An objective view on business ownership by jackanuck 5 Sep 2018 20:18
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.