Chairman's Chat
I WROTE, six weeks ago, that I thought visitors to Home Park would like the first-team football that is on offer. I write this letter just a few hours after a fine 3-0 opening-day victory at Crewe Alexandra. I think that everyone will agree that it was a terrific display of attacking football, not just a perfect result.
“Everyone”, of course, includes the 1,700 members of the Green Army who travelled to Cheshire to make up a third of the crowd at Crewe’s home opener. Thanks for doing so, and thank you in advance for your traveling support in the rest of the season. Ryan is very clear that he looks on the Green Army as providing our team a significant edge over less-well supported teams.
Our home opener against Colchester this Saturday promises to be a wonderful occasion. The first match of the season is always exciting, but this, I think, will be extra special. Jane and I will be there, and look forward to seeing you. Sadly, it will be our last for at least a few weeks, as we have to return to the USA.
More exciting football will also be on offer to those watching Argyle Ladies, who begin their season in the FA Women’s Premier League Southern Division on August 18, away to Crawley Wasps. Their home opener, versus Keynsham Town, will be on September 8.
We are delighted that they will be playing this year at the Manadon Sports Hub, which is managed by Argyle Community Trust. We are very proud of the work the Trust has done in helping to create this asset for the community – already, thousands of people have used the facilities.
I promised, in my last letter, that I would address Argyle’s finances and take another step towards full disclosure of where the money comes from to run the club and where it is spent.
As it happens, we have already taken that step with a presentation at our recent Fans’ Forum by board member Paul Berne (who is also Finance Director at our lead sponsor, Ginsters). That presentation was very well received and will soon be made available to everyone, via the Argyle website. We’ve been a little delayed in getting it out, as we work out the best way to publish it so that the details, as well as Paul’s commentary, are clear and available to everyone.
So, just a few comments from me about finances.
We will move from a December to a June year-end for accounting purposes, consistent with other football clubs. That means we will publish the usual “filleted” balance sheet for December 2018, but complete accounts for the half-year to June 2019, with the first full year of full reporting being to June 2020.
We have not reached our goal of financial sustainability. That goal means we have to be able to fund a competitive first-team and provide the facilities and services that our fans and our position in the community demand – all without relying on shareholders for new funds.
We made a small surplus in 2016-17, but were helped by the FA Cup tie with Liverpool. In the two subsequent seasons, we have had deficits, which have been funded by shareholders.
Those deficits have been made worse by losses of income from hospitality offerings, as we have had to provide those at the Life Centre on match-days, and by extra costs resulting from moving offices temporarily from Home Park to Plumer House. At the same time, our “fortune” income – unbudgeted revenue from e.g. player transfers or cup runs – has been on the low side.
Ticket sales are our biggest source of income, but fans may be surprised to know that they are, at 42%, well under half our total income of about £6m a year.
Money from player transfers, catering, the shop, advertising and sponsorship amount to about 27% of our total income, and the rest (a little over 30%) comes from EFL distributions and grants – from media contracts, “solidarity payments” (from the EPL), Academy subsidies and competitions.
On the other side of the ledger, our costs are dominated by wages, as at most football clubs. Obviously, that includes the first-team, and the first-team management, but also the staff that run the club on a daily basis, and the extra resources required on match-day. Those all add up to about 70% of our costs.
So, outflows other than wages are about £2m a year. We do our best to keep those under control, but they include costs that are unavoidable when running a football team (travel, for example) and a stadium (e.g., rates, utilities, stewarding, safety equipment), or are investments that we think are necessary for the long-term future of the club.
It is important to emphasise this point – cash deficits are partly the results of making investments in single years. The benefits of those investments will be spread over many years.
We also had significant charges this year resulting from the change of first-team leadership.
Overall, costs exceeded revenues last year by well over £1 million.
Our aim in coming years must be to keep those costs under control as far as we can – consistent with the goal of having a competitive first team – but also to increase the money we take in. The investment in the grandstand is a first step – it will increase capacity and the ability to increase the number of tickets sold, but will also enable us to generate income from our biggest asset (the stadium) when not playing football.
Note that nothing goes to directors – they work as volunteers. The only money that will come back to me from the club will be when the loan for the grandstand refurbishment is fully drawn down.
As we have emphasised in the past, that loan is on very favourable terms, repayable over 30 years, at an interest rate of just 2.7%. So far, there has been no interest paid, and no loan repayments.
Note also, that the club, not me, has bought a piece of Higher Home Park. I provided the money, in exchange for shares, and that money will be used to buy an asset for the club.
Finally, despite the losses incurred in the last couple of years, the club is in a secure financial position, providing that we continue to make progress towards sustainability. The share-issue that I referred to in my last letter took place in June, and I invested a further £3m in the club, again in exchange for shares.
That money has funded deficits already incurred and will provide a cushion in case deficits that continue in the current year. It will also provide the cash for a few necessary investments – such as in a better loudspeaker system at Home Park.
That sounds fairly unimportant, but is a clear statement of our unrelenting focus on our fans and their experience at match-days.
As I said, we will soon have the film of the recent Fans’ Forum and video about Paul’s presentation available on our website. I hope you find that an even better introduction to Argyle’s finances than the one that I have outlined in this letter.
We want Argyle to be a club of which you and the whole community is proud, and which even supporters of other clubs are forced to respect. We have made great strides in that direction in the last eight years but want to do even better.
We thank you for your feedback and support.
COYG.
Simon