How turmoil in Watford boardroom unfolded (From Watford Observer)

How turmoil in Watford boardroom unfolded

4:10pm Friday 15th January 2010 in

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It is almost six years ago since we travelled over to Valley Grown Salads for the first interview with Jimmy and Vince Russo, then the new directors on the block. We were shown into an office and ushered to a seat. It was a large, open-plan affair with several people working and one was on the phone, with plenty to say.

He finished the conversation and walked across and introduced himself. It was Jimmy Russo.

Yes, we were shown into a boardroom where there was an unsuccessful attempt to tell me how to conduct the interview but these factors only served to paint the picture. Jimmy Russo was used to getting his own way and, although a millionaire, he preferred working hands-on with the staff.

Their management style works for them. They are their own bosses and they have built an impressive business. But it is not a style that fits effectively into the rules, regulations and requirements of a Plc. Jimmy Russo admits he does not think Watford FC should be a Plc but it could be argued that their very much hands-on approach does not work for a football club either.

There are several members of staff as well as directors who are pleased the Russo reign is over. The board has been split for months with directors frustrated by the fact Jimmy Russo ran the show with little consultation. There was a feeling that the Russos deployed dogs but insisted on barking themselves.

However, I have noted that new directors, successful men in their own field, do not immediately understand the tempo of football administration and, in their initial enthusiasm, tend to be impulsive and impatient. The Russos were no exception.

After the Russos became directors, Ray Lewington received regular calls from the pair, enquiring about tactical specifics. I have not heard of many managers arriving at a training ground on a Monday morning and being met by a couple of directors asking what he proposed to do about making corners more productive, goalscoring-wise.

Lewington eventually contacted chairman Graham Simpson and asked him to "get these two off my back".

The Russos would argue if you have put millions of your hard-earned money into a new enterprise, you are keen to see it is being used wisely. However, there is a balance and even such dictators as Jim Bonser and Jack Petchey acknowledged that. The most successful period at Watford was when Elton John brought in top management and let them manage.

After Lewington, the Boothroyd-Russo relationship never really got off the ground. The club was run by a triumvirate of Simpson-Ashton and Boothroyd, with the Russos, out of the loop. Jimmy Russo contends Boothroyd was barely civil to them.

Soon after the club returned to the Premiership, the Russos decided Boothroyd was not up to the task. They wanted to change managers. Hindsight suggests they were right but after the manager had achieved promotion in his first season, it would have been a very ruthless club to axe him a few months into the next campaign. However, their stance, together with their opposition to Simpson's terms for selling the club, caused problems.

Amazingly, after talking to the Watford Observer for an interview, Jimmy Russo was hauled over the coals by the others and soon afterwards, they were removed from the board.

Such an experience could have helped to trigger their recent possessive assertiveness towards the club, after they brought an end to that disastrous regime.

While they continued to receive the appropriate bonuses and eventually had their loans repaid, the Russos remained determined to "have Simpson's head". As discussed, that was eventually achieved but not without risk to the club, hours before the EGM.

"I can tell you one pivotal moment in the recent history of this club," says Jimmy Russo, who stood with his brother on the sidelines, watching the Premiership and Ashley Young money frittered away. "Fans should kiss the hand of the bank manager at Barclays. He refused to let them have more than £1m as an overdraft facility. Had he let them have more, the club would have been in an even worse state."

With Andy Wilson interim chairman, Stuart Timperley and Graham Taylor were among those invited onto the board, so when Russo became chairman, it could be argued the board was not of his choosing.

On the positive side, the brothers, with Jimmy to the fore, cut costs, made 14 redundant and negotiated with terrier-like determination. Some would claim he almost jeopardised the Tommy Smith transfer, but Jimmy would counter he gained £1.7m for Tamas Priskin "when told I would be lucky to get £1m".

There is no doubt Russo did well in many respects and the club is in a better financial state than this time last year, but Plc's cannot operate as a personal fiefdom.

The board split further over remunerations. The committee, headed by Timperley, decided the Russos should split around £160,000 between them.

"I raised £7m in transfers, saved £4.5m in wages and refused to pay Ashton £600,000 nor £300,000 and paid him nothing," contends Jimmy, who was looking to split nearer £500,000 with his brother – still, incidentally, somewhat short of Graham Simpson's earlier take.

"I put in the hours and I thought that was fair, if I ever get paid. I have billed them," he added.

"Too right I look back at what I achieved at the club with pride but I am disappointed at what still has to be done. Some don't like me but too many of them are in a comfort zone."

Sources suggest the fall-out from the remuneration decision, soured the boardroom. There was also criticism and amazement at the Russos' trip to Argentina – believed to have cost in excess of £28,000. The only reference to it made at board level, it is claimed, was an oblique question as to whether Watford could do with some South American flair.

Directors were shocked that nothing of the imminent trip was mentioned at the board meeting, despite the outlay and the involvement of two members of staff, and that Graham Taylor, on the board for his football knowledge, was neither consulted nor invited. If that is the case, it was a grave oversight.

The split was becoming irrevocable and there was growing concern that the main shareholders, the Russos and Lord Ashcroft, were not talking.

"We kept protecting the club with loans but in the end we came to the conclusion it was not sustainable. We tried contacting Lord Ashcroft for nine months," said Jimmy. "We were informed he was a comfortable investor but, as for meeting up, they kept stalling. It was meant to be in September but that came and went."

Quite why Lord Ashcroft, who has had business dealings with Saracens’ Nigel Wray in the past, ever became involved in Watford has never been explained. Football and investment have never gone together, and, as he is not a football fan, I have never enthused over his connection. However, he decided to meet the non-executive directors, along with chief executive Julian Winter. That one act drew the lines in the sand, for the second biggest shareholder, chairman Jimmy Russo, was not invited.

"I think it was all sorted out and everyone knew what would happen at the annual meeting. We would be voted off but it did not come to that," said Russo. "I made an offer of 3p a share. It was a fair offer as we needed £6m put in. I agreed that if the club was sold, we would pay them 50 per cent of the upside in the first year; 40 per cent in the second year and so on down to nothing after five years."

Critics of Jimmy Russos felt they were trying to buy the club on the cheap, but he refutes this.

"My aim was to get our money back and put the club on a sounder footing. I have done a really good job. This club will have had four or five rights issues in seven years. That can't be right. Nothing we proposed was taken up or discussed. It took so long to get Lord Ashcroft to the table and then we weren't involved. We could see the writing on the wall.

"The idea was for us to be voted off the board, leave our loan-money in, and have no say in the running of the club, while our shareholding would be reduced by yet another rights issue. That was unacceptable. That happened to us once when Simpson was chairman. We weren't falling for that again."

So we had the December stand-off with, in all probability – and this is critical – both parties knowing that Lord Ashcroft does not "do" administration with any of his companies, and is even less likely to go down that road, given his political affiliations, with an election quivering on the horizon.

I have some sympathy with the Russos, facing the prospect of being ousted, insisting on having their money. Yet the brinkmanship, which so annoyed Taylor, was played out like a game – with the club as a football. That is when they lost their white hats no matter the progress they made towards stabilising the club financially.

So the Russos have their money, as expected the club did not go into administration, and the Russo's £4m worth of shares are likely to be devalued by a rights issue – an issue which will only clear up most but not all of the current mess yet will not address the fact the club is still a loss-making concern.

Can a club of Watford's stature have a plush training ground and an Academy? Can a club that has always sold to survive, afford not to have an Academy conveyor belt? And what will happen if, come September, the club faces another cash crisis.

Twenty years on from when Elton John sold the club and forgot to wipe the loans off the balance sheet, Watford are still chasing their tail financially. And now a man based in Belize all but owns the club; and to what purpose?

One can only hope for a buyer in a white hat to arrive, one who, unlike Lord Ashcroft, is either a devotee of Watford or a lover of the game . . . of football that is!