In a statement forming part of the company's year-end results, club chairman Sir Elton John said the stand would "provide facilities that... will generate additional revenue streams for the company."
He added that the new East Stand would be funded through loans and a range of commercial packages currently being considered by Watford Leisure's commercial team.
Since the year-end, Watford Leisure has also signed new football club sponsorship agreements with Toshiba and Total. Details of the terms were not disclosed.
The club, which is currently struggling in the First Division under its high-profile manager Gianluca Vialli, reported a pre-tax loss for the year of £5.42 ($8m/B8.7m) compared to a profit of £3.75m ($5.5m/B6m) the previous year when the club were relegated from the Premier League.
The loss was made on sales of £9.78m (14.4m/B15.75m) compared to £16.80m ($24.8m/B27m) the previous year.
