Cash converters: Where Swindon’s new money will be spent

Why the recent £2 million cash injection won’t mean Town will buy Harry Kewell, by Alex Cooke.

It seems churlish, grumpy and almost disloyal to question anything about a £2 million injection by the board of STFC into the club, after all this is that rarest of things – good news. But few things are quite that simple and you don’t have to be a hardened cynic to want to look beyond the headlines, especially when Swindon Town are involved.

The good news is that the football club will get £2 million, the not-so good news is the money is effectively the same money it already had. This ‘ injection’ will not increase the amount that the Paolo Di Canio has to spend on players or that Jeremy Wray has to spend on redeveloping the ground. That is because the money is effectively an unexpired loan that the club already had and used, but now it will be swapped for shares.

Obviously this is still good news because while the loans from Swindon’s backers Sir Martin Arbib, Andrew Black and Russell Backhouse are interest-free, the cash is now held by the club and so can’t be withdrawn by its owners through death or disinterest. In effect, turning this money from a loan into cash helps Swindon Town Football Club become more stable and secure, and it means the board are still investing.

The less-good news is that this money has almost certainly been already earmarked to cover wages, transfer fees and many of the debts from last season and expected losses to cover operating on a Championship budget in League One.

There was no mention within the club statement that playing budgets would increase above the previous level as a result of the investment. With total wages ranging from £3.9m to £4.3m between 2008 and 2011 – and significant operating losses over that period – Di Canio’s reported £4m playing budget is no greater than the club has been wiling to fork out in recent years, there will be no bonanza or an ‘extra £2m to spend’ as some have been led to believe.

As revealed on this site in April, Swindon Town’s accounts are not the wholly healthy picture that some claim with costs running far ahead of income – leading to a loss of £1,331,946 for 2010/11. If that number seems scarily large it would have been far worse if it didn’t include the £1,664,815 received in transfer fees for Charlie Austin and Sean Morrison et al.

The letter sent to shareholders by the club seems to confirm this view of the club’s financial position. As part of the section explaining the plans to issues shares to raise further capital the following sentence appears: “STFC requires further funding to enable it to continue its positive progress towards its aim of attaining promotion to the Championship. The further funding is urgently required to meet upcoming expenses of STFC”.

Of course, those figures come from a time before Di Canio came to Swindon, and it seems highly likely that the debt will have grown, despite the successful season. At a time when non-football revenue looks certain to have dropped, or at best plateaued, Di Canio effectively assembled and then broke up two teams over the season. He has now set about building a third at even greater expense. He has bought but he hasn’t sold, and that has meant a sizeable outlay in fees, money for agents, wages and even more to terminate those contracts.

This certainly doesn’t make the good news into bad news, more that the news is neutral. We know Swindon have debits, they are mostly in the form of interest-free to our backers, through Swindon Football Holdings Limited. Without the financial understanding of expert journalists such as Swiss Ramble or David Conn, it is hard for me to add much more except that the result of this is that the club’s balance sheet will look much better at the AGM in 2013, showing a significant reduction in the £10.7 million of liabilities. Something which is bound to please any future investors in the club.

The question coming from all of this is why did the club made this statement? And why make it so publicly? The answer is fairly simple: it looks like very good news, and the headlines collected have been wholly positive. Along the way it has also launched a hundred rumours of big-name signings by optimists, pranksters and panglossians.

The timing is actually good media-management: The club’s accounts for 2010-20111 will be published on the 20th July, and as you have already all seen on and the story of Swindon‘s sizeable operating loss before player sales in 2010/11 and debts will be a lot less positive.

While the news isn’t as straight forward as it first seems, the update on the redevelopment of the County Ground really is. Finally, progress is being made, not necessarily in the planning of the redevelopment but in the rebuilding of relations with the council – especially in the talk of extending the lease on the County Ground for 250 years. Now that really would be news that every Swindon fan could all welcome without feeling churlish, grumpy or disloyal.


  • Proof the £2m is to cover an expected loss the season…Jeremy Wray speaking 20th July 2012 – “so there is an awareness going on this year that the club will lose money and that is funded in order to get to the next stage.”


  • Also, interesting comment concerning the impact of Football League rules to restrict loans…

    A general meeting followed the AGM, during which resolutions were passed allowing the sub-division of the £1 shares in the company into 1p ordinary shares and 99p deferred shares.

    The change in the share structure is designed to more easily allow further investment in the club, as Wray explained: “Very simply, the wage cap constraints that we are under means that the money we put into the club has to come in as equity, it cannot come in as loans because we have to use 65 per cent of our turnover plus any funds that we put in directly as equity.

    “That is what is available for the playing budget. We’ve gone out and said that we’re trying to put together a playing budget that gets us to the Championship and it’s necessitated putting funds directly into the club.

    “We could no longer use the holding company structure because loans are not recognised.”


  • Pingback: A Black day for Jeremy Wray as STFC Chairman is dismissed – The Washbag

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