The reasons why Swansea City keep issuing new shares and what it really means

-Credit: (Image: Getty Images)
-Credit: (Image: Getty Images)

It's perhaps gone under the radar a little, but Swansea City's owners have ploughed more money into the club's coffers.

Confirming yet another move that would see the issuing of new shares, the Swansea City Supporters' Trust said in a statement: "The Swans Trust can confirm today that a further 110,549 new shares have been issued at a total value of just over £2.5m following fresh investment into the club.

"As per our earlier statements earlier this year this is the latest of a series of cash injections which has been made by Swansea Football LLC, the investment vehicle of the majority owners, which includes Chairman Andy Coleman, Jason Levien, Steve Kaplan, and Jake Silverstein.

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"We understand this is the final investment into the club from the majority owners in this financial year."

This is now the fifth time in as many months that the American ownership has decided to make such a move. Over the last 12 months, the issuing of new shares has injected nearly £28m into the club.

It's become an occurrence so regular that this latest announcement was made with next to no fanfare by the club, or indeed the media.

But ahead of what promises to be a very important summer, it has nevertheless piqued the interest of supporters, many of whom might well be wondering what it all means.

Some may take it as an indication that Swansea's American owners are getting serious about the upcoming campaign, others are pondering whether it's perhaps a cause for concern, particularly when placed against the backdrop of a slightly uneasy set of financial results.

The reality is a little more menial. Indeed, Swansea are by no means the only club in this position, particularly in the glorified casino that is the Championship.

"It's not unusual," says football finance guru Kieran Maguire. "There's other clubs, including those in the Championship, that do similar. Preston's owners have effectively given the club £1m a month via a share issue.

"It's an acknowledgement that if you want to go and play in the Championship playground it's a very expensive exercise to go through. The average losses are £400k a week. How do you circumvent that? One of the ways to do that is to issue shares. That's what we've seen here, with 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," Maguire adds.

That's all very well. But the obvious next question becomes what Swansea's owners actually get out of all this.

"They get the excitement," Maguire says. "There's the potential in 12 months' time to be hosting Liverpool, or Man United or Man City at your stadium. There's that incentive that if they do get to the Premier League and keep it there, then the value of the club does shoot up and you could potentially make a big financial return.

"But it doesn't tend to be a motivation. It's like any other trophy purchase. You might buy a piece of art just to say that you now own that piece of art.

"At any one point in time there's only 20 people on the planet that can say they own a Premier League football club."

A top-flight return still feels a little way off, but the ownership have made no secret of their desire to take the club back to the promised land one day.

Whether they're in a position to give Luke Williams, or indeed any manager, the adequate tools to get there any time soon is perhaps another question.