Watford boss Adrian Boothroyd insists his club are in a healthier state than ever - despite their relegation from the Barclays Premiership.

The Hornets face Newcastle at Vicarage Road on Sunday in their final Premiership fixture of the campaign, but they were condemned to an instant return to the Coca-Cola Championship when they could manage only a 1-1 draw at home to Manchester City late last month.

But Boothroyd's men will benefit from the 'parachute' payment - of about £11million and granted to clubs in their first two years after relegation from the top flight - and the club also have a substantial chunk of the £9.65million Aston Villa agreed to pay them to sign Ashley Young in January.

"We are in a stronger place than ever before, even though we have been relegated," Boothroyd said.

"There is money there to spend.

"I haven't asked the chairman or the board for a figure, because it may be that I turn out to want more than I ask for.

"I will keep my powder dry and keep going back. It is about being prudent but ambitious at the same time, and balancing the two."

Boothroyd's team will be one of the favourites to make an immediate return from the Coca-Cola Championship, and the Watford manager has already begun to identify his summer transfer targets.

Crystal Palace winger Jobi McAnuff and West Ham defender James Collins have been frequently linked, along with Norwich striker Robert Earnshaw.

But Boothroyd is also keen to sign the kind of players who can handle the relentless struggle which characterises the Championship.

Boothroyd continued: "We need experienced guys who can cope with the grind of the 46-game season, and we also need young talent.

"It is very difficult to bounce back straight away. We are in a stronger place than ever before, but there is also a level of expectation."