Spot on boc. I was just going to say much the same thing.
Deeney spoke at length about his decision last summer to stay at Watford rather than sign for the (then) Champions. He incorrectly rationalised it as 'how could he improve us?'. He was put under immense pressure from the club and fans to stay and did the honourable thing.
I'd argue that the last 12 months have shown him exactly how he can improve us and exactly that he made the wrong call a year ago and he probably knows it better than anyone. Just like I expect Mahrez now thinks he did both the honourable thing last summer and the wrong thing for his career.
Deeney's last season was one where he fell out with their manager (one of many by the way) and lost his way. Similar has happened to loads of players - Vardy in his first season at Leicester, Drinkwater last season or in the play off season, Fuchs last season, etc, etc. It doesn't mean that player is finished or useless.
In fact, I'd argue that signing Deeney now is the best possible timing for us. He'll be more determined to do well than ever if he joins us.