CroJack
Key Player
How?Our fcukers did and they are murdering our club.
OTHER FOOTBALL
- Thread starter ivoralljack
- Start date
?????? Do I need to say?How?
Total lack of investment, And the cash flow has a one way ticket.How?
CroJack
Key Player
Yes, please. I really don't see how they are 'murdering the club'. Are we entering administration? Do we have a huge debt? Are we in a trouble like Derby?
That's the harsh reality for the vast majority of football clubs around the world. When Morgan, Jenkins and Co. run the show at Swansea we used to call their total lack of investment for "shrewd business". And the cash flow had a one way ticket then as well.
I just don't get it why do we call our old owners' lack of investment "a shrewd business", and the same lack of investment by the Yanks "murdering the club"?
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KVetch
Key Player
They've got the finances in order (We hope by now) I begrudgingly give them credit for that. We all know what can happen when a club goes belly up.
i want to see more investment, the Henry deal for a supposed £5 million. I want to see them use that budget come January. I wonder if they put that rumour out there to distract us from them selling Roberts. Did Roberts want to leave? We could have used that money to keep him 1 more year.
That's how football is nowadays. What is the average time spent with a club now? Routledge and Dyer should have gotten more of a sending off than they did.
i want to see more investment, the Henry deal for a supposed £5 million. I want to see them use that budget come January. I wonder if they put that rumour out there to distract us from them selling Roberts. Did Roberts want to leave? We could have used that money to keep him 1 more year.
That's how football is nowadays. What is the average time spent with a club now? Routledge and Dyer should have gotten more of a sending off than they did.
Just this, CJ. When they bought the club they were asked specifically, in front of cameras, if they had money to invest in players and, if so, would they. The answer was an unequivocal yes. I have yet to see evidence of them putting any of their own money in - ie, money that hasn't been raised by the sale of our players. We sold Siggy for £45m, Fab for £8m, Fernandez for £8m, Shelvey £12m, Oli about £20m, Dan about £18m, Rodon £12m. That's over £120m and counting plus others I can't be bothered to think about. Had a decent amount of that been invested in recruiting decent quality we might have been promoted by now. They publicly made a promise and utterly failed to keep it.
Guess their investors are doing well though.
Exactly, any investment made they farmed out in the States and recouped a a large percentage of it, hence then paying dividends from player sales, Agreed good business for them but to the detriment of the club.
And I still stand by my suspicion that before they crossed Jenkin's palm Laudrup had to go, knowing he wouldn't take their crap, and far too smart for them in footballing terms and wouldn't stand by and watch the financial bleeding of the club.
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CroJack
Key Player
I know all of this, but "murdering the club" phrase is too strong for describing the liars.
As for not reinvesting the money from the players sale or not investing their own money that's still not as much a disaster as what has happened to Derby.
On the positive note Brentford owner has earned (not reinvested) approx. £110 m from the players sales since 2015, and they were promoted last season. Some other clubs (like Stoke, Derby, Middlesbrough etc.) have invested a lot of money in their squads, and failed miserably.
When Fulham were promoted two years ago they spent £100 m on new players and...got relegated.
What I am trying to say is that money is not everything. Wait til Pep leaves Man City and you will see.
But ours is not a case of reinvestment failure, it's a case of no real reinvestment, and under the yanks it's something we'll never know what may have been, they have been very careful in their selection of a manager, Cooper for instance , glad of the opportunity to get his foot in the door of league football and never going to make any pressing demands on them. Martin from a lower division club that played possession football that never got them anywhere.
Ivor's comment of murdering the club can also be looked at in the context that they are starving it to death.
Zero investment just loanies and freebies, hopes of promotion are dreams on the measly shoestring budget we now run on.
CroJack
Key Player
No parachute payments anymore, 18 months of Covid, and the mess inherited from the old regime.
Swansea are one of the few Championship clubs who have had net-spend this year, which means we have spent more than we have earned from the players' sales. I think 99% Championship signings during the last transfer window are loanees and freebies.
When he took over there they were in a relegation places. In his first full season as a manager at MK Dons he finished 13th in the league.
Brentford's manager Thomas Frank won only one out of his first 10 games in charge, and finished in 11th place in his first season there as a manager.
One year of management can't be seen as "never". It's like saying that Potter's football at Swansea never got us anywhere
.
Re. parachute payments, when we were relegated in 2018 the parachute payment was £48M paid over 4 years,No parachute payments anymore, 18 months of Covid, and the mess inherited from the old regime.
Swansea are one of the few Championship clubs who have had net-spend this year, which means we have spent more than we have earned from the players' sales. I think 99% Championship signings during the last transfer window are loanees and freebies.
When he took over there they were in a relegation places. In his first full season as a manager at MK Dons he finished 13th in the league.
Brentford's manager Thomas Frank won only one out of his first 10 games in charge, and finished in 11th place in his first season there as a manager.
One year of management can't be seen as "never". It's like saying that Potter's football at Swansea never got us anywhere
, Re. Out spending other Champ clubs , very doubtful if other Champ. clubs had funds totalling aprox. £170M from player sales and parachute payments. reinvestment of that amount has been very meagre to say the least.
18 months of covid does involve close season to some extent, which would apply anyhow. I don't think the picture you paint is as financial dire as you think.
CroJack
Key Player
I am getting tired of discussing this again and again.
Everything is explained here and it's not my "picture".
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CroJack
Key Player
Not true. Our parachute payments were:
£43m in 2018/19
£35m in 2019/20
£16m in 2020/21
In the 2018/19 season our wage bill was £48m, which was £5m more than parachute payment that season. That's without amortisation/impairment and other operating costs.
Surely, way offset by income from player sales?
CroJack
Key Player
If you read the article then you would see that those £5m + player amortisation + other operating expenses were higher than the income from the player sales. Three years ago I was wondering where all the money had gone (just like you are asking the questions today), but then I realized that I hadn't taken the player amortisation into account. Please, try reading carefully what Swiss Ramble has written and you'll understand.
Guys, you have to understand that the club had been in dire straits BEFORE the takeover. Jenkins had allowed 85 % wages to revenue ratio and when you add the player amortisations and other operating expenses, then it's easy to understand that the club had been in a deep shit. We had spent more than we earned. I repeat, BEFORE the takeover. The Yanks took over a poorly run club. Poor managers, poor style of play, overpaid transfers, too high wages, the fans raging over the takeover, lies and broken promises....
I am not defending the Yanks, far from it, but I simply don't see "the financial bleeding of the club" you guys are talking about.
Yankee_Jack
Key Player
Player amortization is not a cash related expense. It’s the “write-off” of an asset that reduces net / taxable profit. This accounting doesn’t consume cash, it can release cash otherwise due HMRC.
However, not easy to factor in are the cash out flows due banks that financed the purchase of players through the receivable factoring of the counter party, and contractual amounts due terminated coaching staff and released players. We terminated the contracts of a lot of underperforming coaches … this is dead weight and drains cash into the future. In other words, we sold players to pay for the past as much as to fund today and tomorrow. It all started with the unnecessary release of Laudrup and cascaded from there into Monk. Then the unnecessary release of Guidolin to hire BoBo only to terminate a few months later followed by Clement et al only dug a deeper hole. Had cash flow not been a problem Andy Pandy could have been gone a year earlier.
We also dumped a load of Prem players when we were relegated … how many of those were releases versus sales or contract expirations, i.e. still net cash out. These decisions were the ones that defined our future … to keep talent and fight to go straight back up or dump payroll and settle for less in terms of competitiveness and outcome. We did the latter. It was a risk management and financial decision. Penny wise but pound foolish? We were not relegated with a weak squad, we got killed by the last few weeks of results below the mean. We could / should have not been relegated. This is where ownership with big balls and deep pockets could have made a difference. However, for better or worse a strategy was selected … perhaps even forced on them … the true financial picture may have been dire. Don’t forget we were bought by an investment syndicate not one/two individual investors … the syndicate was structured and funded for the purchase and squeezing additional cash out of members to fund survival never mind growth is always a tough if not impossible proposition. Naieve members were sold a blue sky scheme … for the most part football clubs are vehicles for turning a lot of money into a little money … and they were rapidly caught on the wrong side of the deal.
However, not easy to factor in are the cash out flows due banks that financed the purchase of players through the receivable factoring of the counter party, and contractual amounts due terminated coaching staff and released players. We terminated the contracts of a lot of underperforming coaches … this is dead weight and drains cash into the future. In other words, we sold players to pay for the past as much as to fund today and tomorrow. It all started with the unnecessary release of Laudrup and cascaded from there into Monk. Then the unnecessary release of Guidolin to hire BoBo only to terminate a few months later followed by Clement et al only dug a deeper hole. Had cash flow not been a problem Andy Pandy could have been gone a year earlier.
We also dumped a load of Prem players when we were relegated … how many of those were releases versus sales or contract expirations, i.e. still net cash out. These decisions were the ones that defined our future … to keep talent and fight to go straight back up or dump payroll and settle for less in terms of competitiveness and outcome. We did the latter. It was a risk management and financial decision. Penny wise but pound foolish? We were not relegated with a weak squad, we got killed by the last few weeks of results below the mean. We could / should have not been relegated. This is where ownership with big balls and deep pockets could have made a difference. However, for better or worse a strategy was selected … perhaps even forced on them … the true financial picture may have been dire. Don’t forget we were bought by an investment syndicate not one/two individual investors … the syndicate was structured and funded for the purchase and squeezing additional cash out of members to fund survival never mind growth is always a tough if not impossible proposition. Naieve members were sold a blue sky scheme … for the most part football clubs are vehicles for turning a lot of money into a little money … and they were rapidly caught on the wrong side of the deal.
Yankee_Jack
Key Player
Further … what you don’t see in a club’s balance sheet are future liabilities for payroll. A player’s acquisition cost is booked as an asset … to represent and record the rights to register the player to play in a competition. These rights are what are amortized. The player’s contract is a payroll expense booked as paid out. The liability of the contract into the future is never booked on the balance sheet. It’s the invisible sword over the neck of a club. There may be some accounting rule that permits this but from my perspective it fails to recognize the true cash condition of the club and therefore its true value. Most businesses have at will employees and payroll is a here and now expense with minimal consequence if business turns bad and employees are laid off … payroll is a budgeted operational expense. Not so much with football clubs … a player’s or coach’s contract represents an encumbrance into the future. This encumbrance is never represented in a club’s financials. Accounting is a representation of history. The naieve investor beware … “past results are no guarantees of future performance” …. No shit, especially when significant cost into the future is already baked into the cake.
CroJack
Key Player
There is another excellent article on the Swansea finances here:
priceoffootball.com
"Most analysts ignore finance, tax and one-off costs to create something called EBIT (Earnings before interest and tax) which represents the club’s underlying profit, and for Swansea in 2017 this converted the profit of £14 million into a loss of £22 million. The main reason for this decline was the combination of lower income and higher player related costs that have been already highlighted. Swansea have been dependent upon player sales to balance trading losses that averaged £380,000 a week in the last three seasons, despite record levels of broadcast income."
"If player transfer sales are to be excluded from profit, then there is a case for excluding transfer amortisation costs too, which leads to another form of profit, called EBITDA. This is popular with analysts as it is a trading cash profit equivalent."
"This is possibly the most revealing figure about Swansea as it suggests that the club has a strategy of breaking even at least in terms of EBITDA profit. This does mean that the club has to also break even in terms of player trading unless it wants to borrow from banks or the owners stick their hands in their pockets. However, Swansea’s relatively loose wage bill control resulted in the club having the lowest EBITDA profit in the Premier League."
Conclusion
"Swansea are in a tricky position, they have not invested in the playing squad since relegation and are using player sales and parachute payments as a means of generating cash. Matchday prices have been reduced to try to ensure that attendances do not fall significantly but the club appears to be budgeting for life as a Championship club rather than gambling on a quick return to the Premier League.
The club’s business model in the Premier League was a dangerous one, spending more on wages than their peers worked for a while, but some poor managerial and player choices had led to a fire sale and a desperate need to get players off the wage bill now the club are in the Championship.
Kaplan and Levien’s motives for running the club are mysterious. They appear to want Swansea to be self-financing, which is understandable to a degree, but having spent £70 million buying control in the club in 2016 it is difficult to see how they will get their money back as the club is likely to be valued at half that sum or less outside of the Premier League.
It’s probable that their aim was to generate some income from dividend payments from the club whilst it was in the Premier League or alternatively flip the club and sell it on to another ‘investor’ with the moral compass of an alleycat for a handsome profit, but neither has materialised to date.
The Championship is a bear pit of a division, with clubs averaging trading losses of £330,000 a week, which have to be funded somehow. Player sales can only assist here for a limited time as ultimately the pool of players who can be sold at a profit diminishes as wage levels fall.
Huw Jenkins’ cryptic comments and the silence from the owners suggests that finance-based arguments led to his resignation and fans are no doubt fully aware of the profit that Jenkins made when selling his stake in the club in 2016 (and the £4 million of dividends paid to shareholders prior to that).
Good governance for any business requires transparency and honest communication and these both appear to be in short supply in SA1 at present."
Swansea City: Soul Train - The Price of Football
Following the money behind the beautiful game.
priceoffootball.com
"Most analysts ignore finance, tax and one-off costs to create something called EBIT (Earnings before interest and tax) which represents the club’s underlying profit, and for Swansea in 2017 this converted the profit of £14 million into a loss of £22 million. The main reason for this decline was the combination of lower income and higher player related costs that have been already highlighted. Swansea have been dependent upon player sales to balance trading losses that averaged £380,000 a week in the last three seasons, despite record levels of broadcast income."
"The EBIT figure shows that running Swansea is a frighteningly expensive business and therefore the club needs to generate income from an additional source, and that source is player sales."
"If player transfer sales are to be excluded from profit, then there is a case for excluding transfer amortisation costs too, which leads to another form of profit, called EBITDA. This is popular with analysts as it is a trading cash profit equivalent."
"This is possibly the most revealing figure about Swansea as it suggests that the club has a strategy of breaking even at least in terms of EBITDA profit. This does mean that the club has to also break even in terms of player trading unless it wants to borrow from banks or the owners stick their hands in their pockets. However, Swansea’s relatively loose wage bill control resulted in the club having the lowest EBITDA profit in the Premier League."
"Swansea are in a tricky position, they have not invested in the playing squad since relegation and are using player sales and parachute payments as a means of generating cash. Matchday prices have been reduced to try to ensure that attendances do not fall significantly but the club appears to be budgeting for life as a Championship club rather than gambling on a quick return to the Premier League.
The club’s business model in the Premier League was a dangerous one, spending more on wages than their peers worked for a while, but some poor managerial and player choices had led to a fire sale and a desperate need to get players off the wage bill now the club are in the Championship.
Kaplan and Levien’s motives for running the club are mysterious. They appear to want Swansea to be self-financing, which is understandable to a degree, but having spent £70 million buying control in the club in 2016 it is difficult to see how they will get their money back as the club is likely to be valued at half that sum or less outside of the Premier League.
It’s probable that their aim was to generate some income from dividend payments from the club whilst it was in the Premier League or alternatively flip the club and sell it on to another ‘investor’ with the moral compass of an alleycat for a handsome profit, but neither has materialised to date.
The Championship is a bear pit of a division, with clubs averaging trading losses of £330,000 a week, which have to be funded somehow. Player sales can only assist here for a limited time as ultimately the pool of players who can be sold at a profit diminishes as wage levels fall.
Huw Jenkins’ cryptic comments and the silence from the owners suggests that finance-based arguments led to his resignation and fans are no doubt fully aware of the profit that Jenkins made when selling his stake in the club in 2016 (and the £4 million of dividends paid to shareholders prior to that).
Good governance for any business requires transparency and honest communication and these both appear to be in short supply in SA1 at present."
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Yankee_Jack
Key Player
In technical terms ... player transactions (buying, selling) are properly capital gains / losses and not operating income or expenditures. The way a club's financial statements are typically presented these player transactions are presented slight-of-hand as "operational" so as to express "profitability". They are not.
It's the equivalent of running a hotel and in order stave off a lack of liquidity and operational losses, the hotel sells the parking lot or a ballroom and literally carves it out of the structure. At some point in the future the ballroom either "grows" back from its "academy" or there's a huge gaping hole in the building.
@CroJack did an analysis in another thread of Llorente and the deal with Spurs ... yes, we got money, but it left a huge gaping hole.
It's the equivalent of running a hotel and in order stave off a lack of liquidity and operational losses, the hotel sells the parking lot or a ballroom and literally carves it out of the structure. At some point in the future the ballroom either "grows" back from its "academy" or there's a huge gaping hole in the building.
@CroJack did an analysis in another thread of Llorente and the deal with Spurs ... yes, we got money, but it left a huge gaping hole.
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CroJack
Key Player
We can agree the Yanks don't want to invest any significant amount of their own money in the club.
And I don't want them to invest because I don't want to see the Supporters Trust shares dilluted, and I quite like the idea of sustainability in football. There are too many examples where the huge investments in the wrong players went wrong. The big clubs have a higher margin of error (though even the clubs like Barcelona can get in trouble), but for the small clubs such investments can be a difference between survival and extinction.
No doubt that a heavy investment in the squad can give results and buy you promotion. A couple of years ago the Wolves did just that, they gambled and won. But if all 24 Championship clubs gambled in a league where only 3 clubs are promoted to the Premier League, then we wouldn't have the Championship at all. We would have the Championship clubs' graveyard instead.
This formula is much better:
superior manager + superior style of play = results -> promotion -> more money -> better players
And I don't want them to invest because I don't want to see the Supporters Trust shares dilluted, and I quite like the idea of sustainability in football. There are too many examples where the huge investments in the wrong players went wrong. The big clubs have a higher margin of error (though even the clubs like Barcelona can get in trouble), but for the small clubs such investments can be a difference between survival and extinction.
No doubt that a heavy investment in the squad can give results and buy you promotion. A couple of years ago the Wolves did just that, they gambled and won. But if all 24 Championship clubs gambled in a league where only 3 clubs are promoted to the Premier League, then we wouldn't have the Championship at all. We would have the Championship clubs' graveyard instead.
This formula is much better:
superior manager + superior style of play = results -> promotion -> more money -> better players