|Whose money is it anyway?|
Written by Uxbridge on Wednesday, 21st Aug 2013 22:56
There’s been some debate in recent months regarding the financial arrangements between club and board so I was asked to write some thoughts on the subject.
It’s quite a bit longer than I planned but I felt I had to include some historical context and look at the various aspects. If it’s any consolation this could be twice as long at least!
In March 2010 Swansea City announced their 2008/9 financial results, a relatively small £457,000 loss which was subsequently offset in the next financial year. Such financial prudence was the bedrock of the club’s relative stability in the mad world of professional football where concepts such as breaking-even, fiscal responsibility and budgetary control seem entirely alien to most clubs. This set of accounts were also notable for the club’s directors and shareholders continuing the tradition since taking control of not receiving any remuneration from the club. A stance which was admired by many and went no small way in helping develop the feeling that Swansea City AFC was truly a club owned by the fans, run by the fans for the fans.
Since that time, things have moved somewhat. In 2011 it was announced director remuneration totalled £110,000. This figure has risen significantly since, with Huw Jenkins alone reported as being paid £200k a year in his role as Chairman. In April 2013, when interim profits of a staggering £15.9m were announced, a dividend of £1m was paid out to shareholders. Finally, a couple of weeks ago, the Swansea City Supporters Trust announced in their newsletter that they had received a further dividend share of £210,525 from the club. Given we know SCST hold a 21.05% share in the club (a slight increase on 20% since the club’s repurchase of Mel Nurse’s 5% stake last December), this means a further £1m dividend was paid out to directors. This is still, quite strangely, yet to be announced by the club at the time I write this.
By any measure, this is a significant departure from the mantra of previous years where every penny was retained within the club for the benefit of the club. Now we have the situation of some directors earning significant salaries at the club and shareholders receiving dividends which are worth several times their initial investment as well as retaining their share in what is now a very lucrative asset.
In my opinion, the issues of salaries and dividends should be split. I’m a firm believer that people should be paid appropriately for their efforts (a belief I hope the club share in future in regard to their recent recruitment of unpaid interns). I certainly could never begrudge Huw Jenkins earning what is a relatively small salary for being in charge of what is approaching a £100m company. However I’m also of the belief that there should be proper oversight and processes to ensure the best people for the job are employed. Huw’s certainly passed any test I could envisage on that score too, however the same needs to be true of other appointments. It was difficult to be too churlish in the days when the club was effectively run by volunteers but when significant salaries are paid then different rules should apply. Can’t argue with success though, so they’re clearly doing something right!
The issue of dividends is not so clear cut in my eyes. Certainly every Swansea City fan is incredibly grateful to the likes of Jenkins, Morgan, Nurse and Katzen and many others for putting their time and money into helping to guide the basket case that was Swansea City 2001 to the stable, cash-rich, successful media and supporter darlings of 2013. Given the club is now more than capable of standing on its own, it would take a hard heart to begrudge the directors being reimbursed for their initial investment and also the long hours spent getting us to where we are now.
Which brings me to the point of this piece, which is twofold. Firstly I believe we are seeing a change of dynamic at the Liberty Stadium where there is a significant change in how the directors view the club. Previously, great capital has been made from how Swansea City Football Club was a not-for-profit community asset and even now is continually presented to the press and supporters as a club run by the fans for the fans. The club have benefited from this public perception, not least from enjoying a relatively patient fan base who have given the board a wide degree of latitude that previous or other club’s owners have or do not enjoy. Now we have significant salaries being paid to at least two of the directors and £2m of the club’s money being taken out of the club. Given that £1m has been paid out for each year we have been in the Premier League, it would be interesting to know whether this trend will continue or even increase as TV revenues go up. Will our continued success turn the club into a cash cow for the board? Either way, in my eyes at least, it is a major change in the relationship between board and club and indeed board and fans.
The second part is … well, does any of this really matter? Our club is undoubtedly the biggest footballing success story of the last 10 years, is seen as the blueprint for many clubs who have fallen foul of the Alice in Wonderland accountancy employed at a variety of other football clubs and is still one of the few clubs to turn over a profit. Don’t the people behind that deserve to make money out of this? If we don’t let them make money is there a danger they might sell up to someone whose interests don’t match ours? Some may go further and say that all that matters is how well the club is doing on the pitch and couldn’t care less as long as we’re not heading back to the High Court.
Those views are all perfectly valid and for me the answer depends on how you view your personal fan “contract” with the club. I can only speak for myself, but what’s made me so proud to be a Swansea City fan over the last decade is how the club has retained a genuine link between club and community despite going from 92nd to 9th place in the league and without compromising the soul of the club in doing so. Would the pride we all felt going to various finals and playoff games at the Millennium Stadium and then Wembley have been the same if we were supporting Swansea City PLC or were the plaything of some rich Malaysian who thinks his waist is at the same level as his armpits and cares only about how the club will feather his own next?
That’s my concern in a nutshell … that we’re in danger of moving away from a true community club to one which has an eye on how it can make money for the 78.95% and starts viewing the fans as customers not stakeholders. Maybe I’m a hopeless idealist regarding my expectations of how things should be, but a) the current board set those expectations and b) aren’t unrealistic expectations part of being a football fan anyway!!
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