championship, due to “the running costs associated with running a successful business within the premier League.”
#WatfordFC made £21m player purchases in 18/19 (including Gerard Deulofeu, Adam Masina and Ben Foster). This is the lowest to date in the Premier League and in stark contrast to the £72m they have averaged over the previous 3 seasons in the top flight.
On a cash basis, #WatfordFC net spend has averaged £32m (£48m purchases less £16m sales) in last 4 seasons in Premier League. Since the accounts, club says has spent £39m on new players. Paid £26m transfer fees since 2015 to Udinese, owned by Giampaolo Pozzo (Gino’s father).
#WatfordFC gross debt rose £4m to £88m, with loans from group companies increasing by £6m to £86m, while directors’ loans were down to £1m and bank overdraft up to £1m. Debt has shot up a chunky £75m from just £13m since promotion to the Premier League.
#WatfordFC £88m gross debt is now the 9th largest in the Premier League. Since year-end, £10m of the group loans has been repaid with the remaining £70m refinanced. The senior creditor on this loan is XXIII Capital, who have no connection to the group.
More positively, #WatfordFC transfer debt decreased from £101m to £79m, while fees owed by other clubs have increased from £13m to £28m, so net payable has fallen from £88m to £50m. In addition, £30m contingent liabilities dependent on player appearances, sell-on clauses, etc.
Worth noting the high interest charged on #WatfordFC parent company loans, e.g. previously £55m at base rate + 6.28% and £25m at 5%, now £70m at LIBOR + 5.35%. This resulted in £6.2m cash interest payments in 2019, the 5th highest in Premier League, with a further £3.6m unpaid.
#WatfordFC generated £32m cash from operations, boosted by £23m loans, then spent net £38m on players, £6m on updating facilities at the stadium and Colney training ground and made £6m interest payments.
In the last decade #WatfordFC had £180m available cash: £84m owners’ loans, £69m from operations (all from PL seasons) and £27m other loans. They spent £109m on new players and £42m on infrastructure. A further £15m went on interest payments, while cash balance was up £14m.
#WatfordFC cash balance rose from £8m to £14m, though this is still relatively low for the Premier League. For example, #MUFC and #AFC held £308m and £231m respectively, though these have since come down.
This was a good set of financial results for #Watford, though the lack of player investment last season might well have contributed to the club’s struggles on the pitch this season. As chief executive Scott Duxbury said, “Retention of Premier League status remains a priority.”
