Watford's chief executive Scott Duxbury sat down with the Watford Observer's deputy sports editor Frank Smith this week for an exclusive sit-down interview. Here he discusses the importance of the Hornets remaining a self-sufficient club.
“Our whole business strategy is to be self-sufficient, minimise losses and eventually to break even.” It’s not a phrase you would expect to hear from many Championship chief executives as they chase the multi-million pound riches of Premier League football. But that is the Pozzo way.
Being a self-sufficient club is something which should be achievable in the top two divisions of English football considering the obscene sums paid. But rarely it is.
Owners are throwing money at players and wages in a bid to secure promotion to the Premier League and then if they do secure a place at the top table, then the same is done again trying to stay there.
But what happens when it goes wrong? After all, only three clubs can secure promotion to the Premier League each year.
In many cases, they either take even more risks or accept the dream is over for a while.
In Watford’s case, they simply attempt to learn from the mistakes of the previous 12 months and have another go.
The Hornets’ annual accounts for the year ending June 30, 2013 showed Watford Association Football Club Limited made an operating loss of £2.1m but this was offset by profit on disposable of player registrations of £2.59m. So Watford were able to make a pre-tax profit of £190,000 compared to a pre-tax loss of £2.65m for the previous 12-month period, which was under the reign of Laurence Bassini.
The club’s turnover increased by £7m during the 2012/13 campaign to just over £18m and the £12.8m wage bill meant the wages-to-revenue ratio had dropped from 90 per cent in 2012 to 70 per cent in 2013.
The Hornets missed out on automatic promotion on the final day of the regular season to a Hull City side who made a loss of £25.6m. It was £30.9m for champions Cardiff City.
Owners Vincent Tan and Assem Allam were happy to fund Cardiff and Hull’s respective losses. Whether it is right or not will be a matter of opinion.
But the Pozzo family, who own Watford, have based their success at Udinese and Granada on being self-sufficient and utilising the strength of their scouting network.
The Hornets’ use of the loan system upset many in English football but with the threat of administration still a recent fear for Watford’s supporters, they would accept those negative comments at the expense of good football and a pre-tax profit of £190,000.
“If you take last year’s wage bill from the published accounts, then this year’s will not be too far away from that,” Watford’s chief executive Scott Duxbury said this week.
“It goes back to what we said when we first joined the club; our aim is to be a sustainable Championship club. We are not going to gamble on buying for instance a £20m player and if it works great but if it doesn’t then it is all over.
“Our whole business strategy is to be self-sufficient, minimise losses and eventually to break even. If we are a sustainable Championship club then it gives us the best foundation to reach the Premier League. That is what we are achieving.
“If we are in the Championship next season then we are in a strong position to move forward and push for promotion. That has been our business philosophy from the start.”
The Pozzos were also able to reach an agreement with Watford’s bondholders at the time of the takeover in 2012 which saw repayment delayed until promotion was secured.
“We don’t have any debt. We just have the bondholders who are more like partners,” Duxbury explained.
Watford had one of the most impressive squads in the Championship last season at a cost of £12.8m.
In comparison, Cardiff’s wage bill was a reported £27m and the QPR team which was relegated from the Premier League spent a reported £78m on wages - £8m more than Champions League runners-up Borussia Dortmund.
Duxbury said: “The most important facts are that we are compliant on any of the Financial Fair Play criteria – the current one or the one they are currently debating. We are compliant and that is what we focus on.
“Clearly if you look at the so-called bigger teams in the division then their wage bills are astronomical compared to ours but we don’t worry about that.
“We have our model and scouting network and we believe we can be equally competitive if not more so by utilising our scouting network and our knowledge rather than paying huge, often inflated, transfer fees on players who may or may not make it.
“It is that philosophy which allows us to have a perhaps disappointing season [on the pitch] but maintain a position where we haven’t gambled our future away and are able to be competitive the following season. We are financially stable and sustainable.”
He added: “Watford fans should always take comfort from the fact they have the Pozzo Family as owners. Technical directors, CEOs and managers will come and go but it is the owners which separate Watford from other clubs.
“They have a history of success, they have longevity of ownership and they have the integrity and soul of Watford Football Club in their hearts.
“They don’t get carried away when things are not going well and they don’t get carried away when success comes. They have a long-term vision and are committed to delivering on this.”
- Duxbury also talked about the importance of Watford learning from the mistakes of the last two seasons when it comes to the club's recruitment. Read his comments here.