THE Plymouth Argyle Board of Directors met this afternoon.
It noted the recent social media dialogue regarding the stadium and is pleased to provide the following information, most of which has never been requested from the club by anyone.
Q1: Does the club intend to purchase the freehold of Home Park from Plymouth City Council (‘PCC’) when that option becomes available in October? How much will the freehold cost?
A1: No final decision has been taken, but the Board has unanimously agreed that the buy-back of Home Park is in the interests of Plymouth Argyle Football Club. The cost will be around £1.7m.
Q2: How would the buy-back of Home Park be funded?
A2: It would be funded through the issue of new ordinary shares to existing shareholders. These shares would be irredeemable, i.e. never repayable, and the shareholders do not expect to receive any dividends on them.
Q3: Who has the option to purchase the freehold?
A3: Plymouth Argyle Football Club Limited (‘PAFC’).
Q4: Could PAFC transfer the option to buy the freehold to another party?
A4: PAFC is not interested in transferring the option and therefore has not looked into this possibility. If the option to buy the stadium freehold is exercised, it will be exercised by PAFC.
Q5: Does PCC’s listing of Home Park as an Asset of Community Value earlier this year prevent or delay the exercise of PAFC’s option?
A5: No, it has no impact on the exercise of the option, which existed before the introduction of the legislation.
Q6: Is PAFC buying the freehold the same as James Brent buying the freehold?
A6: No, the benefits of ownership (described below) go to PAFC. James Brent is currently the majority shareholder in PAFC, but there are also significant minority investors. If PAFC buys the freehold, no rent will be payable to James Brent or, indeed, to anyone.
Q7: What happens if the stadium is sold by PAFC to another party who decided to develop Home Park?
A7: When the club was acquired from administration in 2011, PAFC and PCC jointly entered into a perpetual covenant to ensure that Home Park will always remain a sports stadium. Even in the unlikely event of a change in planning, a developer could not develop the stadium for alternative use except with the agreement of both PAFC and PCC.
Q8: The last time that the club owned its own stadium, it went into administration. Could the same scenario occur?
A8: No. The club borrowed money to acquire the stadium in 2006, which was not helpful but accounted for only a small fraction (around 7%) of the club’s debts of more than £20m. Aside from that, your Board would not borrow money to acquire the stadium freehold.
Q9: Who pays for the maintenance of Home Park under PAFC’s current leasing arrangement from PCC?
A9: The lease is a Fully Repairing and Insuring lease. This means that, in common with most commercial, but not residential, leases, PAFC, as tenant – and not PCC, as owner – is responsible for meeting all of maintenance costs associated with Home Park.
Q10: The cost to PAFC of renting Home Park from PCC is £135,000, which is a small percentage of the club’s revenues. Can repurchase therefore be justified in terms of rent saving?
A10: Firstly, the Board does not accept that £135,000 per annum is a modest amount. The financial achievements since exiting administration have been achieved in significant part by very careful management of costs, many a tiny fraction of £135,000 – and £135,000 x 10 is more than the total football budget of most of our competitors. The Board will continue to be parsimonious in the management of costs so that it can ensure the financial sustainability of the club and fully fund the first team.
Secondly, the lease is a 25-year agreement which provides for cumulative rental increases of between 10-20% every five years. The total rent payable over the remaining 20-year period of the lease will be a minimum of £3.4m and a maximum of £4.3m if the club remains in EFL Leagues One or Two. The rent increases substantially if, as the Board is determined to achieve, Argyle get back into the EFL Championship. At the end of the remaining 20 years, the club will not own its stadium and continue to pay rent. The choice is for PAFC to pay around £1.7m now and own its stadium, or pay a minimum of between £3.4m- £4.3m over the next 20 years and still not own the stadium.
Q11: Would the repurchase of the stadium be solely to save rent?
A11: No. The Board believes that this alone is a persuasive argument but it is not the only one. The stadium needs investment, most obviously in the form of a new grandstand. It is much easier to justify investment in your own property, than one owned by a third party.
Q12: How much has PAFC been paying to rent the offices, classrooms, shop and car-park at Higher Home Park?
A12: No rent, or other payments, has been paid to anyone for any of these assets other than rent previously paid to a third party for the rent of Portakabins. No rent, or other payments, is contemplated.
Q13: If a buy-back of the stadium is such a good deal for the club, why have supporters’ groups come out against it?
A13: The Board appreciates that some supporters have reservations about the buy-back of the stadium and believes that some of these reservations have come about because a lack of information regarding the club’s plans, which the Board seeks to address in this statement and going forward. However, to the Board’s understanding, no supporters’ group has come out against the buy-back. Indeed, an independent survey this summer of more than 1,100 fans, supported by the Argyle Fans’ Trust, showed a majority of fans that responded supported the buy-back and less than a third supported continued public ownership.
Q1: What is the club’s turnover?
A1: The club’s turnover in 2015-16 was £6m. This represents an increase of 15.6% per annum over the last four years.
Q2: Has the club made a surplus?
A2: In 2015-16, the club generated a satisfactory and improved surplus of around £800,000, all of which has been spent on the team, or invested in the club, or used to repay third party loans.
Q3: Was the £800,000 loan from Plymouth City Council two years ago to ‘bail out’ the club?
A3: No. The loan was taken out to pay amounts due to some previous football creditors early. It benefited those creditors who wanted their money before it fell due, and benefited the club in the shape of an early-payment discount. Around £600,000 of the loan was utilised and around £380,000 remains outstanding, the balance having been repaid, together with interest at a commercial rate.
Q4: Is the club being run to increase its value?
A4: Absolutely. A successful and well run club is worth more than an unsuccessful, poorly run, one. However, this is a consequence of the Board’s main focus which is to produce a successful team over the long run, on a sustainable basis. The Board wants success for Argyle, not failure!
Q1: When is the next supporters meeting proposed and where?
A1: 10.30am on Saturday, September 24, 2016 in the Green Taverners Suite at Home Park. Fans that are unable to attend will be able to email questions to firstname.lastname@example.org. Please provide your questions by email by 5pm on September 21, writing ‘Fans’ Forum Question’ in the subject box, and provide your name. As always, the meeting will be recorded and made available on the official club website – www.pafc.co.uk – and plans are being explored to stream it live.
Q1: The club has been criticised for lacking transparency. Is this fair?
A1: Your Board is committed to engaging with fans in an open and transparent manner, with regard to commercial sensitivities. We will endeavour to maintain and improve this.