While much focus has been on the foot of the Premier League, with the continuing financial travails of relegated Hull and Portsmouth and damn-near relegated West Ham, the foot of the Championship has seen its own three-horse mini-race to financial oblivion. Damn-near relegated Crystal Palace remain favourites, despite a late run from relegated Sheffield Wednesday who have had a week of internal warfare to match anything that clubs such as Southampton and Liverpool could offer. And Watford are now bringing up the rear, “saved” from administration by major shareholder Lord Michael Ashcroft, who has put the club on the road to recovery. For 364 days at least.

When this column last looked at Watford’s off-field problems, club legend Graham Taylor was busy muttering “do I not like that” at the boardroom politics of the club, particularly those of chairman Jimmy Russo and his brother Vinny. The Russo brothers have been long-standing financial supporters of the club and major club shareholders (29%) and equally long-standing sources and focuses of antagonism. It was this mix which led to Watford Leisure’s farcical AGM just before last Christmas. The Russos had, via their “Valley Green Salads” company, kept Watford going throughout 2009 with a series of loans so frequent they were given their own names (“the January Loan”, “the July Loan,” “the August Loan,” and so on).  By December, these had totalled £4.93m. But their Christmas present for all this financial backing was to be the sack at the AGM, as former club chairman and pantomime villain Graham Simpson joined forces with senior club shareholder, the afore-mentioned Ashcroft, to oust them from the board.

The Russos knew what was coming and resigned, demanding immediate repayment of their loans, as was their right, in the knowledge that Watford Leisure couldn’t pay and could therefore be forced into administration. Faced with this prospect, the multi-mega-rich Ashcroft paid off the bullish brothers, and offered to take their place as benefactor until such time as a rights issue could be organised to deal with Watford’s on-going £8m-ish debts. Taylor, watching on aghast with his non-executive director’s hat on, offered to replace Jimmy Russo as chairman, to bring “normality” to proceedings and on the understanding that he could meet with Ashcroft to confirm the good Lord’s intentions.

He called Russo a “bad man” for playing brinkmanship with the club’s very future, not the most conciliatory start to his chairmanship. But the club survived and, this week, the “rights issue” was voted through by shareholders, including the previously warring Russos, Simpson and Ashcroft, making Watford’s future as bright as their yellow shirts. Well, sort of. A closer look at Watford reveals a club still reliant on outside benefactors, still making day-to-day losses despite a year and a bit of often swingeing cost-cutting and still openly admitting that they need regular transfer window profits in order to survive. All that appears to have changed between 2009 and 2010 is the name above the door, which makes the inter-necine rivalry between the “Russo” and “Ashcroft/Simpson” camps both pointless and missing the point.

Watford fans have argued endlessly about the Russos’ motivation, accusing them of milking the club through excessive interest rates on their loans and even not caring if the club went under, so long as they got their money. And they’re Chelsea fans, anyway. Others have argued endlessly about Ashcroft’s real motivation for getting involved in football at all, given that, like most upper-echelon Tories, he watches it with a peg on his toffy-nose. And he’s a minor Spurs shareholder anyway. And one source argues endlessly that club Chief Executive Julian Winter has been the saviour throughout. However, that source is club Chief Executive Julian Winter.

The Russos took over from Simpson and the equally-reviled Mark Ashton, chairman and Chief Executive respectively while the current debts were racked up. The brothers were particularly popular for refusing to give Ashton a pay-off after he resigned – the accounts noting that “a provision (in the accounts to December 2008) relating to a claim made by Mark Ashton…was subsequently not used.” The unaudited interim accounts to December 2009 also noted that “the club has been operating as a going concern thanks largely to the valuable financial support received from its major shareholders and directors,” including the Russos.

Despite that, their “combative” management style, combined with a sense that they didn’t have the big money the club required, led to their ousting. The December 2009 accounts added, however, that shareholders and directors’ support “will most likely continue to be required until our costs can be further brought in line with revenues,” which is how things have panned out. The Russos’ brinkmanship was designed to bring Ashcroft and his money to the Watford table, after years where the good Lord had very definitely been a Watford FC “non-domicile.” Respected observers noted that Ashcroft “doesn’t do administration” and that the Russos weren’t really endangering the club’s very future. Jimmy Russo claimed he knew what he was doing all along: “The steps I have taken recently have ensured that the club’s major shareholder has now injected new funds, we knew it would be right for the club.”

But it was very difficult for committed men such as Taylor to see that, through their genuine fears for Watford’s future. And Taylor failed to understand that Russo wasn’t about to go yet leave his company’s money behind. Either way, Ashcroft, via his company Fordwat which owns 37.16% of Watford Leisure, stepped in to “take over” the brothers’ loans, now consolidated into one big loan, just like in those ads. He also agreed to “underwrite a rights issue” to the tune of £7.5m, a figure adjacent enough to Watford’s on-running debts to garner general support, and further agreed to loan Watford more cash until the end of January “to assist with working capital requirements” (trans: keep the club alive).

Since then, the story of Watford’s finances has been an almost frame-by-frame remake of last year. The 2010 “January Loan” didn’t, as it turned out, come from Ashcroft, but instead from non-executive director David Fransen, the MD of “energy company Vitol SA.” Watford were already the beneficiaries of Fransen’s generosity for two million quid-and-a-bit. And he added £500,000 to that total, with interest charged at 3.5% above “the base rate from time-to-time of Barclays Bank” – compared to the “Barclays bank base rate plus 3.5% per annum” which the Russos had charged, to booing from many Watford fans.

The club already knew that they’d be into Ashcroft for more cash by the end of February, as they were among the 80% of humanity known as “Portsmouth creditors.”  Winter reassured everyone that Pompey were up-to-date with past payments for the Watford players they’d bought in August, but he was in no position to guarantee the future. Meanwhile, the “rights issue” was earmarked to “start by March.” And Taylor claimed Ashcroft would do “what is right for the club”, without letting on what that would be. After meeting Ashcroft, Taylor said, correctly, that “people want to know what questions I asked and what he answered.” People, however, weren’t about to find out: “Why have meetings with people if you then come straight out and deliver everything into the public domain?” he asked, answering his own question.

He did, though, let slip that Ashcroft wanted to sell his shares, which was probably a relief to some Watford fans. “All I would say,” Taylor concluded, “is that he was very clear with what he would like to happen and that he has been open and honest.” Which suggested that either Taylor hadn’t read the newspapers that week, which were full of stories about Ashcroft’s alternative views on paying tax, or that he thought the Tory deputy chairman was a different Lord Ashcroft entirely. The rights issue’s target date of “end of February” mutated into “end of the season.” But Ashcroft lent Watford another cool million in March (at 4.5% above Barclays “time-to-time” base rate, Russo fans may have noted, darkly), so the delays weren’t a financial worry.

What eventually appeared wasn’t a full rights issue – Watford have had their fill of them over the years. Instead, the club issued “secured bonds with detachable warrants…to the value of approximately £10.142m” to all existing holders of more than 0.5% of the shares of Watford Leisure. The financial complexities of the bond issue didn’t stop it being some hundreds of thousands of pounds cheaper than a rights issue. It has effectively given Watford a year to pay back its main creditors, who have swapped their debts for these secured “364-day” bonds, and given the club those 364 days to find a new owner. And, significantly, although lengthy discussions helped delay the issue, they brought the agreement of all the substantial shareholders, which gave the proposal the 75% shareholder support required and avoided another messy EGM – a formal EGM was still required but it only took about six minutes.

Thus Watford are at a crossroads. The breathing space afforded by the rights issue gives the club a chance to operate as a going concern without regular recourse to loans from major shareholders. It’s a chance they must take. The now irrelevant “he said, she said” shenanigans of recent times are history. More significant is the “directors’ acknowledgement” in the accounts that “the club, similar to many other Championship clubs, will be likely to continue making operating losses.” And until that is history too, Watford and others are going to struggle to survive. Watford have 364 days to make that history.