Case Study: Swansea City

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On July 8th 2001, a group of Swansea City FC supporters met to discuss and debate the idea of forming a supporters’ trust. Their concerns were numerous: on the pitch, City’s fortunes had slumped, and the club were relegated back to Division Three.

Off the pitch, the outlook was even more troubling. In February, owners Ninth Floor PLC had put up the club for sale, after the company’s half-year financial report showed pre-tax losses of £797,000. Initial reports suggested they would set a price of £3,000,000, but instead, they agreed a sale to former Commercial Manager Mike Lewis for a nominal sum of £1 – but on the condition that the club would shoulder a debt of £801,000, to be paid to Ninth Floor.

Despite having agreed to purchase the club, Lewis – who in 2007 pleaded guilty to accusations of fraud relating to his activities at Exeter City – made no secret of his desire to offload it at the earliest possible opportunity. Unwilling to wait for a change in ownership, the supporters decided to take matters into their own hands, and with the help and advice of Supporters Direct, formed the Swansea City Supporters’ Trust.

The Trust received backing from across the local community, with supporters offering help in a plethora of areas: from fundraising to financial planning. As a co-operative, democratic organisation, the Trust had a clear mandate from the club’s support to act in the best interests of Swansea City.

Off the field, events were moving apace. Lewis sold the club, again for £1, to Australia-based businessman Tony Petty. At this point, the Trust stepped up their efforts to secure a stake in the club for the community, particularly when Petty’s reign soon became a turbulent one, with a number of players sacked and costs slashed. With the backing of their members, the Trust Board supported former Swansea player and head of a consortium of investors Mel Nurse in his attempt to wrest the club from Petty’s control. However, Nurse’ legal bid collapsed after a court judgement ruled against him.

Negotiations continued behind the scenes, whilst supporters took collective action to make their desire for greater involvement in the club clear. Eventually, the Trust were able to broker a deal whereby a group of vetted investors – sourced by the Trust – agreed to purchase Swansea City. Trust members raised £50,000 during this time, thanks to a tireless fundraising drive, and is currently the third largest shareholder in the club, with a 19.99% stockholding; and a seat on the Board of Directors, which is guaranteed permanently by the shareholders’ agreement signed in 2002.

The club barely escaped relegation to the Conference National in 2003, and eight years later, won promotion to the top level of English football, operating under a system of financial sustainability and community engagement.

It would not be an exaggeration to say that without the Supporters’ Trust and their co-operative principles; the current success being enjoyed by Swansea would not have been possible. This success has come both on and off the pitch: a League Cup victory and 9th-place finish in 2012/13 also yielded a profit of £15.3m - the largest pre-tax profit in the Premier League. As shareholders in the club, the Trust were entitled to a dividend, and upon receipt, chairman Phil Sumbler said the following:

“The accounts of the Football Club confirm the prudent nature in which we operate and the current board are to be commended for their careful management of the Club within budgets, whilst also allowing us to remain competitive on the field, highlighted by us securing a third season in the Premier League as well as a return to European football through our successful Capital One Cup campaign.

“Add to the fact that the club is investing in our long term future through the development of both the Landore and Fairwood sites, and the aims we helped put in place back in 2002 are still in force by the safeguarding of the Club’s long term status.

“In terms of the interim dividend, the Trust board fully backed the vote of the Directors in the award of the dividend, when you factor in that during the 11 years in charge, no return on investment has been asked for or offered, until such time that the Club has been in a position that they could afford to consider such return to investors.

“In terms of our dividend receivable, in line with the aims of the Trust and the mandate given by our members, we will retain the money for future investment in the Football Club, ensuring that all monies paid to us will eventually end up invested in the Club at an appropriate time.

“We firmly believe that the receipt of this dividend ratifies all decisions taken 11 years ago for supporters to invest within the Football Club, and highlights the remarkable story of the rise of Swansea City.”

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