Club News

Q&A with Simon Hallett

18th May 2016

Thank you to everyone for your questions...

...and thanks to the PASOTI team for organising this Q&A. If all goes well, we’ll do this again, hopefully including all the fan groups. However we end up holding these sessions, PASOTI gets the credit for leading them!

It’s also a time to thank you for all your kind words of welcome. I realise that this is the honeymoon period, and that harsher words are to come, but I accept that. There will be misunderstandings, and there will be disagreements. There will also be times when I can’t be as transparent as I would like. The only thing I ask is that you don’t question my motives. I really am like you, wanting nothing out of this involvement but what is best for Argyle. Hard to believe, I know, and hard to accept, given recent history, but it’s the truth.

My wife, Jane, and I also owe more general thanks for the welcome. We both met a number of supporters at the Hartlepool and Portsmouth matches, and had a great time. Hartlepool was Jane’s first football match, and, to my surprise she’s a convert.

Say hello at Wembley!

Simon

Questions & Answers

Finance

1: Thanks for taking questions and investing in our club. Here is my question.

Considering different managers have had restricted budgets over recent seasons to clear our debt - what chance is there now with your involvement for our current manager to have his player budget increased for next season? Or are we still likely to be debt burdened for another season?

Pete Colbourne

Let me answer the second question first. Argyle will still have outstanding debt, and will continue to do so for a number of years. The burden of that debt has decreased though. In fact, annual repayments and interest are now only about 2% of our annual income.

There is still about £2.1mln in debt to various directors, now including me. There is a later question dealing with why I was foolish saying it had been “written off”. It has not, but is on generous terms, with no interest burden and no repayment obligation for 5 years, except under very unusual circumstances, such as a change of control at PAFC.

As to the first question, budgets, by definition, are always restricted! If we win at Wembley, we expect revenues to rise, allowing for more spending on players. We have to balance long-term investments, particularly on the infrastructure at the Club, against spending on players. Sorry to be vague, but it’s not my money to spend.

2: What role will you be playing as part of the board and given your background in the States, will you also be looking at bringing on board other investors for the future?

Pete Barrett

All directors have a responsibility to do the best, in their judgment, for the Club, and some have individual responsibilities, or skills. Tony Wrathall, for example, takes a great interest in supporter relations, and in the Academy, Peter Jones is a marketing wiz. And so on.

I have general business experience, and an inclination to develop closer relations between supporters, and potential supporters and the Club.

I will not be looking to bring on potential investors. Running through these answers you will see a common theme—that of sustainability. We believe that a successful football club is one deeply embedded in its community, loved by its community, and supported by its community. We have to find ways to make sure that the revenues generated by that support base are enough to finance the success we all want on and off the field.

We, therefore, do not favour the benefactor model, whereby a Club is reliant on wealthy individuals to make annual contributions to the revenue base. I think that it can lead to supporters being disassociated from the Club they support (do Chelsea fans really like Chelsea any more?). I also think that the model can put the Club at risk of a change in attitude, or circumstances, of the benefactor.

Another part of my role will be to be our US representative. I think we have a great opportunity to market Argyle as a team with a great role in the community that has historical ties to the US. We are the Pilgrims, we wear the Mayflower on our shirts. Why aren’t we better known in the US? I don’t know how to go about it, but have made a start by being interviewed on Men in Blazers, an NBC podcast and TV show. I recommend it by the way! We are already in touch with new, US-based fans as a result.

3: What made you pick this point in time to invest, was it personal reasons (if so not expecting details) or do you now see something in the club that made it a more promising proposition? And if so, do you see the opportunity to bring in more investment if welcomed by the board?

Thanks, Adam Runnalls

Personal reasons - my wife and I are spending more time in Devon, where I have family. I was educated at the City of Plymouth’s expense (I was a scholarship kid at Plymouth College, and then went to university at Oxford), and wanted to do something for the City. Above all though, I’m an Argyle fan, and the time felt right to see if I could become involved. Happy to elaborate, but it will make me cry.

4: Welcome to the club.

Can you give an overview of the current debt situation. What is owed to whom and what are the repayment arrangements, and how the debt impacts on the playing budget.

Thanks, Richard Jones

I think I dealt with this in a previous question - I hope that’s enough for you. Remember that it’s not the size of the debt that’s important, but the servicing costs. They are now modest, at about 2% of revenues. That said, any spending we do or any investment we make is money that cannot go on players. We are also subject to Financial Fair Play rules whereby salaries are limited to 55% of revenues.

5: Welcome to the club.

In an article in the Herald, you spoke about a seven figure write-off…

"I also took on some old debt. So I have got both investment in stock and investment in debt.

“The injection into the club is £500,000, and there is about £620,000 of debt, so it's a seven-figure write-off.

“I have done that so James (Brent, Argyle's chairman) and I have equal measures of debt."

In regards to the £620,000, has this money been completely written off or will the football club owe you that back in the future?

Either way, it's a positive investment (nice change) and I look forward to seeing your tenure on the Argyle board.

Josh Pope

I’m sorry about this - you’ve rightly picked up something that I said a little flippantly, but was clearly ambiguous. The Club now owes me £620,000 and it is not written off in the Club’s accounts. I was having a conversation about how much I’d “invested” and my point was that I didn’t look on it as an investment – it’s permanently in the Club, and I don’t want it back, let alone seek a return.

So I’ve “written it off ” in my own books. Of course, that’s terrible accounting, as the Club does actually owe me the money. As I said before though, there’s no interest, no repayment schedule, and no repayment date for 5 years, at which point I intend to extend the loan. So it’s fairly long-term capital.

Again, I apologise for this. My goal is clarity, and I hate it when I confuse things even more. Thanks for catching that one.

6: My question is one that has often raised its head in my discussions with other fans - Does the club have any plans to encourage members of the fan-base to become involved financially in assisting the forward progress of our club? Very few of us can make anything like the contribution that you have so generously made, but a number are willing and able to contribute a lesser amount in return for a very minor stake in the club they so love, as was the case in the "olden days". Is there any intention to have a share issue to bring finance into the club from sources beyond the major contributors?

Thank you for listening

Keith Whitfield

I do not know of any such plan. I think it is an interesting idea though, as it binds small shareholders emotionally to Argyle, so long as they understand they get to voice opinions, not make decisions. In the NFL, the Green Bay Packers are famous for it – one of my colleagues has the certificate for the single share that his father gave him on his office wall. There would almost certainly though be huge expenses and regulatory issues involved: issuing shares in any way makes you subject to a whole bunch of new regulatory bodies. I’ll raise the idea, and any other ideas anyone has about how to make supporters more engaged with Argyle with the Board.

Stadium Redevelopment

1: Do you consider your entry to the Boardroom, together with that of your brother-in- law, will be an immediate catalyst for progress in the now long outstanding desire to see the old Grandstand replaced with one fit for the 21st century?

Should you think not, what do you you think will definitely bring this project forward, given that looking ahead, the commercial property/development market looks benign for this part of Plymouth?

Chris Hayne

I don’t think we will be catalysts, I’m afraid, as it is not something we know much about, other than what has been made public, and is available via Google or www.pafc.co.uk.

2: Hi Simon

Do you have any updates on the progress of Our New Grandstand?

Welcome to Plymouth Argyle FC

Regards, Paul Richardson

I do not have any updates, I’m afraid, though obviously will know more after I’ve been on the ground a little longer. When I became a shareholder, I deliberately kept investment in the property around Home Park separate from ownership of PAFC. My investment in PAFC is exactly what I’ve said it is – not in pursuit of a financial return. Of course, if the Club is successful, the value of PAFC will increase. I can’t deny that that wouldn’t be a nice thing, but, more importantly for Argyle, it would make it easier and financially more attractive, to issue new equity, for example to finance the long-term investments we need to make. There are no plans to do that at the moment, but it is clearly something we can consider in the future.

I have very limited experience of property development. My job is to preserve my family wealth, not to grow it, so I’m not seeking investments that offer financial returns. If I were to invest in the development of the area around Home Park it would only be if:

a. It were in the clear interests of Argyle, and

b. Was structured to be very low risk, even at the expense of return.

Sorry, that’s more than you were asking for, but I am a little sensitive to people (not you, obviously) implying that I’m in this to make money out of the property. I’ve got plenty of money, and don’t need a UK property development headache!

3: It's obvious to nearly everyone that the new Grandstand with a better match day bar area and with all the other benefits it would bring is a must. When can you see this happening? Can you give a time frame?

Cheers, Dave

Re the Grandstand, of course. Re the bar area, I agree it would be nice, but there are a load of infrastructure priorities that may take precedence. That said, my wife, John Morgan and I are going to be at Fanfest whenever we can, and it is a shame that so many fans who want them cannot get tickets, given limited space. So, would I like to see more space for pre-match get togethers—yes. Can I put a timeframe on it, no. Sorry!

Freehold

1: Thank you Simon for agreeing to answer questions and thank you for your substantial investment in accordance with your 29% shareholding which has given the Football Club certainty of repaying all the Football Creditor debt by the due date. The Football Club is now, with its careful stewardship over the last few years, certainly in the best financial position it has been for many years. You will also have also tasted the exhilaration of an exciting performance on Saturday and the mounting tensions of a Play-Off lottery so you will now know first-hand what we are experiencing as fans.

According to the 2011 lease from the 1st August 2016 the Football Club has the legally binding position to serve an Option Notice to purchase the freehold of the Home park Stadium for a pre-determined price of 12 x the rent paid (around £1.7m) from Plymouth City Council on 31st October 2016.

Q1: As a major shareholder do you support the purchase of the freehold by the Football Club?

I’m not yet certain about it, though as a rule, I think Clubs should own their ground. As you suggest, the numbers suggest that buying the ground would gives an immediate 8% return (from the rent saved), and it is possible that financing costs could be less than that. So, it would probably make sense in terms of net cash flow. But…..see answer to Q2.

Re your description of the option, I think you may misunderstand the terms of the 2011 lease.

Argyle does indeed have an option to purchase the ground but the time to exercise is not limited to October 2016.

I’ve experienced, for 50 years, what you’ve experienced as fans! Not first hand as much as you, but it has been a long, tough road for me as well. That said, there’s nothing like being in the stadium to make it more intense.

Q2: If so, and if the money to buy the freehold is borrowed and secured against the subsequent value of the stadium do you support the principle of the Football Club once again being burdened with a debt to another financial institution? You will be aware of the position the Football Club found itself five years ago with varying loans secured against the value of the Stadium.

I am aware of the position of 5 years ago, and I am aware that a very large proportion of League 1 and League 2 clubs have gone bankrupt, or come close to bankruptcy, in the last 20 years. I’m old-fashioned, and believe that debt dramatically increases the risk of bankruptcy. I am also very sceptical about long-term forecasts, and think enterprises need to be managed so that they can survive the worst happening (where the ‘worst’ is twice as bad as anything you can think of). That’s very conservative, I admit, and means they will miss out on some opportunities. But, they will survive!

That is my general view. At the moment, the costs of financing are so low that I am tempted to say ‘it’s different at the moment’….some of the most dangerous words in investing.

As I suspect do you, I agonise over this, and would need to make a final decision based on actual costs of debt, and a proper risk assessment. My general approach though is to be very cautious.

Q3: If it were adequately demonstrated that the purchase of the freehold of the Stadium was against the wishes of a substantive proportion of the fanbase would you still support the principle of the purchase and its execution?

Graham Clark

Let us generalise the question - If it were adequately demonstrated that any policy decision that you supported was against the wishes of a substantive proportion of the fanbase would you still support it?

The answer is, “Yes”. I believe more strongly than most that input into decision-making from all parties (particularly from those who disagree) is desirable; I also believe that decisions are best made by those who are held accountable for them. That is the Board. Our job is to make tough decisions. Sometimes they will be unpopular.

The Future

1: In your opinion what has this football club got to do in order to push on? Thank you for your investment, and for doing this!

Liam Vercoe

I believe we need to increase revenues by attracting more supporters to matches at Home Park. We are in a much better financial position than in the recent past, but are suffering from decades of under investment in facilities, and need to catch up. We need investment in supporters, staff and player infrastructure; we need investment in training facilities; we need investment in marketing, so we can get the word out about how important Argyle is to Plymouth and the rest of the Westcountry.

We have a fabulous core supporter base. Sadly, that’s not enough if we are to meet the ambitions of the Board, and of the supporters. We must reach a point where the casual fan turns up to a few matches a year simply because it’s great entertainment. I think Derek Adams has done a terrific job of making the style of play attractive to those who are casual fans.

We also need to treat casual fans with respect. They are the ones who will allow us more passionate ones, who will always turn up for a game, to achieve our ambitions.

This requires Argyle (staff, players, directors) to engage more with supporters, and potential supporters; it requires more aggressive marketing of our existing achievements - who has heard of the Community Trust? Is it a coincidence that our fanbase in Cornwall is so strong, where the Academy is so strong?

I love a lot about the Bundesliga model: prices are reasonable, the Clubs are an integral part of the community, and fans turn up in droves even to ‘meaningless’ games.

That’s a long way of answering the question. The short way - “get more fans in the ground”!

2: Welcome Simon to the boardroom. I believe we can get to the promised land of the Premier League (first division in old money), do you think we can and if you answer “yes” what timescale can you put on it?

Stephen Evans

3: Hi Simon

So, it is last day of the season 2021.

Where are we?

Where are you?

Good luck mate, Dave Langmead

All forecasts are dangerous….

I’m either

At Home Park (probability 45%)

Somewhere I’ve never thought of, or have thought of but prefer not to (probability 10%)

Some other football ground at an away match (probability 45%).

We are either

In the Championship (P=30%)

In League 1 (P=55%)

In League 2 (P=14%)

In the Premier League (P=1%)

I think it’s very helpful to assign probabilities to events, even if they are not capable of accurate assessment. Don’t forget that the odds of being in the Championship in two years are the odds of our being in League 1 next year multiplied by the odds of going up the year after. To get to the Premier League in 2021, we need to get promoted 3 times in 5 years. Those are very low odds. Sorry, but that’s how it works. Over a longer period, say 10-15 years, I’d put the probability a lot higher, but it is so dependent on that happens on and off the pitch in the next few years, that it’s impossible to make any meaningful guess at it.

This is a tough business, with competition increasing. We have to assure survival and make investments. I think they will eventually pay off, but 5 years is not very long. Bournemouth and Leicester are remarkable, because they are exactly that - remarkable. The odds of someone else doing something similar are very poor. But, we have to try.

4: Hi Simon

What is your ambition for the football club.

Thanks, Mike

I want a Club that is loved and admired by the community, supported with average attendances in the 15-16,000 range, and that can maintain a strong position in the Championship.

I want a Club that has a reputation for good behaviour, and whose supporters treat those of other clubs with respect.

I would like all the above, plus a team that can challenge for promotion to the Premier League.

I dream of playing in the European Championship.

5: My late father took me to my first game in 1961 commenting "Argo are a sleeping giant", 55 years later I am saying the same to my grandchildren. What do you think you may bring to the table to assist in waking the club from its slumbers?

Frank Harper

I have referred to a lot of my thoughts about this already. The Club has woken from its slumbers. It is young, financially sound, and exciting. It needs investment (and I mean investment, not expenditure) in a number of areas, and it needs a bigger fan base. I can bring a bit of money, a lot of enthusiasm, a willingness to move on from the past, and some knowledge of how America works. I’m also very flexible—if I do no good, I’ll leave the Board and go back to the Devonport End. I have no ego involved here, other than wanting to be part of something successful.

6: It is clear that we can go a long way with the right structures in place, both on and especially off the pitch (which to my mind has been our perennial achilles heel). It was not so long ago that we were regularly crossing swords with the likes of Swansea, Burnley, Bournemouth, Southampton and yes, even Leicester. So my question is: What is the club currently doing and intending to do to capture some of the lessons that their ascendancies can tell us, and thereby short-circuit our own rise? I am sure that you are more aware than the vast majority that such lessons are not easy to uncover (or else everyone would be doing them), and that therefore our search for clues needs to be thorough and systematic.

Keith Whitfield

I agree. You will have seen in the previous answers how I see the general direction of the Club going. In my day job my firm’s decision-making process is based on structure and discipline. I believe strongly in process, and improving it, irrespective of individual outcomes – betting on horses pays off occasionally, and may be fun, but it is not a sensible financial strategy.

I believe in the use of data, rather than gut feel, and I believe in learning from others. I recommend “the Bundlesliga Blueprint” as a guide to how Clubs and Leagues can be run to be financially sound and well-supported. I recommend Barry Hearn on what he learned from owning a Football Club, and I recommend “Money and Football” as an introduction to systematic analysis of what works.

I agree that off-the-pitch at Argyle has a poor history, until recently. Even apart from the 2010 debacle, it is clear that investment has been weak. That needs to be fixed and will be at the expense, in the short-term, of money for players. In the long run, it will make young players more willing to stay, other managers more willing to make loans, and incoming players more content. That will pay off in results.

Youth and Training Facilities

1: You have been quoted in the Herald as talking enthusiastically about the club's academy set up. The Academy is likely to have a key role in the club's future.

An area where things need to improve to maximise the potential benefit of the Academy is the club's training facilities. Harper's Park is now totally outdated after 40 years. Previous Boards have never prioritised this, perhaps short sightedly, and we lag well behind our competitors in this area.

I recognise we all want on field success as our number one priority, but where does this sit in terms of off field priority for the Board?

Can we expect the club to have upgraded training facilities in next two seasons?

Adrian Jones

I can’t speak for the Board – I’ve yet to go to a Board meeting, and only met most other Board members recently. For me, the priority’s very high, but I can’t put a timeframe on when facilities will be upgraded. Incidentally, it’s not just about training facilities, it’s also about how the youth system works in the Football League: we have to decide about players at 18, and it’s often too early either for Derek and staff to make a final assessment of whether they are going to be good enough for the first team. They really need more time. If we let them go, however, better-resourced clubs snap them up, and we get inadequate compensation. Assuming we can’t change the system, we need more resources to hold on to those players for another couple of years.

The trouble is there are several areas crying out for investment. The Board will prioritise, and I’ll try to readdress the question in coming months.

Miscellaneous

1: Welcome, apart from the intellectual questions posted what is your history, Where did you stand? Who is your all time favourite player? Favourite match? Best memory?

Mark Paull

What a relief!

Favourite Player: Johnny Hore. I’ve always been a sucker for wing halves, and grit. I do know he was also a full-back! I met him in the bar at the Portsmouth match, which was a wonderful moment for me.

Where stood: I used to stand in the Devonport End, at what is now between vomitories 3 and 4. At least I think it was. Here’s one of my daughters in a similar place back in 2004!

While on photos, here are John Morgan and one of my brothers with most of our kids, before the same game. I think it was against Millwall, but ready to be corrected!

Favourite Match: December 26, 1969 Argyle 6 Torquay 0 (Bickle 4, Piper 2, 1 pen). Sorry Torquay fans.

Favourite Memory: See above! I also have one of seeing Trevor Francis hitting the bar at the Devonport End in a Plymouth Under-16s match. I’d like to know if it’s true.

2: Simon

Thank you for agreeing to answer our questions.

I am sure you are well aware of the clubs recent history, although you appear to have lived most of your adult life away from the City, indeed out of the Country. I hope you will then understand that many, many fans are rightly suspicious of anyone wishing to “invest” in our club.

Can you explain why you did not come forward prior to or immediately after the clubs entry into administration? Is your appearance now more connected to Argyle being able to buy the ground?

The timing of my appearance is nothing to do with being able to buy the ground. I did come forward before but not aggressively. Here’s a message to the Fans’ Trust in 2010 (uncensored, so note I confused Pat Kelly, of Arsenal, and our goalkeeper, Pat Dunne!)

Just saw your website and would like to be kept in touch with what's going on. I live in the US and am not able to attend the first meeting. I'm a former Plymouth resident, and watched Argyle from back in the Pat Kelly days!

Not much I can do to help, though willing to chip in if there is some sensible program thought up.

I did send a modest donation, and am still a member of the AFT. I would have made a bigger donation, if asked, but wasn’t aggressive enough in offering. I didn’t want to get too involved because I couldn’t (and still can’t) afford the time commitment that James and others made. If you’re hinting that this was an opportunity missed on my part, I agree.

Can you explain what your brother in law brings to the Argyle Board, bar your backing as it appears he is not investing? Or is his appearance more to do with being a neighbour of James Brent?

He is the most trustworthy and sensible person I know (other than my wife). He brings little knowledge of football management, but is a quick learn. John will bring further pragmatic business management expertise and experience to the Board. He offers advice, trouble shoots, and develops sustainable business plans for concerns that are frequently in tight financial positions. For obvious reasons, this experience will be useful to the Board.

John is my appointee, but very happy to tell me that I am wrong, which is valuable. Note that he is a board member and responsible to all stakeholders, not just to me. He is well aware of that.

John is not a neighbour of James - according to Google Maps, he lives 2.9 miles away, by the fastest route, 2.4 by the shortest. If anyone cares, my house is also in the area (about 6.8 miles from James, and 5.4 from John). These distances would be reduced if we were crows. It is a coincidence that John and I live near James, but it is not a coincidence that we live near each other.

To save anyone any more sleuthing, I can reveal that James and John have kids in the same school. Two of them are friends. James and John met for the first time at the Portsmouth match in April. Sorry, but there is no story there at all.

Can you give any indication or hope that your appearance and presence will break the status quo of barely surviving in the lower leagues that I and most fans have had to endure all our lives?

I hope that the answers to the questions I’ve given suggest that at least I have some ideas. I cannot guarantee that they will turn into the success on the field we all want. I think they should give you hope.

Can you, will you, look to buy out the current Board in time and give fans real and genuine hope of advancement beyond fleeting appearances in the Championship inside a ground that is fit for purpose?

Ta. Tony

I am not sure what you mean by “can”. I could afford to if they wanted to sell, I wanted to buy, and my wife approved (it’s her money too). I hope though that that has nothing to do with giving fans genuine hope as you indicate. As for the question implied by “fit for purpose”, I agree that the infrastructure at Home Park needs investment, which has been sorely lacking for far too long.

3: Please can you ask the CEO if the club are trying to encourage new supporters why is there an increase on the match day ticket if you buy it on the day.

Loyal1970

The Club is selling tickets that are limited to about 16,000 in number. The trouble is that we rarely sell that many.

Given that, if we were to give a discount on match day, rather than to early buyers (which is the same as an increase on match day), everyone would wait for match day. That would make financial planning difficult, make for less revenue, and, I suspect, we would sell fewer tickets.

If we were sold out for every game, we could indeed hold some back and sell at a discount on the day.

We need to plan the logistics of game day. Knowing that we have sold a certain number of tickets means that we know how much security, food and drink, and even stock in the Superstore we need.

So, the Club offers a discount for early buyers, it does not charge a premium for last minute arrivals.

That said, I agree we need to get new fans, and we need to get fans for whom half a dozen games a season is enough. That means we want everyone in Plymouth and the surrounding areas coming occasionally to add to the diehards who come to every game.