Watford’s Supporters’ Trust has urged the club to answer questions around its current financial position in the light of this week’s digital equity release, while football finance expert Kieran Maguire says he thinks the Hornets have been “disingenuous” in some of the claims made in their investment pitch.

On Tuesday, Watford announced that fans and investors alike could take part in the purchase of 10% of digital equity shares in the club, at a share price of £12.44 which valued the entire club at £175m.

However, while there are perks on offer for various levels of investment, these Class B shares come with no voting rights or any other path to have input into the club.

That is something at the heart of the statement released by the Supporters’ Trust this morning.

“While some supporters may view this as a way to help the club meets its immediate financial needs, the Trust have questions about the nature of the appeal for investment and the wider implications to our club’s financial stability, particularly as we are aware that other attempts to secure investment from third parties have broken down,” it said.

“While the shares could increase in price if the club returns to a period of stable success, the immediate concern is that they do not provide any tangible benefits such as voting rights in AGMs or basic levels of consultation by or input to the board.

“As such the owner will be entitled to use all finance raised however he sees fit, without any consultation with or recourse to those who have invested.

“We retain the belief that fans who make a financial investment in the club should be entitled to some form of input or engagement about how their money will be used.”

In their online pitch when launching the share issue, the club talk about “pre-tax profit of £24.1m in 2022/23 season believed to be highest ever at the Championship level”.

While that is an accurate figure, the Trust point out in their statement it was a figure that included the sale of Joao Pedro for some £30m.

“While the club showed a substantial pre-tax profit in 2022/23 which was driven by player sales, we have a number of significant questions about the rationale and timing for this appeal for cash injection,” said the Trust in their statement.

“Along with fans and other supporter organisations, we enjoyed a few hours of dialogue with the owner last summer. There has been no subsequent engagement, including on financial matters.

“We strongly encourage the club to provide more detail on its current financial status in 2023/23, what has prompted the share sale now, and specifically how funds will be allocated against business needs.

“We have contacted the club on these matters and will advise our members of any forthcoming response.”

In response to the statement, Watford FC have written to the Trust and said the following: “Firstly, the club would stress – as we did in our literature to fans and media alike – this is not ‘rescue capital’.

“The club has budgeted for the forthcoming season, and we believe it will allow Tom Cleverley and his squad to be more than competitive in the Championship with a return to the Premier League being the ultimate priority.

“In recent years, we have had discussions with potential investors to help strengthen the club yet, for a variety of reasons, these talks have never materialised into concrete investment.

“The door is certainly not closed to these discussions, but the club felt there were other avenues to explore.

“One of the most innovative is the offer of digital equity which, if tokenised, allows investors to trade on a regulated market and receive a variety of perks surrounding matchday experience and beyond, dependent on the level of investment.

“We were adamant this would not be a cryptocurrency only offering. We wanted it to be as straightforward as possible with the ability to explain it in absolute layman’s terms. This was the reason behind the letter to fans and the comprehensive Q&As available on the club website.

“Because it is an open process, fans are eligible to buy shares. What we would stress, however, is that supporter investment was never the primary motivation.

“Such a scheme should always be aimed largely at institutional investors, high net worth individuals and/or family offices.

“At no stage would we ever suggest there was an obligation for supporters to invest, it is an opportunity only.

“The end goal is to strengthen the financial position of the club so we can achieve on field success, not to prop it up. The scheme also sets a strong value and profile for the club while opening up channels to traditional and non-traditional investors that have not previously been explored.

“These are very early days in the process with at least several weeks of potential investment ahead. At the end of the timeframe, we will take stock and assess the success of it.

“In the meantime, any capital raised will strengthen revenue streams and allows the club to invest in the ambition of a return to the Premier League.”

Meanwhile, on his ‘The Price of Football’ podcast on Thursday morning, Maguire talked at some length about the both the £175m valuation the club has placed upon itself and also questioned another claim in the share pitch, which says Watford have achieved ‘239% commercial revenue growth over five seasons, the highest of any European football club’.

“What they (Watford) have done is put up 10% of the company, or issue 10% of new shares, with the aim of raising £17.5m, which values Watford’s shares at £175m. If you add on the £110m of net debt that they’ve got on top of that, it values the whole business at £285m,” said Maguire.

“I’m going ‘I like Watford, they do a lot of good work in their community, but I never had the words Watford and £285m value in my locker before’.”

Maguire, who is regularly used by TV, radio and written media as an expert on football finance, went on to question the legitimacy of some of the figures Watford have cited in the pitch to potential investors.

“Things started, in my view, to get very, very disingenuous. If you go onto the Seedrs website – and Seedrs is the platform through which the shares are going to be sold – they say ‘the club had a 239% increase in commercial income between 2018 and 2023’,” he said on his podcast.

“You look at that and you go ‘that’s impressive’.

“And then you say to yourself ‘hold on, haven’t Watford published their 2023 accounts’. So I go to their 2023 accounts and I find that between 2018 and 2022 commercial income has not increased by 239%, it has in fact fallen by 8%.

“You’re trying to sell something so you’re going to, a bit like a greengrocer, put your best apples and bananas out the front of the store. But this is being marketed as investment and this is the kind of thing I don’t like.

“Then it says Watford made the highest profit in the Championship in 22/23, and they’re absolutely right. They made a profit of £24m, but £59m of their £24m profit came from player sales.

“Are Watford going to sell players every season at a profit of £59m? I suspect not. If they were able to do that they’d probably be going back to the Premier League because their players must be that good.

“Then I’m looking at Companies House and Watford have taken out 10 loan agreements in the last two years, so does this therefore mean that lenders have said to Watford ‘we’ve given you enough’, and therefore they’re now going to perhaps try to generate money from fans and investors? I don’t know is the simple answer to that.

"I don’t think the club has been particularly fair in the way they have represented this sale.”

Watford FC declined to comment on the remarks made by Keiran Maguire.