As the rain pours and blows into our faces, the anticipation among the 16,500 fans is palpable. On a chilly October evening, Plymouth Argyle FC is readying for one of the biggest games of its season: the bitterly fought contest against neighbouring rivals Exeter City.
The Home Park stadium is quickly filling up and the hospitality area is already rammed. In the stands, one Argyle fan removes his shirt, his bare chest visible among the sea of warm coats and green scarves.
“Welcome to real football,” says Simon Hallett, Plymouth Argyle’s chair and majority owner.
Hallett is a US-based investment manager who has transformed the ambitions — and balance sheet — of his team as it tries to climb the pyramid structure of the English game, putting in about £14mn of his own money since taking control in 2018.
The British-American chair is among the rapidly growing cohort of US-based investors buying into European football — albeit at a much lower entry point than the record £2.5bn Todd Boehly and Clearlake Capital spent to acquire Chelsea FC or the sum the Glazer family can expect to take home if they go ahead with the potential sale of Manchester United, announced this week.
There is another important difference. Hallett is the diehard fan who made enough money to buy the club he has supported since he was a boy. He says he bought Argyle not as an investment but to “have a bit of fun”.
Counter to the stereotypes, though, he insists football clubs can be run like proper businesses, not lossmaking vanity projects. As a finance specialist he has a fondness for investment terminology, rigorous processes and sound business decisions.
As he pursues his plans for Argyle’s advancement, FT Money asks whether he and other individual club owners in the lower-league English game can devise a workable model of financial independence in a field strewn with insolvencies — and compete against the largesse of deep-pocketed owners with no such inhibitions.
Argyle man and boy
Hallett’s love of Argyle goes back to when his family moved to the area from south London. Despite attending a rugby-playing school, Hallett loved football. He saw his first Argyle match not long after England’s victory at the 1966 World Cup. Soon, he was following Argyle to the point of attending midweek youth matches.
As vice-chair and partner at Harding Loevner, an asset manager based in Bridgewater, New Jersey, Hallett likens the construction of a football club’s squad to devising an investment portfolio. Data is fundamental to his approach. Gut decisions are out, analysis is in.
Rather than send someone to meet me, he waits in the cold outside the club. Hallett isn’t just hospitable because the FT is in town. He knows the Argyle staff by name and praises chief executive Andrew Parkinson and manager Steven Schumacher for its recent run of form. Four years since taking control, he still enthuses about his ambition to turn the club’s youth academy into a talent factory that can make the difference on the pitch.
Based in the US for decades — but retaining his English accent — it’s his first trip to Home Park in three months. “I’ve been here all day because I can’t keep out. I just love being here, but that’s as a fanboy, not as the chair.” He compares the role of chair to that of chief investment officer of Harding Loevner; in both roles, he focused on process rather than on individual stocks or players.
He wouldn’t interfere with starting line-up or player recruitment, he says, leaving that to Argyle’s experts and the club’s chief executive. But decisions are informed by data. Players are selected on whether they suit Argyle’s style of play; the club can search databases of footballers who meet an objective set of characteristics for a specific role.
Argyle has never played at the highest level of English football. The club is on the up, however, sitting at the summit of League One, counter-intuitively the third tier of English football. Victory against Exeter City, though early in the season, held the promise of extending that lead to four points, a small but important cushion in the race to win the league and secure promotion to the Championship, one rung below the top flight, the Premier League.
The owner’s tale: Tony Bloom
There was a time when Brighton & Hove Albion languished in the depths of the English football leagues. But the club’s fortunes picked up after its acquisition by Tony Bloom in 2009. Nicknamed “the Lizard” for his cool head at the poker table, he invested more than £400mn in transforming the south coast team into a Premier League club, including funds for new infrastructure and a talent academy. In a sign of his success, Albion manager Graham Potter was recruited to lead Chelsea FC in September.
For years, Plymouth was known as “bloody Argyle”, such was its reputation for calamity. In 2011, the club went bust, setting off a chain of events that ultimately led to Hallett’s takeover seven years later.
While the club is spending more on the playing squad this season, impulsive and costly transfers aren’t Hallett’s idea of fun. His theory is that improving the fan experience is good for business. Even before the pandemic, Argyle fared better than rivals. Its “current ratio” — which compares assets that can be converted to cash in a year with debts over a similar period — was a healthy 1.55 in 2018-19, according to research by football experts and academics Kieran Maguire and Christina Philippou. A ratio above one is strong.
Hallett says the club is arguably stronger in the wake of the pandemic. He lent another £3.5mn to Argyle in July 2020 based on “worst-case scenario” planning and subsequently converted the money into equity. But the club didn’t burn through the cash, thanks to furlough money, a grant from the Premier League, fans refusing to ask for refunds for season tickets, and a successful claim through its business interruption insurance policy.
Even so, Hallett has left the cash on the club’s balance sheet. Taking money out of a club just isn’t the done thing in English football. The fans wouldn’t understand it, says Hallett. It was just his latest multimillion-pound investment in Argyle, and he intends it to be his last.
The owners’ tale: Ryan Reynolds and Rob McElhenney
Hollywood and a fifth division Welsh football team might sound like an unlikely match, but actors Ryan Reynolds and Rob McElhenney had other ideas. During lockdown the pair acquired Wrexham AFC — and turned their story into a sports documentary series on FX on Hulu in the US and Disney+ in the UK. Showbiz appeal has commercial benefits too: social media platform TikTok sponsors Wrexham’s shirt and Reynolds-backed spirit Aviation American Gin is available on the club’s online store.
Just weeks before speaking to the FT, Hallett sold a minority stake in Argyle to a group of US investors. In a sign of the enduring international appetite for English football, Argyle Green, an investment group that includes National Hockey League stars Victor Hedman and Ondrej Palat, acquired 20 per cent of the club for £4mn at a valuation of £20mn.
Warning potential investors of the perils of buying into a lossmaking football club did not sound like the best way of striking a deal. (Even after last season’s successes, Argyle remained lossmaking after tax.) But when Hallett gave the bidders a sober assessment of English football finance, it did little to put them off.
“They say they’re in it for investment reasons,” he says. “I tried to discourage them. Completely mad. You’ll never get your money back but they claim they will, so good luck to them.” He appears to be only half-joking.
Part of the motivation is to secure the club’s long-term future. “I’m 67 years old,” he says. “The probability that I die in the next five years is actually quite high. So I want Argyle, should I drop dead or get hit by a bus, you know, to not panic . . . I want it to be in a stable position.”
Attendance at Home Park averaged more than 13,000 last season, bolstered by investment in the ground’s Mayflower Grandstand. Argyle’s accounts for 2021-22 showed that annual revenue leapt to a record £11.3mn from £5.6mn, driven by ticket sales, hospitality, events and retail sales. It’s all the more impressive given that Hallett eschews gambling sponsorship, a mainstay of club sponsorship elsewhere.
“I think betting is dangerous for the sport,” says Hallett.
He is eyeing further growth — attendance is up this season and British rock band Muse is due to perform at Home Park next May.
The club has also kept costs in check, spending 54p on wages for every £1 of revenue generated in 2021-22. The latest figures for Argyle’s peers aren’t available but League One teams paid out 75p in wages for every £1 of revenue made in 2018-19, the final full season before the pandemic, according to consultancy Deloitte.
“It’s incredibly unusual,” says Philippou, a football finance specialist at the University of Portsmouth. “There’s a choice between being competitive and being sustainable. There’s a line where you can do both but it’s a very difficult one. It’s a struggle all clubs face — some deal with it better than others.”
Argyle, however, has relied on Hallett to fund the infrastructure improvements that have driven revenue increases. Nick Giannotti, one of the Argyle Green investors, says Hallett’s stewardship and running of the club was part of the attraction. But winning matches is crucial to future gains.
The path towards making a return hinges on whether Argyle can win promotion to the Championship.
Do I think that if we go to the Championship and we stay there for several years that we are only going to be worth £20mn-£30mn? No way,” says Giannotti. “There’s a world of opportunity for this club.”
Results and returns
Since the recent transaction took effect through the issuance of new shares, this means more funds for Argyle and no payout for Hallett. He stressed that he has no plans to sell the club, but reckons that winning promotion to the Championship could double Argyle’s valuation from around £20mn. Valuing a football club is “guesswork” anyway, he says, adding he was more concerned with finding investors who shared his approach to running Argyle.
The owner’s tale: Mel Morris
Mel Morris, an early backer of the hugely popular Candy Crush game, took control of Derby County in 2015. In the early days of his ownership he spelled out his hopes of taking the club into the Premier League in a “sustainable” way. But the joy of buying the club he supported as a boy turned into an investment nightmare. Derby narrowly missed out on promotion in May 2019. Disputes with the English Football League over spending rules followed. It went into administration in 2021, resulting in relegation to League One — and Morris’s departure from the club.
On a tour of the ground before the game, he points to some of the new infrastructure investments, including live streaming and refurbishment of the grandstand. A giant digital screen in Home Park that wouldn’t look out of place in a Premier League ground is another recent purchase, even if its arrival was held up in Djibouti, making the League One club an unlikely victim of global supply chain issues.
But did the match against Exeter give a boost to Hallett and Argyle in the quest for promotion? As play begins, Argyle look an accomplished side, passing the ball around with sophistication. But through an error by Bali Mumba, on loan from Norwich City, Exeter take the lead. Argyle hit back to make it 1-1.
The half-time break flies by. As we return to our seats, I ask Hallett to predict the final score. He goes with 2-1. It’s the most common result in football, he reasons. Just seven minutes into the second half, Exeter add a second goal.
Hallett, however, is lucky to be wrong. In the second half goals fly in. Mumba equalises with a scorching shot from outside the penalty area. Substitute Ryan Hardie adds another in the 70th minute, before sending Argyle two clear with minutes remaining in the match. The final whistle blows at 4-2 to Argyle.
The owner sips a glass of cider to celebrate. His “bit of fun” leaves the club top of the league, with contented fans, higher returns and the glittering prospect of promotion still to play for — but that much closer.
League One: not for the faint-hearted
Without the global appeal of elite football, broadcast revenues for clubs in League One, the third tier of English football, are limited. So clubs rely on the old-fashioned business of selling tickets to fans.
League One clubs spent 75p in wages for every £1 of revenue made in 2018-19, the last full season before Covid, research by Deloitte found. As lockdowns took their toll, club revenues fell below wage bills. In 2020-21, clubs paid £1.03 in wages for every £1 of revenue.
The clearest path to meaningful revenue growth is to gain promotion to the Championship by winning the league title, finishing runner-up or through a mini tournament known as the end-of-season play-offs. In 2021-22, Argyle just missed out on a spot in this contest.
However, the Championship is where financial holes can transform into crises. If Argyle are promoted, Hallett must resist the urge to follow the herd by allowing wage bills substantially to exceed club revenues. In its accounts for 2021-22, his team paid just over half its revenues out as wages, despite an increase in its playing budget.
That discipline would be tested in the Championship, where clubs spent £1.07 in wages for every £1 of revenue made in 2018-19. That ratio worsened to £1.25 for every £1 in 2020-21.
Hallett and his fellow shareholders don’t have to look far for cautionary tales. Bolton Wanderers and 2008 FA Cup winners Portsmouth are among the League One clubs to have entered insolvency proceedings in the last decade.
Rick Parry, chair of the English Football League, has warned that the Championship is distorted by “parachute payments” received by clubs relegated from the Premier League to cushion their fall.
Parry says the need to keep up with clubs receiving these payments incentivises irrational expenditure in search of Premier League riches. The Premier League defends the practice as a way of encouraging clubs to invest when they’re promoted — and it now has a mandate from its clubs to negotiate a so-called New Deal for football.
The end result of negotiations — and the outcome of stalled plans for an independent football regulator — will be pivotal to clubs such as Argyle, investors and power dynamics in English football. The fans are watching.