Wfc Finances

Presumably, given the overlap and just how popular it is with the original US crowd who use it to justify literally any illegal behaviour whatsoever, his waving about of the Magna Carta suggests this Bradley Orr character is at least somewhat down the 'Sovereign Citizen' road, which would indeed make him someone in possession of a box of frogs in place of the more popular option of a functioning brain. As such, he may actually be more of a basket case than our club. Shocking stuff.

 

This is interesting and I imagine will be of great interest to those amateur accountants in here (and of course the professionals too!)

https://www.watfordobserver.co.uk/sport/20206732.watfords-debt-reduced-owner-will-never-call-loans/

It all sounds encouraging although I found it interesting that Mr Duxbury claims to be not even slightly concerned about the holding company debt because as we’ve discussed on here previously at least some of that is or at one stage was owed externally

 

This part of Duxbury's interview in the Wobby warrants being repeated in full in this thread. What are people's thoughts on it? How does it tally with your previous ideas?

The point about a significant part of our debt being to the Pozzos and thus unlikely to be called in soon and ruin the club is a point I had raised before.


https://www.watfordobserver.co.uk/sport/20206732.watfords-debt-reduced-owner-will-never-call-loans/

Watford’s debt has reduced by £40million, what the club does owe is being repaid over the long term as part of a payment plan and loans from owner Gino Pozzo will “never” be called in. Hornets chairman Scott Duxbury wanted to make it very clear to fans that the club is not on the edge of a financial cliff, or even close to it.

You only have to look around the Championship to see the carcasses of clubs that once saw the Premier League as their home to understand why fans would worry. Then there’s the likes of Derby County, whose plight has seen them drop into League One.

There have been stories in various places and numerous rumours that the Hornets were in a fiscal mess behind the scenes, so I asked Duxbury this:

What is the financial situation at Watford in layman’s terms? We hear numbers, we see articles, but very few of us are actually able to truly understand most of it. There’s worry, do you understand why?

“Our debt situation has improved significantly. During the past two years, we’ve reduced debt by £40m, and now we owe simply the £50m loan struck with Macquarie Bank in November 2021.

“The big news was that in a season after we were relegated and during a pandemic, we reduced our headline debt by £40m. Yet I saw and heard people talking about £150m owed to the owner and sensed there was a lot of negativity. So, yes, I understand why fans worry, and hopefully this will put their minds at ease.

“There is holding company debt, which is basically loans from the owner. You can call it equity or whatever you like, but it’s how all clubs operate. It is money that Gino [Pozzo] has put into Watford Football Club to fund transfers, stadium development, training ground development and so on. It’s a loan from the owner.

“Is he ever going to call those loans in on himself? Never. If at some point in the future the club is sold than that debt is paid back as part of the purchase price. It’s a normal vehicle that is commonly used in business, not just in football. Gino put money in as a loan, which is what most clubs do these days.


“I don’t even think about that holding company debt. I don’t pay interest on it, I don’t need to do anything with it. It’s just owner funding. The only debt we have is £50m to Macquarie Bank, which is repayable over a long term and entirely sustainable.

“Our plan over the next two years is to get that debt figure down to zero. We have shown our intent by paying off the £40m I referred to.

“That’s part of the reason I am so excited about the coming season. I can focus on supporting Rob Edwards and making the changes in culture and approach, because I don’t have to worry about our finances.”

 

The really surprising thing is him claiming that he doesn't pay interest on the debt to the Pozzos?!?!

 

I think he was saying he as CEO of the club. I think in the context it’s pretty clear he isn’t talking about personally.

 

Obviously. I mean it seems very surprising that the club supposedly isn't paying any interest on the debt to the Pozzos.

 

I don’t think that’s surprising. That’s just how they’ve structured owner financing. I’d assumed as much. The thing I found surprising was the claim that there were no interest payments to the holding company at all, considering that previously some of the holding company loans were not to the Pozzos but to external parties.

 

As you say the latest accounts which are post pandemic show holding company owing significant external debt??

So when Duxbury states “there is holding company debt which is basically loans from the owner”. That is factually incorrect according to latest accounts isn’t it?

 

Money put into the club by the owner = money borrowed by the owner, which will have interest payable on it.

 

Presumably Duxbury is saying as of now. The accounts are describing the situation as of summer last year.

 

By the Pozzos I meant including their holding company.

 

Last accounts said we owed £2.5m in unpaid interest on the holding company loan.

 

But it doesn’t add up. The additional loan is only at club level and consolidates other debt so we are being asked to believe at holding company level we got rid of £60 million of external debt either by making a load of money (we didn’t) or by Pozzo injecting a load of liquidity to pay it off. I’d be amazed if when next years accounts it transpires Duxbury is not being transparent.

 

That's right-the loan from Gino (or his Luxembourg registered entity to be accurate) is accruing interest-the accounts will show interest paid through the Profit (haha) and loss account but its not being paid in cash so all things being equal his loan will increase each year. He gets interest on interest-not that unusual in owner sponsored loans

 

Well, I certainly don't think he's being accurate as we took another loan out against the transfer instalments for Isaac Success. Maybe as it was only worth ~£4.8m he didn't think it worth mentioning but it certainly doesn't appear correct that the £50m is the only loan we have. And I don't believe we have paid it off as the charge doesn't appear to have been filed as satisfied at Companies House.

Agree with your point too, would be amazed if they have paid off all that external debt.

 

The holding company has given no security to anyone now and the club only has given security to McQuarie bank which is logical as that's where the PL parachute money is due and the club own the ground which is that banks security as well.

As at June 21 the club owed £141m in debt with c £50m to "Gino" leaving £91m to 3rd parties

Of that £91m we owed £36m on transfer fee debt so self liquidating and £24m to McQuarie plus £5m to a director (?-not Gino) leaving c£26m to others (Close brothers).

If McQuarie has lent " us" another £26m taking their loan to £50m it was used to repay the other/Close debt.

That's what it looks like to me

 

Twitter is going to be unbearable for 12 months as the £50m figure is quoted over and over

 

If we consider transfer fee incoming loans to be self liquidating don’t we have a gap to plug on transfer fees outgoing in that case?

 

And if you bought Euros with that amount at the all time low of parity, then sold it back at the all time high of 1.70, the debt is less than £30m anyway.

 

Thanks.

For us thickos...

What is "self liquidating" for the transfer fees we owe?

Who are the Close Brothers?

 

I only meant to imply that the income to repay the loan is guaranteed by the purchasing club/EFL/FA so the lenders who advanced us the money will get it direct from them and not us.

You are correct that we still owed (as at June last year ) £62m to other clubs for our player purchases-some of this will have been paid by now.

Our financial y/e is a few weeks away-based on what SD is saying when the accounts are published some time in 2023 we should expect to see two loans being
a) £50m to Macquarie bank secured against all the assets the club have-ground/TV money etc and
b) £50m to Gino's Luxembourg entity-totally unsecured.

Plus outstanding transfer fees still owed-only guesswork as to what that might be-but likely less than £60m.

 

Please see my post 1003 for my definition of self liquidating-its from income going direct to the lenders who advanced us the money we are due from player sales (RP and GD in the main).

Its nothing to do with the money we still owe for players bought-that's a real liability

Close Brothers-is an Investment bank specialising in all types of asset finance-to housebuilders as well as football clubs. Its listed -valued at £1.5bn and highly respectable

 

The joy of watching a load of people trying to figure out the layout of an entire room by squinting through the keyhole. A year ago.

 

So what’s the takeaway? Are we screwed or not?

 

A lot less screwed than we were last time we went down, it seems. Which gives me hope that we may *actually* gives Edwards time to instill a culture and a style of play, even if it means a mid table finish this year.

 

Oh look, Duxbury's podcast lapdogs are piping up now.

 

If we finish mid-table then it will indicate the new culture instilled will have been one of mediocrity.

 

Could say the same (or worse) about Corberan's Huddersfield. Could see a similar story with Martin's Swansea next year.

If we have to go through the horror of a mid-table championship season, but it means we have a distinctive style of play, a culture where the Head Coach has more power than the players, and a squad of young, hungry players who actually give a ****, then I'll take that.

 

Scott and Gino do business properly, right?

 

As opposed to trying to figure it out by listening to what our CEO has to say about it instead, which is akin to squinting through his ar5ehole to try and make out the layout of the this entire room of yours, or in your case, putting your tongue up there instead, except you do it in real time rather than a year ago.

 

Yep me too. What would be a disaster would be ending with another gaffer and Cathcart/Kaba/Cleverly still being our key players. If it’s a younger team, showing progress under Edwards then all good.

 

I think the next month will be telling. Assuming we are able to sell Sarr and Dennis externally, hopefully we will see Edwards allowed some modest acquisitions to fit his vision and style. If the only incomings are free agents and Udinese cast offs the likelihood is Duxbury is being economical with the truth in terms of how comfortable he is about our finances.

 

He could be comfortable with the finances and still recruit freebies, punts and cast offs. I would think the financial as well as sporting plan must be at least a top six finish this year. A minimum expectation of promotion within two years.