SPORTS LAW AT THE CROSSROADS

Stung by increased costs, Pozzo’s high-flying Hornets post £30m loss

By David Owen

February 19 – Watford, the Premier League club based in London’s commuter-belt and controlled by Gino Pozzo, has fallen into loss due to higher costs and a markedly smaller gain on player sales.

The club, enjoying a notably successful year on the pitch under Spanish manager Javi Gracia, reported a pre-tax loss of £31.6 million for the year to end-June 2018. This compared with a modest £4 million profit for the previous twelve months.

The £4.3 million increase in annual turnover, from £123.9 million to £128.2 million, was more than swallowed up by higher wages, which climbed from £76 million to £85.8 million. Meanwhile, the profit on disposal of player registrations tumbled from £22.4 million in 2016-17 to just £2.9 million.

The vast majority of turnover – £108.8 million, equivalent to almost 85% – came from media and broadcasting.

The other main point of interest in the accounts is another sharp run-up in sums owed to Hornets Investment Limited, the club’s immediate parent company. These rose from £45.5 million to £83.4 million on 30 June 2018.

The loans consisted mainly of £20 million due in less than a year and attracting interest of 5% and £55 million due in more than a year and attracting interest of 6.28% above LIBOR. Interest charged in the year on this latter loan was £3.58 million, up from £2.2 million.

Hornets Investment also charged Watford £145,000 in relation to management charges.

During the year, just over £4 million was paid to Udinese Calcio, a company under common control, in respect of transfer fees, £43,960 in respect of “solidarity fees” and £5,140 in respect of “gifts to the board”.