What would winning the Championship play-off final mean to Watford? Supposedly £120m.

A victory for the Hornets against Crystal Palace at Wembley on Monday would secure Watford’s place in the lucrative Premier League next season.

Promotion to the top flight of English football has always been financially rewarding, with clubs receiving millions of pounds through TV money and increased sponsorship.

Next season the benefits of reaching the Premier League will be greater than ever before. The Premier League, for the next three years, will be paid £1 billion a season for the domestic TV rights from Sky and BT.

The Founder Members’ Agreement of the Premier League rules state 50 per cent of the domestic broadcast revenue and all international revenue is equally split between the top flight’s 20 clubs.

Should Watford go up they can expect a revenue increase of around £60m of which £55m would be from broadcast income alone, according to Adam Bull, a senior consultant in Deloitte’s Sports Business.

Since its formation in 1992, the television income, assuming overseas rights are sold for more than £2 billion, received by the Premier League has increased by 3,300 per cent.

For less wealthy Premier League clubs the TV money is crucial to their survival.

In the 2010/2011 season television income made up 70 per cent or more of the revenue at West Bromwich Albion, Wigan Athletic, Blackburn Rovers and Bolton Wanderers.

Three of those clubs have been relegated since that season but have been cushioned by parachute payments.

Should the Hornets secure promotion but then suffer an immediate return to the Championship they will also receive parachute payments over the next four seasons of around £60m – an increase of 25 per cent on the current payments.

Prizes for staying in the Premier League are even higher. It is not only the football club that benefits from promotion.

Studies have shown the town of a promoted side is also boosted by promotion. Swansea City’s first season in the Premier League generated an estimated £55.3m for the town according to a Cardiff University study.

Given the financial incentives, is it any wonder clubs overspend in an attempt to remain in the top flight? Fans want their side to compete.

That’s entirely understandable. But it can come at a price. Nine clubs have gone into administration within five years of being relegated from the Premier League. Not even the parachute payments have helped clubs avoid administration.

Should Watford achieve promotion their wage bill will inevitably rise. Several of the loanees from Udinese and Granada are likely to sign permanently deals at Vicarage Road and it is probable the Hornets would look to further bolster their squad.

A careful balance has to be struck though. If a club overspends on wages in the Premier League and then suffers relegation, cuts will need to be made.

The season Queens Park Rangers were promoted from the Championship, they were paying £28.7m in wages.

Their turnover that season was £16.2m which resulted in a wages to turnover ratio of 183 per cent. During their first season in the Premier League (2011/2012) the Hoops’ wage bill rose to £58.4m but the wages to turnover ratio dropped to 91 per cent.

Last summer, and in January, Rangers spent heavily on new players and paid even higher wages. Defender Christopher Samba reportedly receives £100,000 a week.

But Rangers were relegated from the Premier League this season. The club’s owner, Tony Fernandes, has said 60 per cent of the playing squad have relegation clauses in their contracts, as does QPR manager Harry Redknapp. 

However, player sales are still likely to occur. Fernandes has identified Loftus Road, which has a capacity of less than 19,000, as a problem.

Promotion to the Premier League inevitably leads to increased attendances – QPR’s average attendance rose by more than 2,000 during the two seasons they played in the top flight.

Watford’s average attendance the last time they were in the Premier League was just short of 19,000.

Vicarage Road’s current capacity is around 17,000 but Watford chief executive Scott Duxbury has stated in the past the East Stand “will be built” should the Hornets reach the top flight.

That would ensure further revenue for the club that will hope to establish itself in the Premier League.

Given the Pozzo’s record with Udinese and Granada, it is unlikely Watford will break the bank should the club reach the Premier League. The first step though is beating Crystal Palace on Monday.

  • Some of the information in this piece was sourced from The Swiss Ramble and The Independent.