Watford will be forced to reconsider developments to Vicarage Road after seeing their pre-tax profits cut by £7.6 million.

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The annual accounts of the Hornets' parent company, Watford Leisure plc, were released by the Stock Exchange on Tuesday and revealed the cost of failing to regain Premier League status.

The yearly figures showed a reduction in pre-tax profits from £8m to £400,000, while revenue was down from £29.9m to £22.4m.

The club has planning permission for a new 5,000-seat East Stand, but chairman Graham Simpson said a change of plan may be necessary.

"Given the current financial constraints, we are reviewing our options for the East Stand and considering an alternative structure which would be cheaper to build," he told the Watford Observer.

Chief executive Mark Ashton added: "With our parachute payments coming to an end in June 2009, we have to walk a tightrope of balancing the ever increasing demands of fielding a competitive Championship football team with financial reality."