Argyle do well off the pitch

Plymouth Argyle’s 2023/24 financial results cover their return to the Championship for the first time since 2010, following the previous year’s promotion from League One.

Argyle have come a long way since they entered administration in 2011, when the club was deducted 10 points, leading to relegation to League Two, where they only just avoided dropping out of the football league.

James Brent bought the club, took it out of administration and steadied the ship. He then stepped aside in 2018, allowing Simon Hallett to became the majority shareholder before taking on the role of chairman.

Hallett’s arrival was not enough to prevent another relegation to the fourth tier, but the club has made excellent progress since then. Argyle bounced back to League One at the first attempt and have steadily improved, leading to promotion back to the Championship after 13 long years away.

Following promotion, Argyle’s pre-tax loss narrowed from £3.4m to £2.4m, as revenue shot up by £10.9m (74%) from £14.7 to a club record £25.6m, though this was largely offset by the “increased operating costs of competing in the Championship”.

As a result, expenses rose £10.7m (58%) from £18.6m to £29.3m, including the financial impact of the various changes in coaching staff. The previous season had featured once-off costs triggered by promotion, but 2023/24 would have included survival bonuses.

Balanced revemue

The main driver of Argyle’s revenue growth was broadcasting, thanks to the higher TV deal in the Championship, which led to income more than tripling from £3.0m to £10.6m. However, there was also good growth elsewhere, as commercial rose £2.5m (34%) from £7.1m to £9.6m, while match day was up £0.9m (20%) from £4.6m to £5.5m.  Consequently, the club established new records for all three revenue streams.

Argyle’s revenue has almost quadrupled in the last four years from £7.0m in 2019/20 to the club’s all-time high of £25.6m, with all three revenue streams showing good growth. Broadcasting led the way, rising £9.2m from £1.4m to £10.6m, but there were also noteworthy increases in commercial, up £6.6m from £3.0m to £9.6m, and match day, up £2.8m from £2.7m to £5.5m.

As a result, the club has a reasonably balanced mix of revenue streams. Broadcasting is the most important with 41%, but this is closely followed by commercial 38%, then match day 21%.   Argyle were within striking distance of the highest earning clubs without parachute payments, such as Bristol City £37m, Sunderland £36m and Stoke City £31m.

Although it’s never great to lose money, Argyle’s £2.4m pre-tax loss is extremely good for the ultra-competitive Championship, where no fewer than six clubs lost more than £20m in 2022/23, namely Burnley £36m, Sheffield United £31m, Birmingham City £25m, Bristol City £22m, Blackburn Rovers £21m and QPR £20m.

Although Argyle’s losses are very small compared to the vast majority of football clubs, they have widened in the last two years to £2.4m and £3.4m, though the latter included some once-off costs linked to promotion.

Argyle’s average attendance increased from 15,582 to 16,507 following promotion, as they sold out every league game. This has risen by around 60% in four years from 10,338, boosted by the team’s improving fortunes on the pitch.   However, even after this notable growth, Argyle’s 16,507 attendance was still one of the smallest in the Championship, miles below Sunderland 41,028, Leeds United 35,989 and Leicester City 31,238 in 2023/24.

Stadium

The club has commissioned a master planning exercise “to optimise facilities in and around the stadium at Home Park”.

Hallett said, “We think that by spending quite a lot of money we can increase capacity to about 22,000. Part of our investment opportunity is not just to spend money on the first team, it's to continue to build the infrastructure in a way that generates not just higher quality facilities for the first team, but also generates revenue.”

The owner added, “Clearly, we are losing a competitive edge by having a stadium in the Championship that only seats 17,000. It's very much at the lower end of Championship capacities.”

The most impressive growth came in hospitality and venue income, which rose £1.5m (345%) from £3.3m to £4.8m. This has massively increased following the development of the Mayflower Grandstand, as match days sold out, while there was strong demand for conferencing and banqueting facilities.

Home Park has become the venue of choice for concerts and events in the South West of England, as shown by selling 25,000 tickets for a Take That concert last June.

An important element in Argyle’s long-term vision is the development at the Brickfields Sports Centre, which the club said would provide superb facilities for the ambitious youth academy and a permanent new home for the women’s team, adding that it underscores the commitment to nurturing future talent.

Wages

Following promotion, Argyle’s wages rose £7.8m (85%) from £9.1m to £16.9m, as the club needed to pay more to be competitive in the higher division. The underlying growth was probably even more, as the previous season included bonuses and other contingent payments linked to promotion.  This means that the wage bill has more than tripled in just three years from just £4.8m in 2020/21.

Even after this steep growth, Argyle’s £16.9m wage bill was still one of the lowest in the Championship. The only clubs to pay less than them in 2022/23 were Blackpool and Rotherham United, so it’s not a huge surprise that Argyle are battling it out at the wrong end of the table.

Argyle’s 66% is actually the lowest (best) wages to turnover ratio in the Championship, ahead of Rotherham United 66%, Norwich City 71% and Sunderland 72%. This is an incredibly good result, given that many of the clubs in this very competitive division have unsustainable ratios well above 100%.

Argyle’s other expenses were nearly a third higher, rising by £2.4m from £7.7m to £10.1m, mainly due to inflationary pressures on services and utilities, allied with costs related to revenue generating activities, such as retail, hospitality and staging concerts at Home Park.   With the total staff headcount up to nearly 500, the increase in employers’ national insurance scheduled for April will have an impact.

Argyle did not exactly push the boat out this summer, as they spent just £1.8m on player purchases, which was the second lowest in the Championship, only above newly promoted Oxford United. To place this into context, four clubs invested £20m or more: Burnley £43m, Leeds United £27m, Hull City £25m and Norwich city £20m.

As a result of last season’s recruitment, Argyle’s squad cost (per the accounts) surged from £1.1m to £4.0m, though this was again on the low side for the Championship.  In fact, the only clubs with a lower squad costs in 2022/23 were Blackpool, Wigan Athletic and Rotherham United. Argyle supporters will be uncomfortable with this comparison, as all three of them have since been relegated to League One.

In the last six years, the majority of Argyle’s £30m available cash has also mainly come from their owners with £24.0m, though they also generated £5.6m from the club’s operations.   Even though Argyle have benefited from money from their shareholders, other clubs have received significantly more from their owners, e.g. in the three years up to 2022/23 Cardiff City and QPR got £87m and £68m respectively.

The club believes that more needs to be done to “help us towards our mission”, which basically means additional external investment.   Indeed, a potential partner has already been identified with discussions around approval ongoing with the EFL. The club said that it was a pre-requisite that any new investor would have to be fully aligned with Argyle’s well-established vision and values.

Wayne Rooney

A low budget in football often presents challenges on the pitch, which helps explain why Argyle currently find themselves in the relegation zone. As Hallett said, “Our ambitions are essentially to compete in the top half of the Championship and at the moment we are competing in the bottom half of the Championship.”

Manager Wayne Rooney has received the dreaded vote of confidence, though director of football Neil Dewsnip said, “He’s desperate to help Argyle to be successful. Success is staying in the league, doing a little bit better than that if we can.”  My personal view is that Rooney does not have a great track record as a manager and was the wrong fit for Argyle.

Investing more money in the squad might help in the short-term, though it is equally understandable that Argyle are focused on sustainability, as it’s not so long ago that the club was in administration.

Seventy years ago I was returning from an Easter weekend in Cornwall.   The train stopped in Liskeard and my father noticed a number of Argyle fans getting on.   Ever since I have had a soft spot for Argyle, reinforced by the work they have done on the Isles of Scilly.   I hope they stay up and continue to develop.   Green Army!