Watford recently made headlines for having its debt reduced by £40 million and for commenting that loans from owner Gino Pozzo will never be used. Chairman of the Hornets, Scott Duxbury, was adamant that the club was not at all in a state of financial peril, despite the losses brought about by COVID-19.
He also said that the organization was nowhere even close to fiscal danger as the club is being repaid over the long-term with the help of a payment plan. Part of the confusion comes from misunderstanding the nature of how owners support their organization. We look at the news and what it means for the season and the general future of the team.
Explaining the Situation
Duxbury understands why fans would be up in arms about Watford. There were several other clubs that didn’t make it through the crisis, and that’s in addition to Derby County’s demotion to League One. There haven’t been a lot of specifics about the Hornets until now, but the chairman did his best to break it down. He asserted that the situation has improved dramatically. Now, they owe £50 million for the loan deal that they made with Macquarie Bank in autumn 2021.
There were a lot of misconceptions to contend with. Duxbury said that he heard people quote £150 million owed to the owner with no evidence to back up these assertions. He said that, because of the other stories in the press, there was a lot of negativity out there. As he put it, “I understand why fans worry, and hopefully this will put their minds at ease.”
Gino Pozzo’s Investment in the Club
When it comes to financial jargon, there’s a term called ‘holding company debt’. This essentially means that, in Watford’s case, owner Gino Pozzo has provided a loan to support anything from stadium development to fund transfers. This is standard procedure in sports, and practiced by owners all around the world. “Is he ever going to call those loans in on himself? Never. If at some point in the future the club is sold then that debt is paid back as part of the purchase price.”
In practical terms Duxbury doesn’t pay interest on the debt, nor does he really need to do anything with it. What he needs to focus on is Macquarie Bank, which will be handled over the course of the next few years. His plan is to have it all paid off by 2024. Watford has already paid off £40 million, which is a strong sign of good faith for the institution.
If Duxbury and Gino Pozzo were buried in financial woes, it would be difficult to concentrate on anything else. However, because they’ve worked out a sustainable approach to paying down the debt, they’ll be able to focus on new head coach Rob Edwards. This is the chance to change the strategy and culture of Watford, updating tactics so they stay fresh and competitive out on the field. It’s an exciting time for all, as the world of football gets back to cheering on their favorite teams and players.
Pozzo’s Journey to Watford
Gino Pozzo has loved football from a very young age, having been raised in an Italian family that was fanatical about the sport. In the 1980s, his parents purchased a club of their own, thanks to their successful woodworking business. Pozzo went to Harvard before coming back to take over the woodworking business. However, he found that he wanted to pursue the family’s other main interest instead.
After his father was able to make his football club a success, Pozzo had every intention of following in his footsteps. After moving from Italy to France, Pozzo would look at a variety of football clubs in his price range, before hearing that Watford was up for sale. This was exactly the kind of opportunity that Pozzo was looking for, and he was eager to turn their success rating around. It’s not just his family’s love of the game, but an innate understanding of how to fund a club and hire the right people for the right positions.
Read more about Gino Pozzo here: https://www.thefuturepositive.com/blog/gino-pozzo-owner-watford-football-club/