Football Management

Commentary on the management of over 160 English football clubs by Dr John Beech, winner of the FSF Writer of the Year Award 2009/10 Twitter: @JohnBeech Curator of! Football Finance

Lessons from Plymouth

Posted by John Beech on January 3, 2011

The car crash that Plymouth Argyle is on the verge of turning into is a strange case, yet many a club might well think that there but for the grace of god go they.

At the beginning of the nineties Dan McCauley had become Chairman, with his predecessor Peter Bloom becoming Vice Chairman.  While the club did not have a particularly stable decade on the pitch (three relegations in eight years; seven managers), the club was run reasonably stably, if unsustainably, on a traditional benefactor model.  Shortly before McCauley finally stood down in 2001, debts were reported to be £2.7m, with £1.8m owed to McCauley’s Rotolok Holdings.  He was also advocating a new stadium, the capacity of which was wound in from 23,000 to 18,000, but with scope to increase capacity.  As McCauley explained “An 18,000 all-seater stadium should be sufficient for us in the short-term. But it’s important to have flexibility in the design to cater for success when Plymouth Argyle move up through the leagues.”  ‘Sufficient’ is an odd choice of word – average seasonal attendances throughout the decade had peaked at just over 9,000 in 1994, but had fallen to around the 5,300 mark.  The sort of figure McCauley was speaking of had not been seen at Home Park on a regular basis since the fifties (1).

Reaching the age of 65 in 2001, McCauley found buyers he felt would be good for the club.  The new board was led by local businessmen Paul Stapleton and Peter Jones, and included the local MP Michael Foot, and two London-based businessmen, Nick Warren and Phil Gill, all Pilgrim fans.

[Sources for the above paragraphs are newspapers, mainly the Western Daily Herald, and are unavailable on the internet]

Under the new regime, stadium redevelopment proceeded, but hit a snag when the Council declined to carry on funding it (2).  Having already spent £2.6m, it felt that it was difficult to justify further expenditure.  Argyle Vice Chairman Peter Jones rather ungraciously argued “People should not forget the council are the freeholder of the stadium. Given the fact that a revamped stadium will bring in more people, more income and more rent, they should be prepared to put in a proportion of the £5m we need.

From a business perspective the early years of the noughties were a success.  In 2004 they announced a profit for the third year running (3), and by 2005 the seasonal average attendance had reached almost 16,500, following a return to Tier 2 for the first time since 1992.  The ground was purchased from the Council in December for £2.7m (4).

How then did things start to go wrong?  The management of players proved problematic. with continuing changes in who was manager.  The club managed to maintain their status in the Championship (until last summer, that is), but the fans started to drift away, attendances falling to just over the 10,000 mark on average.

In February 2008 the club recorded a record annual loss of £715,000 (5).  Not only were revenues down, but the club had locked itself into some rather expensive player contracts.  The wages/revenues ratio, which in 2001/02 had been at a very healthy 43.1%, had by 2007/08 risen to a rather unhealthy 74.4%.

In April 2008 the club announced a surprise new investor – Japan’s K&K Shonan Management Corporation, headed by Yasuaki Kagami who joined the Argyle board (6).

Argyle chairman Paul Stapleton, said: “We are excited about the future possible revenue streams from the Far East in particular and expanding the horizons of Plymouth Argyle. While this agreement has only just been concluded, it demonstrates the considerable appeal that Plymouth Argyle and our region has for companies with a global reach.”  I suspect that few outside Plymouth shared this optimism.

Japanese involvement increased when Yasuhiko Okudera was appointed Argyle’s President (7), and there was talk of Japanese players coming to Home Park (8).

By the summer of 2008 things were beginning to crumble; the transfer budget was reported as overspent (9).  By March 2009 non-playing jobs were at risk (10).

By the summer of that year there was talk of not only further investment from Japan but also of a takeover (11). Phill Gill sold his shares to Kagami (12), and by July Kagami held 38% of the shares, and his colleagues Sir Roy Gardner and Keith Todd joined the board with holdings of 13%, the trio thus holding a small majority.  The appearance of Gardner in particular, a former Chairman of Manchester United, raised hopes for some stabilisation.  Paul Stapleton said of Gardner “He’s going to bring a no-nonsense, common sense approach, and a business attitude to everything we do” (13).  The challenge was certainly there though – they had, for example, inherited a squad of over 30 players (14).

There was to be no magic wand.  In December that year the club was placed under a transfer embargo (15) for what the club dismissed as historic debts, and Kagami rode to the rescue with a loan [sic] of £1.5m (16).  Kagami was meantime being sued for £84,000 by former director Gill (17).

2010 opened badly, with the first of a series of winding-up petitions from HMRC (18).  In March there was the announcement that the club was to ‘sell off the family silverware’, the only recently acquired Home Park (19).  A ‘New World’ was heralded nevertheless (20), involving a 46,000 2018 World Cup stadium – rather than repeat my thoughts on this, see a posting I made at the time called Are we going stark stadium bonkers?.  The year’s financial figures, which featured a loss of £2.9m, were described by Gardner, with the kind of understatement that football club Chairmen specialise in, as ‘disappointing‘ (21).

The relegation to League 1 was a bitter pill to swallow given the already worrying state of finances.  Gardner however insisted that the new stadium was the way forward: “A new stadium is an essential part of our forward-planning and reflects the scale of ambition at the club” (22).  Oh dear, the A-word (ambition).  Perhaps the R-word (reality) might have been more appropriate.

The scale of ambition was certainly enormous – last August the board announced plans for a £150m redevelopment of Home Park (23)!  The following day, it emerged that the club had not paid their long-serving announcer since late in the previous season (24).

Things have just progressed from bad to worse since then, and I will assume that any reader who reached this point is already familiar with the failed 2018 bid, the further winding-up petitions from HMRC, and the worrying appearance of Peter Ridsdale.  I will spare you a repetition of his experiences at Leeds United and at Cardiff City (but see here if you want to read my previous postings on the Spinmeister).  Less well remembered are his days at Barnsley – he took over in October 2003 (25); when he left fourteen months later, new Chairman Gordon Stewart explained Ridsdale’s departure “The club was running into a financial position that was less than comfortable and it was clear cash had to be injected” (26).

For the Spinmeister himself to declare the situation at Plymouth as ‘dire and I can’t even find the words to put into context how bad it is. It is probably worse than you can imagine. This is a race against time‘ (27), one can only assume the situation is considerably worse than dire.

With the exception of bringing in Ridsdale as a ‘saviour’ – all I can offer as hope to the Green Army here is the thought that this might just be a case of fourth time lucky, although I don’t think it actually will be ;-(  – the situation at Argyle is one that could have happened at too many clubs – ‘benefactors’ who couldn’t or wouldn’t stay the course, overpaid players, cashflow insufficient to pay all staff on time, a high turnover of managers, a serious case of ‘stadium envy’, a casual attitude to paying HMRC, absentee investors, an absence of fan power…  It encapsulates most of what is wrong with English football, and offers a very depressing start to 2011.

14 Responses to “Lessons from Plymouth”

  1. Rob said

    Good article, but Argyle play at Home Park not Hope Park

  2. Rob said

    Me too John. Here’s Hoping that we can get out of this mess.. Not looking good at the moment.

  3. John, not sure i was being “ungracious” when I said that. The leader of the council had stood on the balcony of the Civic Centre after the club’s promotion to the Championship in 2004, and said to 20,000-odd revellers: “We WILL finish the stadium!”.

    The officers were of course horrified, and did everything to block this – the ultimate wheeze was to sell a subsequent board the stadium in 2007, when the football club (as opposed to the Holding Company) didn’t need it and couldn’t afford it. But “with one bound, Jack was free”. All of the problems stem from this, as it turned the club from a much loved football into nothing more a development opportunity.

    You’re right, it’s an example of much that is wrong with football. I hope it can be turned round. But I wouldn’t bet much on it, if the club does survive it will enter February with an extremely thin squad, and Peter Reid (who has played a blinder) must be losing patience. Fast.

  4. Argyle Fan Abroad said

    A thoughtful article, John, thank you for all the work you clearly put into it.

    One point to clarify is that apparently the Kagami money that was the subject of the Dec 2009. Herald article, never arrived.

    Todd, in an interview in Oct 2010, stated that Kagami/Synan had put in no investment since Todd/Gardner joined in July 2009.

    Adds a dimension of strangeness to the whole affair.

  5. Mac said

    Let us take the World Cup together with its hopes and apirations as a seperate issue to the real nitty gritty.
    The main question to be answered is how could a qualified accountant, Mr Stapleton, let his Manager(Paul Sturrock)spend in a profligate manager by allowing him to have some 35 full time professionals on the books. A more normal quota at our level would have been somewhat less than 25. Given that only some 55% of income should go on salaries and our income 3 years ago was about £3.75 million and expenditure on salaries some £9 million(I include all staff in this figure)this leaves a huge black hole of some £5 million deficit per year. Doesn’t take an experienced accountant to realize that this is not sustainable does it. And that, in my opinion is why we are were we are. This is where the WC bit comes in because this was going to be the panacea of all financial ills. How could those running the Club have been so out of touch with reality that thay have caused this mess and our accountant-in-chief doesn’t seem to recoginize that he might be responsible. He appears to accept no blame at all.
    Had my rant …grrrr.

  6. praying pilgrim said

    i hope stapleton,dennerly and wrathall (and gill) have read this is their personal greed in seeking to bolster their pension funds through developing home park and the surrounding area which has got the club into this state.

    how right jones and foot were to leave the board (albeit they were hansomely paid off) when stapleton and co bought plymouth cricket club.this was the seminal moment in time when greed took over.

    and even now with closure looming all they can do is scrabble around to fight off administration so they can protect their own interests.i for one fan hope stapleton,dennerly and wrathall lose all they put in as a lesson to all who follow the david dein model of seeking to profit from football clubs.

    the fl and fa need to return to the days of no holding companies so directors can neither receive a dividend or take a salary and share the ownership of the club amongst the fans in the local community.

    • shadwell30 said

      I think you are being a bit harsh on Wrathall as he is in line to lose nearly a million of his own money trying to bail us out of this,i will agree with the others though.

  7. ParrotheadChris said

    Good article and it raised some issues that I wasn’t aware of. However it does somewhat re-write the McCauley era I do take issue with the view that there was stability at Argyle when he was chairman. I remember an ego maniac who sacked the manager a few months into the season after promotion. I remember the fraud squad investigation. I remember how hard Dan McCauley tried to broker a deal for the re-development of Hope Park seemingly because it was in his own interest. I remember the poor decisions and the games called off at the last minute, and I remember clear violations of the Companies Act. A couple of years ago I ran into Bruce Grobelaar, we only spoke for a couple of minutes but time enough for him to tell me that McCauley still owed him money. I don’t believe Argyle’s troubles started with the Stapleton era, and I still believe that for most of the time since McCauley left the club has been run more sustainably and more professionally than ever it was before. It certainly appeared to me that Argyle reacted to external financial pressures far quicker than most clubs.

    Could it just be that we’re looking at the “Perfect Storm” scenario? The first club to be in HMRC sights since Portsmouth took the Mick out of them. Combined with a club with a low profile and (let’s be honest) fans that aren’t exactly demanding (compared to say Leeds, Sheff Wed, Cardiff) and the timing during the recession (this might be the first of others), and no clear rich benefactor left to bring in.

  8. Ivy Bridge said

    Don’t forget the additional 4 to expensive loanees we’ve had to pay every season too. Likewise the flop signings; Mpenza, Marin, Walton, Sheridan, MacLean, MacNamee, Gow, Cooper….

    Failure to control spending & repeatedly signing flops was our downfall.

    Losing our great goalkeeper Luke Macormick was also a blow

  9. Ron said

    Success brings pressure for more success,that was what Stapleton had to contend with.
    In hindsight it is easy to say he got it wrong,but he had the courage to try and move Argyle to the next level.
    So it did’nt work out,he could’nt realize how it would turn out.
    He new that Argyle, sited miles from the centre of the main action needed finance to entice quality players to leave their playgrounds where their wives and girl friends prefered to be.OK I might sound cynical about the modern player,but I’m not far wrong.Stapleton would know that and took the gambol to bring in investment from outside the west country,hindsight is a wonderful gift, don’t blame Stapleton for trying to lift Argyle into the big time, just accept he was unlucky with who came to help him to achieve that goal.

    • shadwell30 said

      I do blame him for bringing Sturrock back and letting him loose with the cheque book,in hindsight as you say he was trying to take us forward but in having his old pal back(luggy)he has taken the club to the verge of extinction,so i do blame him.

  10. Northernpilgrim said

    Not only did the money promised in December 2009 never arrive, neither has £2m, supposed to be delivered in 4 installments over the last few months.

    It’s too late now to play the blame game, but the fans do seem, on the whole, to have escaped their share. Attendances have fallen from 16,500 in 2005, to just under 8,000 now, a cut of more than 50pc. At the same time, the wage bill has risen hugely. Partly due to big name signings such as Emile Mpenza (who didn’t really play), and Taribo West (remember him?), but also as a result of Sturrock’s policy of signing a massive squad of 34 players, many of whom weren’t good enough. Sure, there was some bad luck too, but if we’d been financially responsible, as we were between 2000 and 2005, then much of what has happened would have been avoided. I do concur that HMRC have got the hump with football, and saw Argyle as an easy target, though.

  11. futbol en vivo…

    […]Lessons from Plymouth « Football Management[…]…

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