Watford heading for administration

English second division side Watford moved closer to administration on Thursday after their former chairman demanded immediate repayment of a multi-million pound loan.

Valley Grown Salads, a company owned by former club chairman Jimmy Russo, want a loan to the cash-strapped Championship side of 4.88 million pounds repaid in full “immediately”, according to a statement issued Thursday.

Watford added that if no agreement was forthcoming, the club’s parent company – trading in whose shares was suspended on Wednesday – would be put into administration.

Under Football League rules designed to encourage sound financial management of clubs, Watford risk a deduction of 10 points if they go into administration.

Watford currently lie tenth in the Championship — one tier below the Premier League — on 30 points. A drop to 20 points would see the club slip to fourth-bottom in its division, one place above the relegation zone.

The club want to raise 7.5 million pounds from existing shareholders, with the aim of paying off the loan and partly clearing a projected cash shortfall to June 2010 of 5.5 million pounds.

A Watford statement added: “In the event that no agreement can be reached with Valley Grown Salads then the company will have to be placed in administration. The company’s shares remain suspended.”

Watford also announced Thursday that former manager Graham Taylor had been appointed as interim chairman with immediate effect.

Russo, his brother Vince and their fellow director Robin Wright all quit the board of the club’s parent company, Watford Leisure, on Wednesday.

Watford’s most famous fan is pop legend Sir Elton John, who owned the club during its most successful era that spanned the late 1970s and most of the 1980s.

Under the guidance of Taylor, who went on to manage the England national team, Watford rose from division four obscurity to finish second behind Liverpool during its first ever season in the top tier of English football.

A year later, in 1984, the Hornets reached the FA Cup final, losing 2-0 to Everton.