| An objective view on business ownership 20:18 - Sep 5 with 15150 views | jackanuck |
OK. Here goes. I've had this user ID for years but have never posted. I used to be on JackArmy years ago. I used to read and post all of the time but for the last few years I come on to the forums a lot less because in my opinion, it's gone really down hill.
I'm a lifelong fan of the club, mid thirties, expat and never owned a season ticket at the Vetch because I couldn't afford it. I'd go to most home games - 2/3 I'd say and always sat in the East Stand with my dad or go on the North Bank with my friends or if I was on my own. I moved away the year we went in to the Liberty and have been back to watch 1-2 games a year most seasons since then. I listened to every game on the radio through PalTalk after I left, until we hit the big time. I was really devastated when we were going to get relegated because I was worried I wouldn't be able to watch the Swans anymore. As it's turned out, The Championship seems to be hitting the big time too and so far I haven't missed a single game on TV/Internet. All in all, I'm a pretty happy chappy.
Why have I come back on the forum? It really irks me that our fans are being divided by the subject of who owns our club. I know it's not something I can fix with some silly little post on the forum, but for my own therapy, I just have to get this out there for a few people to read. Everyone's entitled to their opinion, and I don't expect I'll change anyones thoughts, but theres a few things I want to get off my chest in the hope that we can bind together as a fan base. A lot of what I read (the majority) makes out that everything is black or white. Like most things in life, the situation at Swansea City is far from left or right, but aptly somewhere in the middle.
First of all, I've been hearing for years and years from every premier league broadcast (like a lot of us) the Swansea success story. THE FANS OWN THE CLUB. This is not technically true. (It's a bit like saying I own Apple Inc. because I have some shares) It would have been true to say that the Swansea Supporters Trust owns a non-majority share of the club. Regardless, I've always been really proud of this and I would let the inaccurate statements made by TV pundits slide. However, I think there is a large camp of fans on this forum that do not understand when they read things like "the board sold our club...." This isn't true, the board sold their majority shares in our club.They earned those shares with money and by dedicating a large part of their lives to the success of the club for the past 15 years. Our trust still owns their minority shares. It's as factually true as it ever was that our fans (The Swansea City Supporters Trust) still own the club. I think this is a really valuable thing and I hope that our trust never dilutes or gives away it's shares in our club. It is my hope that in the future, there will be no one entity (other than the Trust) with a greater than 50% share in our club and while a million miles away from that scenario at the moment, I'd love to see the Trust get in to the drivers seat one day.
As someone who is frustrated that are club is in the majority ownership of strangers, I ask my self this question. Why did the trust not make moves to purchase shares from the rest of the board of directors / owners so that the Fans could own the majority share? You should ask this question too because it trumps all of your other questions. If you want the fans to won the club, they need to pay for it. They can't expect it to just be handed to them in a sweet heart deal by investors (Jenkins et al) who put their money at risk all those years ago.
I realize the answer to this question could be multi-faceted. For example, maybe they wanted to but couldn't afford it. Maybe they just didn't want to because they didn't want the risk exposure. Regardless of the reasons, it is important to understand accountability and for me, if we are to ask the question about why our club is in the hands of strangers, the obvious answer is - It's because the fans did not purchase the shares required to own the majority of the club. There may be incredibly good reasons for why the trust didn't do what was necessary, but it doesn't alter the fact that the failure of the trust to acquire 51% total shares is why the club was in a position to sold to foreigners.
My second blurb is about the basics of business. I am a business owner. I have founded, raised debt and equity finances and exited businesses within the past 5 years and know my way around East Coast VC's (Venture Capitalists) I'm sure i'm not alone and am among a small minority here who understand these 'ventures'
It really pisses me off when I read one liners on here from people who are Anti Ownership, Anti Board who deem everyone with an objective opinion to have their head up the arse's of Jenkins/Levein/Kaplan etc. It's simply not true. The difference between me and many of those posters is that I have a moral (and legal) compass to not fabricate bull-shit about the owners to make it appear that they are thieves and people who are taking advantage of the club. Yes, the purpose of most businesses is to make money to pay their annual burn and in most cases, to make a profit. That doesn't automatically make all owners bad. It's my opinion that this ownership group made a few big mistakes that they've since confessed too. With the exception of Jenkins, I don't think they are more qualified than anyone else to get the club back to where it needs to be, but it's obvious to anyone who has ever been involved with buying and/or selling they aren't going to go anywhere. Why?
VALUATION. So I can make sure I've expressed myself and how important this is, I'm going to say it a few more times! VALUATION VALUATION VALUATION!!!!
If you know what Valuation is, feel free to check out of this thread now. If you don't, this is possibly the missing link to answer to all of your uncertainties about what is happening and what's about to happen, probably for the next 5 years.
I'll start with a basic and made up case study.
If a theme park has 10 rides and 50,000 annual visitors and generates 1 million pounds per year with a NET Profit of around $200,000 per year, you could argue it's worth (has a valuation of) about 1 million pounds as an investment to a new buyer. That buyer would make the money back on their investment in approximately 5 years. The original owner could cash out now, or he could do a lot of work and invest more capital to make his investment worth more and cash our later. He could also give away % of his ownership and a fraction of the million pound so he can keep some skin in the game.
Our owners intention (in my opinion) is to increase the overall valuation of Swansea City and then sell the club on. I am explaining this in such simple terms because there are people on the forum who say things like, "why would they be here if not to rip the beating heart out of the club and steal all of the money" NO! If they did that, the club would be completely worthless. They would never in an entire decade be able to rip out enough money to cover their original investment from this club. The only way for them to profit is to improve the club on and off the field and sell it again for a higher price. The Club's current Valuation is probably 30 pennies on the poind to where it is if we're in the premier league. When selling it in the future, all the clubs negative attributes will be attached to the due-diligence that a buyer will do including debt, bloated salaries, deal fees etc. I am absolutely sure that they do (YEs said DO!) take a salary from the club or in the very least, have an attachment to deal fees but that is absolutely normal among ownership / venture capitalists.
Right now, there's a few die hard board-haters doing calculations on players sales to prove that they've already made their money back. All I can say is, this is futile. You don't have the books. Any money they are currently taking out of the club would be trivial 'icing on the cake" deal fee amounts and wouldn't in any scale contribute to what you currently see as trying to claw back their investment in our club by "bringing down the house" They are simply bringing our clubs burn rate inline with our annual revenue forecast now that we've lost a huge amount of revenue. If this concept is lost on you, all I can ask you to do is enrol in a very basic night school or internet course on business management. No different to running your own household, your income has to be equal or greater than your outgoings, or else your fiscal value is less than zero.
It pisses me off immensely that these American's didn't understand the history and culture that has been built within our club, especially during the past 15 years. They admitted as much in that BBC article the other day. It kills me that they were ignorant, bold and naive enough to that Idiot of an American Manager, Bradley, in charge of us. I'm so frustrated that we took big gambles on player signings in the last couple of years that haven't worked out. I do believe we are on the right track, they've learned from their mistakes and have placed trust in the right people to get the playing side of the club back on track. However, I'm also smart enough to know that as fans, we are having to live with their mistakes. Overall I think they are stupid idiots and pretty typical of the east coast VC's I've interacted with in the past. However, I don't think they are doing anything dishonest and I don't think they are going to continue to purposefully ruin our club. If they are smart, they'll open up a good channel of communication with the supporters trust and see them as the future, rightful owners of a majority stockholding in Swansea City Football Club, potentially helping the trust to acquire the loans it might need to reach the clubs future valuation, if we can cement ourselves once again as a top half premier league side with a good academy.
Overall, I just want our fans to be less divided. I'm open to constructive criticism on my thoughts and most of all, I want to be optimistic for the future.
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| An objective view on business ownership on 22:33 - Sep 5 with 2532 views | londonlisa2001 |
| An objective view on business ownership on 22:25 - Sep 5 by jackanuck |
HI Lisa,
Forgive my ignorance if what I'm about to say is stupid. But If my house is worth 500k and I have a 360k mortgage added to it's value, that would make my house worth 860k. Hence why I chose different language in my post. Please feel fee to correct me if I'm off. |
If you’re going from equity value to enterprise value you add debt.
In the example you’ve just given equity value is 140k so you add back debt of 360k to get to ‘enterprise value’.
What Leighton was saying was that if the club is ‘worth’ 20m and it has debt of 10m, it’s equity value is only 10m whereas a club worth the same without the debt has an equity value of 20m.
Your example in plain English is fine, but when you use terms like enterprise value or equity value they mean specific things. | | | |
| An objective view on business ownership on 22:36 - Sep 5 with 2516 views | jackanuck |
| An objective view on business ownership on 22:33 - Sep 5 by londonlisa2001 |
If you’re going from equity value to enterprise value you add debt.
In the example you’ve just given equity value is 140k so you add back debt of 360k to get to ‘enterprise value’.
What Leighton was saying was that if the club is ‘worth’ 20m and it has debt of 10m, it’s equity value is only 10m whereas a club worth the same without the debt has an equity value of 20m.
Your example in plain English is fine, but when you use terms like enterprise value or equity value they mean specific things. |
Thumbs up! Thanks Lisa. | | | |
| An objective view on business ownership on 22:37 - Sep 5 with 2508 views | jack2jack |
| An objective view on business ownership on 22:29 - Sep 5 by jackanuck |
Technically anything can be agreed but think about how motions are brought up and passed. They are passed by the majority. The entire rule book can be re-written by the majority given enough board meetings.
Also, it's quite typical that in the event that any shareholders have injected debt (which the Americans have) that voting rights can be changed until such debt is paid back. This is fairly routine if any portion of a debt is not being recalled on-time.
I've had first had experience with minority ownership VC's who had dominant shareholder rights temporarily, until monies are re-paid. |
Thanks for that, so we are saying that voting rights can be diluted, depending on the amount of debt, is it there possible under those circumstances, that a minority shareholders, can out gun, a majority shareholder, so to speak.
It's getting kind of late for this, so keep it simple,cheers👠|  | | |
| An objective view on business ownership on 22:38 - Sep 5 with 2502 views | _ |
| An objective view on business ownership on 22:04 - Sep 5 by leighton1318 |
Thanks for your reply 
I wanted to make a slightly different point, the way the debt in the business (the enterprise) affects the value of the equity. So your house may be worth £500k (the business) but if you have a mortgage of £400k the equity is onl6 worth £100k. If there’s no mortgage the equity would be worth £500k.
My thought stemmed from the other thread about an equity issue. I think the Americans bought in at £100m amd that we were debt free at the time, so both enterprise and equity value were £100m.
Now - the business is worth less (an 7navoidable consequence of relegation) and there’s undoubtedly debt in the business (eg see the interview reference to the shareholders lending money because the bank won’t).
So the points I wanted to draw out are (a) that the equity will be worth a heck of a lot less than £100m and so our new owners are sitting on a massive paper loss; and (b) the owners could really set the cat among the pigeons by launching a rights issue to dilute the Trust (as someone did pick up).
The point you’ve made, I agree with - even to get their money back, never mind the desired hedge fund return of 2.5x money/ 25% IRR - the Americans have a very long way to go. Asset stripping alone (even ignoring or assuming the duck the restrictions on what they can do) will never do it.
Hope that may be helpful to some readers. |
They bought in at £1m a percentage or thereabouts and own, what is it, 67%? So there's other shareholders down on the original share valuation.
The business is worth less for all, but it's not worthless and the only official reference we have to there being any debt in the club are short term loans which they are recouping to cover cashflow issues.
The Club has always 'sold' the central payments at this time of year, this was happening pre-Americans so that in itself isn't an indication of how the clubs finances are now compared to how they were then.
A football club would be valued on many aspects from it's assets (ground, training facilities) to its players and future revenue. We've taken a hit on the last 2 and the signs are we are adjusting for the loss in revenue and trying to rebuild and grow again our playing assets.
All extremely wise decisions, but not, in isolation, an indication to what debt, if any, we are in. |  |
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| An objective view on business ownership on 22:40 - Sep 5 with 2496 views | jackanuck |
| An objective view on business ownership on 22:30 - Sep 5 by leighton1318 |
I would say they took a flat out punt on staying in the top division and cashing in on the apparent magical money tree of ever growing TV revenues. They may have deluded themselves, or been kidded, as to how easy that would be.
From here ... they are in a hole, they have £68m of dead money. Their options IMO were to spend in the hope of going quickly back up, or to take the deep breath and work through it for the long term - it looks like the latter. It is not the hedge fund style to throw good money after bad.
To be clear it is not hedge fund money that’s invested (I believe), more a rich man’s plaything. £68m between 27 people averages less than £3m each and for most of them (again, I assume) it was not a high % of their net worth. So they can probably afford it, as opposed to being under pressure to ‘satisfy the bank manager’. |
This! It's so nice to read an objective analysis of the symptom. Whether we like it or not, it's important to understand the problem.
Leighton - I mentioned in my original post that I'd love to see the Supporters Trust eventually get to a point where they are dominant share holders of the club. I say eventually, because I wouldn't want this to happen in a 'burn the house down and start again' scenario. It would be good if they could raise the funds necessary to buy the club from the Americans in a few years once their original investment has been restored. Do you (or anyone else) have any thoughts on this? | | | |
| An objective view on business ownership on 22:44 - Sep 5 with 2472 views | jackanuck |
| An objective view on business ownership on 22:37 - Sep 5 by jack2jack |
Thanks for that, so we are saying that voting rights can be diluted, depending on the amount of debt, is it there possible under those circumstances, that a minority shareholders, can out gun, a majority shareholder, so to speak.
It's getting kind of late for this, so keep it simple,cheers👠|
yes that is correct. I must say though - while this is common, I do not know if it applies in this scenario. It was more just food for thought to supplement your earlier comment about majority shareholders not having absolute dictatorship rights in this relationship (in other words) | | | |
| An objective view on business ownership on 22:47 - Sep 5 with 2456 views | jack2jack |
| An objective view on business ownership on 22:44 - Sep 5 by jackanuck |
yes that is correct. I must say though - while this is common, I do not know if it applies in this scenario. It was more just food for thought to supplement your earlier comment about majority shareholders not having absolute dictatorship rights in this relationship (in other words) |
Interesting.
Thanks👠| | | |
| An objective view on business ownership on 23:23 - Sep 5 with 2402 views | ExiledJack |
| An objective view on business ownership on 22:30 - Sep 5 by leighton1318 |
I would say they took a flat out punt on staying in the top division and cashing in on the apparent magical money tree of ever growing TV revenues. They may have deluded themselves, or been kidded, as to how easy that would be.
From here ... they are in a hole, they have £68m of dead money. Their options IMO were to spend in the hope of going quickly back up, or to take the deep breath and work through it for the long term - it looks like the latter. It is not the hedge fund style to throw good money after bad.
To be clear it is not hedge fund money that’s invested (I believe), more a rich man’s plaything. £68m between 27 people averages less than £3m each and for most of them (again, I assume) it was not a high % of their net worth. So they can probably afford it, as opposed to being under pressure to ‘satisfy the bank manager’. |
Another very insightful post Leighton, thank you.
It would be a lot more reassuring for fans (at least one would hope) if we were to have sight of the terms and conditions of the shareholders' investment, including the reward structure for K&L. Never going to happen of course.
Establishing incentive and constraints can give an indication as to how they may proceed from here. | | | |
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| An objective view on business ownership on 01:09 - Sep 6 with 2359 views | DJack |
The post non-football thread that I've read today. Ta. |  |
| It is far better to grasp the universe as it really is than to persist in delusion, however satisfying and reassuring. - Carl Sagan |
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| An objective view on business ownership on 06:32 - Sep 6 with 2294 views | Sirjohnalot |
What a fantastic thread. Thanks to all that’s contributed for educating me on something I didn’t really understand |  | | |
| An objective view on business ownership on 07:25 - Sep 6 with 2275 views | waynekerr55 |
| An objective view on business ownership on 22:17 - Sep 5 by jack2jack |
Welcome Jackanuck.
Can I ask a simple question, everyone keeps banging on about majority shareholder s this, minority shareholders that.But I'm under the impression that share percentages don't mean that much, depending on what's written into the SHA. |
You mean the SHA that (a) doesn't exist, (b) wasn't signed on behalf of BVS, (c) Jenkins asked the trust to scrap and (d) the agreement that was used to divvy up Mel Nurses shares |  |
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| An objective view on business ownership on 09:04 - Sep 6 with 2210 views | JACKMANANDBOY |
Thanks to the OP and those who have made constructive contributions. I'm left feeling more depressed that the future of the club is purely about getting the right return for a small number of American money men. |  |
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| An objective view on business ownership on 09:46 - Sep 6 with 2194 views | A_Fans_Dad |
| An objective view on business ownership on 09:04 - Sep 6 by JACKMANANDBOY |
Thanks to the OP and those who have made constructive contributions. I'm left feeling more depressed that the future of the club is purely about getting the right return for a small number of American money men. |
That is what it was ever only about.
It is what hedge funds are for.
ps American money men, women and others. | | | |
| An objective view on business ownership on 10:27 - Sep 6 with 2177 views | hammy |
| An objective view on business ownership on 09:46 - Sep 6 by A_Fans_Dad |
That is what it was ever only about.
It is what hedge funds are for.
ps American money men, women and others. |
Yes, indeed. The discussion and understanding of the accounts and the financial business drivers are all well and good, but SCFC have been put in this situation by the very people that were meant to be the so-called guardians of the club. Personally, I have no issue with shareholders making profit on their shares, but this has most certainly been done with the dis-regard for the future stability of the club. All this talk of investment and going to the next level was complete and utter BS, which is the crux of the current malaise at the club. Maybe certain individuals need to come clean and provide some honesty around how we arrived at our current situation; would possibly be both cathartic (to the individuals) and help to quell the current toxic atmosphere at the club.
Anyway, we are no worse off than a number of clubs that have been taken into overseas ownership and just hoping that the on-field situation improves and we bring through a number of good, local youngsters. I must admit that I'm currently getting more satisfaction watching us play in the Championship than the past 2-3 years in the PL. Maybe I just care about the football … |  |
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| An objective view on business ownership on 14:23 - Sep 6 with 2102 views | Nookiejack |
Why after all these years do you want to post this around the time of the Trust forum.
Your wisdom would have been really appreciated a few years back.
Are the Yanks suddenly on the run?
If I were advising the Trust I would be smelling weakness here. | | | |
| An objective view on business ownership on 14:35 - Sep 6 with 2094 views | Nookiejack |
After all these years of standing on the North Bank and sitting in the East Stand - I suddenly feel that the club is tearing itself apart and am compelled to start a thread about Enterprise Value and Venture Capitalists on the East Coast of America.
I hope this thread provides a way of us coming together in a period of disharmony. | | | |
| An objective view on business ownership on 14:42 - Sep 6 with 2082 views | Nookiejack |
Interesting also the ‘addicted to deal fees comment’ is that some justification for management fees being paid offshore to the Yanks Delaware company? | | | |
| An objective view on business ownership on 15:34 - Sep 6 with 2045 views | jackanuck |
| An objective view on business ownership on 14:35 - Sep 6 by Nookiejack |
After all these years of standing on the North Bank and sitting in the East Stand - I suddenly feel that the club is tearing itself apart and am compelled to start a thread about Enterprise Value and Venture Capitalists on the East Coast of America.
I hope this thread provides a way of us coming together in a period of disharmony. |
You really can't boil down my original post in to a two liner like that. Not accurately anyway.
Sincerely, I'm not perfect and I don't expect I can bring about Planet Swans peace in my time. Right, Wrong or indifferent, these were just my words right now.
By the way, since you bring it up, let me clarify for anyone that didn't know that a very high volume of US businesses are registered in Delaware (as well as Nevada). I myself have worked with a founder who registered his creative services business in Delaware even though he'd never set foot in the state. I suspect Levein and Kaplan have never been to Delaware either! However, this is nothing unusual. [Post edited 6 Sep 2018 15:35]
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| An objective view on business ownership on 15:37 - Sep 6 with 2041 views | jackanuck |
| An objective view on business ownership on 10:27 - Sep 6 by hammy |
Yes, indeed. The discussion and understanding of the accounts and the financial business drivers are all well and good, but SCFC have been put in this situation by the very people that were meant to be the so-called guardians of the club. Personally, I have no issue with shareholders making profit on their shares, but this has most certainly been done with the dis-regard for the future stability of the club. All this talk of investment and going to the next level was complete and utter BS, which is the crux of the current malaise at the club. Maybe certain individuals need to come clean and provide some honesty around how we arrived at our current situation; would possibly be both cathartic (to the individuals) and help to quell the current toxic atmosphere at the club.
Anyway, we are no worse off than a number of clubs that have been taken into overseas ownership and just hoping that the on-field situation improves and we bring through a number of good, local youngsters. I must admit that I'm currently getting more satisfaction watching us play in the Championship than the past 2-3 years in the PL. Maybe I just care about the football … |
Agree with this Hammy. Our real point of difference though is that we have brought in a fantastic on field manager and his team) and we've invested in great facilities that'll help us attract good players in the coming years. I don't know much about our academy but its starting to feel like it's yielding some serious talent! | | | |
| An objective view on business ownership on 15:39 - Sep 6 with 2040 views | jackanuck |
| An objective view on business ownership on 09:04 - Sep 6 by JACKMANANDBOY |
Thanks to the OP and those who have made constructive contributions. I'm left feeling more depressed that the future of the club is purely about getting the right return for a small number of American money men. |
Thanks and remember one thing to make yourself feel a bit better about this. Our success will be their success and vice versa. If they get a good return on their investment it'll be because they elevate us to a higher standard.
I wish we had more talented owners, but I don't think we have dishonest ones. Clowns, not thieves. [Post edited 6 Sep 2018 15:42]
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| An objective view on business ownership on 17:55 - Sep 6 with 1983 views | Highjack |
| An objective view on business ownership on 21:04 - Sep 5 by Shaky |
VALUATION:The club is to all intents and purposes currently worthless. |
Can I have it for free then please? |  |
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| An objective view on business ownership on 18:01 - Sep 6 with 1970 views | Shaky |
| An objective view on business ownership on 17:55 - Sep 6 by Highjack |
Can I have it for free then please? |
Possibly.
Do you have £21 million to give to the Trust in compensation for their pending Unfair Prejudice action? |  |
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| An objective view on business ownership on 18:13 - Sep 6 with 1951 views | Highjack |
I do not. No. 😞 | |
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| An objective view on business ownership on 18:31 - Sep 6 with 1942 views | chad |
| An objective view on business ownership on 15:39 - Sep 6 by jackanuck |
Thanks and remember one thing to make yourself feel a bit better about this. Our success will be their success and vice versa. If they get a good return on their investment it'll be because they elevate us to a higher standard.
I wish we had more talented owners, but I don't think we have dishonest ones. Clowns, not thieves. [Post edited 6 Sep 2018 15:42]
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Indeed and long may they be successful that would be great for us
Although clowns they are most certainly not so I am not sure how objective you are being
Hopefully we will not be further elevated to the 1st division though
However should that occur hopefully we will have that 20m pot we are going to sue their asses for for all the honesty they showed during the buyout. |  | | |
| An objective view on business ownership on 18:31 - Sep 6 with 1941 views | Shaky |
| An objective view on business ownership on 18:13 - Sep 6 by Highjack |
I do not. No. 😞 |
In fact the actual amount on the line is probably a shade over £23 million; don't suppose you have that in the piggy bank either then?
No need to feel bad about it though. Because the reality is that there aren't many around who would like to buy a business where they have to pony up £23 million to a disgruntled shareholder with a very strong legal case, and that has signed over the next 2 year's revenue to the bank.
Hence why the value of the non-Trust shares in Swansea City is quite likely negative, currently.
And for those who take an interest in the technicalities of valuation this is based on what is known as a break up valuation. This a opposed to a cash-flow or earnings based valuation, because non of those are positive. | |
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