Cash-strapped Watford Leisure has managed to raise £6 million, and could pull in a further £3 million, but a dispute with high-profile former manager Gianluca Vialli over lost wages could still cause problems for the football club. Ben Cobley reports.

At the end of last season former Italian World Cup hero Vialli left Watford along with four coaching colleagues, all of whom have already agreed settlements with the club. However the ex-Chelsea manager, who failed to win promotion for Watford from the First Division, is still in dispute about the wages he lost from being made redundant.

Attempts are being made to reach agreement with Vialli, whom Watford chairman Graham Simpson has admitted 'we couldn't afford', but 'litigation is a possibility' says the club. A spokesman, who said Vialli is 'loaded', lamented that 'obviously greed sometimes has no end'.

Meanwhile financial adviser Strand Partners has arranged the firm placing of four billion Watford shares with directors and other investors, to raise just under £6 million at 0.15p per share. Former chairman Sir Elton John has not subscribed.

The general public can also apply for two billion more shares via an Open Offer at the same price. If fully taken up this would bring the maximum proceeds to just under £9 million. Expenses come in at £150,000.

The club needs the money to avert the threat of administration following the failure of Vialli's squad to achieve promotion to the Premiership and the collapse of ITV Digital, which resulted in the loss of nearly £3 million of potential annual revenue in the form of TV payments.

Watford's financial crisis is exacerbated by the expiry of its entitlement to Premiership 'parachute' payments. These contributed £6.1 million to the top line last year. Given that the club made increased losses of £7.2 million in the year to June, BSkyB's newly-agreed TV deal with the Nationwide League – expected to bring in around £800,000 of yearly revenue to Watford – is clearly not enough to replace this.

Various directors were even moved to advance unsecured, interest-free loans worth £600,000 back in June to help out with immediate working capital requirements. The club also sold back the freehold of its Vicarage Road stadium for £6 million in July and is cutting costs further.

Watford's spokesman says 'the important thing is that we have secured funding that is going to save us,' adding that 'I bet many other clubs would love to be able to do this.' Investors who fancy topping up Watford's war chest have until 11 December.

The club's shares today remained stable at 0.22p, close to their all-time low.