Scott Duxbury responds to rumors Watford had taken a bank loan

Concerns that Watford had taken out another loan when paperwork connected with Macquarie Bank surfaced online should be allayed after chairman Scott Duxbury explained this was a process called a ‘sales discount’.

“It’s a common tool used by pretty much every club,” he said.

“It relates to the sale of a player: we agreed to a total fee payable in three installments: for example €2m now, €2m next year and €2m the year after. Like most clubs, ideally we wanted all the money right now.

“So a bank like Macquarie Bank will give you the full €6m and charge a modest interest rate for doing so.

“The bank pay us the total transfer fee we are due up front, and they take the facilities from the buying club and charge the seller – in this case us – a modest amount of interest.

“And interest is only charged on the amounts you ‘discount’, so from the example I gave the €2m received up front isn’t liable for interest.

“In some cases, you negotiate a deal where the buying club also pays the interest. They aren’t paying you the full sum up front so they pay the interest. In those cases, the selling club actually get their full transfer fee and don’t pay any interest at all.”

The Hornets chairman gave another example of where Watford had been the buyers, rather than the sellers.

“When we bought Will Hughes from Derby, they wanted all their money upfront,” I explained.

“I said no, we couldn’t do that, but if they were prepared to accept payments in installations, we would pay the interest on the discounting costs.

“They agreed, they got their money in one lump up front. We have done transfers in both directions, in and out, where we’ve used discounting.”

There is certainly no attempt to hide the arrangement, and Duxbury was at pains to explain the sales discount is prevalent throughout football across the world.

“I have tried to explain this at fans forums in the past, and I’m happy to explain it again,” he said.

“I’d say nearly every football club in the world uses this method because when they sell a player they want the full amount right now. It’s very rare these days that a transfer fee is paid in one installation up front.

“If there is any risk, it’s taken by the bank. If the buying club defaults on its payments, the bank goes after them, not the selling club.”

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