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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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MattG added 10:56 - Aug 22
Excellent blog, Ux - lots of things to think about. For me, I think I sit in the middle ground.

I do believe that those who put their money where their mouths were back in 2001 deserve to make a decent return on their original investment but that dividend payments at the recent level shouldn't become a regular occurrence.

Hopefully the shareholders still hold the Club as dear as they did back when they stumped up their hard-earned cash and, if anything, I'd hope that the dividend payments would give them less reason than ever to consider selling up.

DafyddHuw added 11:26 - Aug 22
OK. Firstly, we have to be extremely proud of our board for getting us from insolvency to where we are now. That doesn't mean everything is OK, though.
I have two "niggles" - actually a bit nore than niggles.

(1) Now that we can afford it, directors are being paid proper money. However there's defo a lack of transparency about how much money goes in board "salaries", who gets what and who decides what these salaries are to be. More scarily, why is there so little transparency?

(2) Can't criticise the on-field effort of the board at all, but there are serious concerns about some off-pitch issues. I don't know which director is in charge of ticketing and refreshments concerns, but both issues are a joke. The issues around getting served at half-time, the quality of the stuff on sale and the pricing of the food/drinks doesn't just reflect that all of this needs to be addressed. It's more than that. Someone, somewhere, at board level, thinks that it's OK for fans to be given a bad deal. I know the refreshments are supplied by a sub-contractor, but some director must be responsible for signing a contract for us being supplied with this poor-quality fare at rip-off prices. Then there's the issue of ticketing. We've have to put up with a small number of staff processing tickets when the queues were going around the block. We've been told to buy tickets online and been charged for the privelige my dad doesn't have a computer - what's he gonna do?). I don't know if this is all down to Stadco. Let's assume that it is. I don't blame Stadco - they're an independent concern, out to maximise profits. However, again somebody at the club, at director level, thinks that all this is OK.

The fact that the club wasn't paying interns any money until they were told that they had to speaks volumes about the attitude of the club these days.

When was the last time we saw the club reaching out to fans? Look at Stoke this season - free buses for fans to all away games throughout the season. Is the club so disconnected from the fans that it doesn't feel it can afford gestures like this?

I'd have a lot less problems with the attitude of the club if they just came out and said "Look, we're a commercial enterprise. We'll squeeze you for as much as we can. If you're prepared to pay stupid prices for food, drink,kit etc. then who's fault is that?". It's the countinual peddling od this "Aren't we great - we're such a small family club" that grates.

I've been a fan for many, many years. It gives me no pleasure to post this. In fact I do it more in sorrow than in anger.

Uxbridge added 11:27 - Aug 22
Thanks Matt. Think we pretty much agree actually. Share your hopes on the final point ... but that's probably another piece entirely, and twice as long!

Uxbridge added 11:42 - Aug 22
Dafydd - Good post. Agree on the lack of transparency. We know some things because the club are required by law to publish details about how much is paid to directors in total and the highest single amount ... and we can infer more from that. However agree it's seemingly provided reluctantly and there's little transparency.

Like I said in my intro I could have written several times as many words and ultimately decided to stick to a relatively narrow subject. Could easily have written just as many words on topics such as the ownership structure or the fan experience issues you raised!

DafyddHuw added 12:04 - Aug 22
Thanks for the comeback Ux. Sorry - now see that I went a bit off topic.
Excellent blog btw.

Molliemick added 13:06 - Aug 22
I think Ux and Daf have both written interesting stuff and I, for one, look forward to further commentary on the ownership structure. An enjoyable and stimulating read. Thanks.

LaudrupFan added 13:09 - Aug 22
I might be wrong, but to me it seems that the 5% share buy back (and termination), has a much more dramatic impact on shareholders than the dividend of 1M (twice). In the blog it is just mentioned as a footnote in brackets.

Uxbridge added 13:14 - Aug 22
LaudrupFan - It's a good point and I'm surprised it's not really been discussed much despite being filed at Companies House since December. Saying that Companies House isn't only everyone's Favourites list and I only became aware through word of mouth. Like I said though, my focus was on the renumeration piece and the ownership structure is a whole other topic in itself.

NOTRAC added 15:54 - Aug 22
A very interesting article.I personally see nothing wrong in the present system of shareholder dividends.The payments reward the original investors ,not all of whom are in the Morgan's class.
The payments obviously ease the pressure of those shareholders who might otherwise have been tempted to sell their shares to raise much needed funds for themselves.
The secret of the success of the club has been the apparent unity of the Board, and their trust in the Chairman.By paying dividends in this way therefore it is less likely that the shares are offered for sale on the open market,thereby allowing individuals or trust funds who are only interested in the club as a selling investment, to upset that unity.
The fact that Mel Nurse sold his shares back to the Football Club rather than to another person, retains that unity, and as one would expect from Mel was the best way to proceed with that transaction from the Club,s own interests.
An interesting aspect of the dividend route is that the Trust is and will build up substantial cash assets.I cannot personally see a lot of point in them retaining cash in this way, as the Trust would not be allowed to reinvest this cash in increasing its share capital.
Perhaps they should consider using at least some of the cash to help young and disadvantaged people in the community, by paying for away trips, tickets, mascot costs, etc for such persons, who would never ever have the chance otherwise of having the Swansea City experience.

ItchySphincter added 18:40 - Aug 22
Dividends can only be taken out of profits once tax obligations have been met. The fact that they can draw a dividend points at a successful year therefor it is perfectly acceptable. Yes it's the fans' club but these are the people who put their arses on the line when we needed them to. Why should they not be rewarded during the good times for the commitment they made and the risks they took during the bad times?

Watchman added 18:51 - Aug 23
EXcellent comments and blog folks

Some thoughts, we can all understand dividend pay outs but the club/board given the previous mantra of owned by fans......really should have explained it a whole lot better. I certainly think that the Trust and especially the Trust Director should have explained it if the main board did not want to. There will come a time when those the club forgot when tkts for the EPL were on sale will be needed when hard times arrive.
As a PS post said it really now is the time when we re examine the next phase of SCFC. I would much prefer any dividend being used to further develop the Academy side of thingsand the links between the club and schools and youth clubs in the areas being strengthened.

EXcellent talking points whatever side of the discussion you sit on

Swanseajill added 23:01 - Aug 24
Good read Ux, and a better understanding of finances for this Jill who finds a maths paper is surely written in chinese.
I dont believe a premiership club can be still thought of as 'club run by fans' as we, and the board have to abide by premiership rules and regulations.The Trust is there for the benefit of the fans, and although we regard the board as fans, at the top flight we need to be seen as professionals. I'm of the view that anyone who risked their money whilst never knowing if they would ever see it again, deserves to be rewarded for their courage.
It's all positive, and hopefully, I for one need never go around with a ' begging bucket' again...ever.

longlostjack added 11:28 - Aug 25
A well written piece. I share your concerns and agree that transparency is essential. No matter how well intentioned the Board's motives are - being open will lessen the chances of major mistakes being made. We've also built up a good image in the press (brand equity etc.). The last thing we need is to give them any opportunity to turn on us.


covertspecialk added 17:04 - Aug 25
Sir take a bow on an excellent blog 😎good points raised and argued for and against

I agree and I have a deep feeling that perspectives of the board has shifted from all things good for the club, to how much money can I gain.

I believe we need a some sort of Charter in place ensuring the club is the foremost important aspect and greed doesn't blacken it.
Strick guidelines on who can aply to become a board member/major investor that only applicants who don't need to put their needs before the club. Far to many times have we seen investors only wanting quick return with a staggering increase on their investment that either bancrupts the club or worse needing to sell their players and just to pay mr moneypit!
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