We spoke with football finance expert Kieran Maguire to get a sense of the rationale behind the club’s decision to continue issuing additional shares. Swansea City’s owners have put extra money into the club’s coffers, which may have gone unnoticed for a while.
The Swansea City Supporters’ Trust confirmed in a statement that a further 110,549 additional shares had been issued at a total value of little over £2.5 million as a result of fresh investment into the club.
“As we previously stated earlier this year, this is the most recent of a series of cash injections made by Swansea Football LLC, the investment vehicle of the majority owners, which include Chairman Andy Coleman, Jason Levien, Steve Kaplan, and Jake Silverstein. We understand that this is the majority owners’ final investment in the club this fiscal year.”
This is the seventh time in as many months that the American owners have made such a decision. Over the last 12 months, the club has received roughly £28 million in new shares.
It’s become such a common occurrence that the club and media paid little attention to the newest announcement.
But, ahead of what promises to be a pivotal summer, it has sparked the imagination of fans, many of whom may be wondering what it all means.
Some may see it as an indication that Swansea’s American owners are serious about the upcoming season, while others wonder if it’s a cause for concern, especially given the backdrop of a rather unsettling set of financial figures.
The reality is a bit more mundane. Swansea are hardly the only team in this position, especially in the Championship, which is a glorified casino.
“It’s not unusual,” says football financial expert Kieran Maguire. “There are other clubs, even ones in the Championship, that do something similar. Preston’s owners have effectively given the club £1 million every month through a share issuance.
“It’s an understanding that playing on the Championship playground is a pretty expensive exercise. The average loss is £400k each week. How do you get around that? One way to accomplish this is to issue shares. That is what we have witnessed here at Swansea.
“It’s better than borrowing money because if you issue shares, you don’t have to pay them back. It’s the owners putting money into the club to effectively keep the lights on. That sounds very dramatic. But it’s not. Every club in the Championship is in a very similar position.
“Swansea were actually mid-table in terms of losses last season. Their losses were half that of Burnley and Sheffield United. Norwich lost close to £30m. Birmingham lost more, so did Bristol City, Blackburn and QPR. So Swansea are about eighth or ninth in the list of losses.”
Financial losses will always carry the weight needed to generate a concerning headline, and many will argue that just because other clubs in the division are facing similar challenges doesn’t mean the reality of Swansea’s balance sheet can just be brushed off.
But for now, Maguire argues, there’s little reason to worry.
“Unless the owners decide to do a Mel Morris at Derby and they get bored, or maybe realise that sticking £400k a week into the football club isn’t a particularly good use of the children’s inheritance.
“If the owners walk away, it then means the club doesn’t have the resources to pay the bills on a month-by-month basis. That increases the risk of administration.
“Football clubs are trophy assets and provided the owner is getting some enjoyment out of it, in exactly the same way as they might a helicopter or a private island or a yacht, and we are talking about high-net worth individuals, then it’s fine.
“But the owners are the biggest assets because they fund the losses, but they’re the biggest risks because if their circumstances or attitudes change. Then the club is in a precarious position.”
Given the club has seemingly ruled out any further issuing of new shares for the rest of the year, it appears there’s some confidence that there will be enough cash to see them through for the first half of the season, although there’s nothing stopping them from ploughing more in should they so wish.
“Issuing new shares is limitless,” Maguire says. “Roman Abramovich brought in £1.5bn of financial support for Chelsea. Brighton’s owners put in half a billion.
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“There’s nothing from a legal point of view to stop clubs taking such an approach. It could be that the owners might choose to put in some of the money in the form of interest-free loans as opposed to shares. But that’s effectively the same thing – money to keep the lights on.”
As with the Swans’ latest accounts, the main takeaway that emerges from all this is that the reliance on the American ownership has never been stronger.
“It is very much a dependency relationship as opposed to the owner happening to be very good at what they do,” according to Maguire.
That is all very fine. But the obvious next question is what Swansea’s owners actually gain from all of this.
“They get the excitement,” Maguire says. “In 12 months’ time, you could be hosting Liverpool, Manchester United, or Manchester City at your stadium. There’s the incentive that if they make it to the Premier League and stay there, the club’s valuation will skyrocket, and you might possibly make a lot of money.
“However, it rarely serves as motivation. It’s the same as any other trophy buy. You could purchase a piece of art solely to Say you now own that work of art.
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