The Salary Cap And Argyle
Argyle and all League Two clubs once again operated under a salary cap for this season.
The English Football League again imposed a salary limit which restricts clubs to spending 55 per cent of their turnover on player wages.
The Salary Cost Management Protocol applied to all clubs in the EFL for the 2016-2017 campaign with the wage cap set at 55% of projected turnover for League Two and any club that breached the limit would be the subject of a transfer embargo.
The salary cap in League One is set at 60%.
The aim of the SCMP is to reduce the levels of losses incurred by clubs and, in the long term, ensure the EFL is comprised of self-sustaining professional football clubs.
Budgetary information and financial forecasts are passed to the EFL authorities at the start of the campaign and is updated and monitored as the season progresses.
In 2011, the Football League, as it was known at that time, stated they gave a "huge leap of faith" to allow Argyle to exit administration and continue as a football club. In those years after administration Argyle were under intense financial scrutiny and had to supply regular financial updates to the Football League and the club has operated under a 55% wage cap since those days.
The SCMP allows no restrictions on the amount a club can pay out or lose on transfer fees.
Turnover relates to season ticket sales, match day income, pre-season friendlies, programme sales, catering and commercial income (including non-matchday events), TV revenue and profit from player sales. The corporate and commercial facilities in the proposed refurbished Home Park grandstand will help the club generate income seven days a week and contribute to turnover.
Under SCMP wages relate to player wages only and not club staff; this will also include the wages of loan players, although the wages of players loaned out will be deducted for the loan period. The pay of youth players who have just signed a professional contract are excluded from SCMP.
Argyle's recent history has shown that success and promotion can be achieved with a wage-to-turnover ratio of less than 50% because Argyle's last three promotions in 1996, 2002 and 2004 were all achieved by spending less than 50% of their turnover on wages.
Each of those three promotions all happened with a player wage-to-turnover ratio below 50% and in season 2014-2015 and 2015-2016 Argyle reached the play-offs with a salary cap of 55% or less against turnover and this season are on course for automatic promotion under the same financial restrictions.
The Wembley play-off final win in the 1995-1996 season saw the club spend 40.8% of their turnover on wages and still enjoy a successful season.
Similarly, the two promotions achieved by Paul Sturrock were also built on sound financial management and paying affordable wages with 43.1% of turnover spent on player wages in the 2001-2002 Division Three title winning season and 49.1% of turnover paid out on wages when winning the 2003-2004 Division Two championship.
So Argyle themselves have recently proven that promotion and success can be achieved by operating under imposed financial restrictions.
The other side of the coin is that Argyle are also the perfect example of what happens when a club spends beyond its limit on wages because in 2008-2009 when the Greens were still in the Championship the club spent a huge 87.2% of an £8.6 million turnover on wages; with the wage bill hitting £7.5 million for that season.
We all know what happened after that and the administration process that almost killed PAFC.
Transfer fees paid out to sign players in the lower leagues are now the stuff of pure fantasy but Argyle can still compete with other League Two clubs when offering wages, courtesy of the spending power of the Green Army.
The Pilgrims' are fortunate that attendances at Home Park are one of the highest in the lower divisions, certainly the second highest in League Two; which means that extra fans coming through the turnstiles will help manager Derek Adams attract new players by offering good wages when compared to the standard in League Two or even League One.
Argyle's player wage/turnover ratio since 1995:
2012 - 2017 below 55%.
2010-2011 no accounts available.