Watford Leisure, the company that owns Watford football club, has reported a sharp increase in losses for the second half of 2010.
Pre-tax losses for the six-month period came in at £2.5m compared with a loss of £172,000 a year earlier, despite a small rise in revenue to £5.4m.
The company said the loss was due in large part to the fact that no players were sold during the period.
Watford football club is currently the subject of a £440,000 buy-out offer.
The bid was tabled earlier this month by Watford Football Club, a company set up specifically to buy the club by surgeon Panos Thomas and backed by entrepreneur Laurence Bassini.
Watford Supporters' Trust has said it is not against the offer, but has expressed concern about minority shareholders losing money if the deal goes ahead.
Watford Leisure said that it needed to sell players in order to keep the business sustainable.
"It should be no surprise to anyone to read that our half-year figures state a deficit," said chairman Graham Taylor.
"Our focus on ensuring we remain true to our business plan means that failure to trade in either [summer or January transfer] window inevitably leads to the need for a working capital injection from alternative sources."
He said this injection would have to amount to about £3.5m this year.
Match day revenue fell £42,000 to £2m, while season ticket sales fell by 1,500, resulting in a £49,000 drop in revenue - less than would have been the case had it not been for a "restructuring of the [season ticket] pricing model".
Media revenue increased by £324,500 to £2.6m.
Watford FC are currently lying in ninth place in the Championship, four points behind the play-off places.