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Watford sack manager

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On 03/10/2021 at 11:19, PurpleCanary said:

I think what is behind this is the fear that if Watford get relegated they will be in serious financial trouble (unlike us, if we go down) and they want a more experienced coach.

You are almost certainly correct.

Watford are heavily indebted and the Pozzos are not rich enough to ride it out. (Their owner's net worth was valued at £93 million.)

According to Swiss Ramble. at the end of 2020 their net debt was £93 million but they are also had a net transfer debt of £64 million (they were owed £15 million on transfers, but owed £79 million). I can only imagine a year in the Championship and Covid will have made this worse.

Interestingly, they value their total assets at £242 million (with the ground + training ground etc at over £million). I don't recall anything similar in the NCFC accounts.

 

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23 hours ago, sgncfc said:

I know lots of Watford fans. They all hate the football they have to watch, and promotion last year was completely unexpected. They had to give grudging admiration to their manager because they got up but to a man they are happy he's gone. Most of them admire us a club and the way we are run.

We played them a bit too early. They have no style or substance, but I disagree that relegation will hurt them financially, unless they stay down for a couple of seasons; their borrowings are largely under control.

https://www.watfordfc.com/storage/40495/2020-Financial-Report.pdf

As a matter of interest, how do you interpret the change in loans om page 33 - I wasn't quite sure.

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It seems that in order to give themselves a positive balance sheet they have brought in a full revaluation of freehold assets at £62m odd. (Presumably a commercial revaluation is allowed to bulk up assets, rather than just selling it to your owners as Derby did, to bulk up income). Essentially though, it means the same thing if you then borrow against those assets. They had to do something to get rid of their negative net worth in 2019. The debt seems to have been restructured to an external provider, so whilst it is still only £85m in total £70m of that is long term at punitive interest and £15m on bank overdraft. That will hit P & L if turnover drops, which it must have done in 2021.

The debt is still not so huge that it can't be managed adequately, but their room for manoeuvre is very limited. Interestingly also, they have very little cash.

So, you're right, they are somewhat worse off than I thought. They have used their get out of jail card with the revaluation and have nowhere else to go apart from selling assets. If they go down, I don't see any way they can keep their better players this time, without a wealthier benefactor to lend them more money. Also, if the property market goes south, they are in real trouble in terms of their net worth.

Plus, the figures to June 2021 will be even worse, and another loss at this level will put real pressure on for FFP with a reducing turnover. It shows how important getting back up was for them last season, and staying up this season seems to be equally crucial.

By contrast, in July 2020 Norwich had a net current value of only £37m on freehold assets and £23m on player registrations, but our equity is slightly lower. Crucially though we had £43m in the bank (thanks partly to Lewis and Godfrey?) rather than £18k and our creditors were mainly small short term loans and deferred taxation. We could easily bulk up our balance sheet if we ever needed to - I guess we might have done already, but we'll find out when the June 2021 accounts come out.

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22 minutes ago, sgncfc said:

It seems that in order to give themselves a positive balance sheet they have brought in a full revaluation of freehold assets at £62m odd. (Presumably a commercial revaluation is allowed to bulk up assets, rather than just selling it to your owners as Derby did, to bulk up income). Essentially though, it means the same thing if you then borrow against those assets. They had to do something to get rid of their negative net worth in 2019. The debt seems to have been restructured to an external provider, so whilst it is still only £85m in total £70m of that is long term at punitive interest and £15m on bank overdraft. That will hit P & L if turnover drops, which it must have done in 2021.

The debt is still not so huge that it can't be managed adequately, but their room for manoeuvre is very limited. Interestingly also, they have very little cash.

So, you're right, they are somewhat worse off than I thought. They have used their get out of jail card with the revaluation and have nowhere else to go apart from selling assets. If they go down, I don't see any way they can keep their better players this time, without a wealthier benefactor to lend them more money. Also, if the property market goes south, they are in real trouble in terms of their net worth.

Plus, the figures to June 2021 will be even worse, and another loss at this level will put real pressure on for FFP with a reducing turnover. It shows how important getting back up was for them last season, and staying up this season seems to be equally crucial.

By contrast, in July 2020 Norwich had a net current value of only £37m on freehold assets and £23m on player registrations, but our equity is slightly lower. Crucially though we had £43m in the bank (thanks partly to Lewis and Godfrey?) rather than £18k and our creditors were mainly small short term loans and deferred taxation. We could easily bulk up our balance sheet if we ever needed to - I guess we might have done already, but we'll find out when the June 2021 accounts come out.

Interesting, thanks.

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2 hours ago, Badger said:

You are almost certainly correct.

Watford are heavily indebted and the Pozzos are not rich enough to ride it out. (Their owner's net worth was valued at £93 million.)

According to Swiss Ramble. at the end of 2020 their net debt was £93 million but they are also had a net transfer debt of £64 million (they were owed £15 million on transfers, but owed £79 million). I can only imagine a year in the Championship and Covid will have made this worse.

Interestingly, they value their total assets at £242 million (with the ground + training ground etc at over £million). I don't recall anything similar in the NCFC accounts.

 

Is this Gino Pozzo on his own or daddy Pozzo too? (Giampaolo)

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50 minutes ago, sgncfc said:

...It shows how important getting back up was for them last season, and staying up this season seems to be equally crucial...

 

Thanks sgncfc.

I found the wording of the refinancing a bit confusing - am I correct that the loan seems to be with XXIII capital now, having previously been with Hornets Investments Limited. I have read it both ways and am not clear what they mean. It says, that XXIII are "the senior creditor and have no connection to the group." (p33)

It also says that XXIII have a "fixed and floating charge secured against all assets  and undertakings of the company" (which is exactly the same wording as for Hornets Investments Limited) (p34). So I'm not clear about the big loan - in essence, it occured to me that they might be refinancing using other money, which gives them potential to add their own on top?

Barclays have first legal charge over the freehold at Vicarage Road.

 

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12 minutes ago, Mr Angry said:

Is this Gino Pozzo on his own or daddy Pozzo too? (Giampaolo)

Gino on his own, I believe.

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46 minutes ago, Badger said:

Gino on his own, I believe.

So Giampaolo could bail him out if necessary? I have seen somewhere that he is the de facto owner of the club anyway and he was reputed to be worth $400 million sometime in the last 12 months.

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1 hour ago, Badger said:

Thanks sgncfc.

I found the wording of the refinancing a bit confusing - am I correct that the loan seems to be with XXIII capital now, having previously been with Hornets Investments Limited. I have read it both ways and am not clear what they mean. It says, that XXIII are "the senior creditor and have no connection to the group." (p33)

It also says that XXIII have a "fixed and floating charge secured against all assets  and undertakings of the company" (which is exactly the same wording as for Hornets Investments Limited) (p34). So I'm not clear about the big loan - in essence, it occured to me that they might be refinancing using other money, which gives them potential to add their own on top?

Barclays have first legal charge over the freehold at Vicarage Road.

 

23 Capital appear to specialise in the financing of transfers, by way of moving money for accrued interest and fees based on a players valuation, so the £70m they are owed is likely charged against player registrations - not clear whether it is against individuals like Sarr, Dennis etc or against the total pool value. Also not clear at what point it is actually repayable.

That presumably means the other assets are freed up to be available as collateral for other loans. Barclays have a first charge but their loan is only £15m against a total value of over £90m.

The amount owed to 23 Capital will presumably vary, depending on what deals they finance. In 2016 they had £25m at Watford which is now £70m. They appear to work with agents to provide leverage on the financial aspects of a deal i.e. Ismaeli Sarr is valued at £40m, but you don't have to pay that - we'll pay that, plus the agents fees etc, and you pay us a fee until you sell him. It doesn't count as TP ownership (so not against FIFA rules) as the club still owns the registration but it's akin to a leasing arrangement for a car - with the same potential pitfalls. The amount paid over is presumably evened out over the contract term.

Perhaps good to use to finance young improvers; less good for a 28 year old on a sideways move.

23 Capital seem to raise their money in offshore funds (Caymans, Monaco, Singapore etc) - a way for perhaps less wealthy individuals to own a piece of football without exposing themselves completely. I know that other industries (film and theatre, music production etc in particular) operate in a similar way, so it's a fairly well established model.

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Since the owners of Watford have taken over (they were on the brink of going bust and mid table championship when they did) , they have spent most of their time in the top flight, had a play off final, 2 promotions, a FA club final, a semi final, their highest points total and their highest league position.

Their methods are dubious but I bet their fan base are pretty happy with the owners.

If they stay up this season, its a good decision. Time will tell.

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8 minutes ago, Kenny Foggo said:

Since the owners of Watford have taken over (they were on the brink of going bust and mid table championship when they did) , they have spent most of their time in the top flight, had a play off final, 2 promotions, a FA club final, a semi final, their highest points total and their highest league position.

Their methods are dubious but I bet their fan base are pretty happy with the owners.

If they stay up this season, its a good decision. Time will tell.

Where were you when they finished runners up to Liverpool in 82/83? 🤣

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3 minutes ago, Mr Angry said:

Where were you when they finished runners up to Liverpool in 82/83? 🤣

If it wasn't on sky it didn't happen 🙃

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On 04/10/2021 at 16:50, Mr Angry said:

Where were you when they finished runners up to Liverpool in 82/83? 🤣

Meant Premiership.... and as it's now 3 points for a win...🤪

I was in up 10th year of watching NCFC? You?

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46 minutes ago, Kenny Foggo said:

Meant Premiership.... and as it's now 3 points for a win...🤪

I was in up 10th year of watching NCFC? You?

So why do you compare our PL record with our pre PL record?

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2 hours ago, Kenny Foggo said:

Meant Premiership.... and as it's now 3 points for a win...🤪

I was in up 10th year of watching NCFC? You?

Strangely enough, 82/83 was the season I gave up my Watford season ticket.

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