#Swans loss before tax widened from £3.2m to £7.0m, as revenue almost halved following relegation from £127m to £68m, despite parachute payments, and profit on player sales fell £16m to £30m, largely offset by cutting costs by £72m. After tax, loss increased from £2.9m to £6.0m. 
The main reason for #Swans £59m (46%) revenue reduction was broadcasting, which more than halved in the Championship from £105m to £52m, though commercial was also down £6m (45%) to £8m and match day fell £0.8m (11%) to £6.6m. Player loans up £1.7m to £2.0m.
To offset the steep revenue reduction, #Swans cut the wage bill by £43m (47%) from £91m to £48m, while player amortisation/impairment was down £22m (43%) to £30m and other expenses decreased £7m (23%) to £22m. In contrast, net interest payable rose £1.5m to £2.6m.
#Swans were profitable 5 times in 7 seasons in the top flight – though have now reported losses two years in a row. Chairman Trevor Birch has warned of “the difficulty in running a financially sustainable football club, if you are not an established Premier League team.”
#Swans have become increasingly reliant on player sales, where average annual profit has increased to £38m in the last three seasons. As Birch noted, “If we had not sold players in the last few seasons, we would have reported significantly higher losses.”
Birch continued, “Profit on player sales has gone on funding player wages, running the Academy and more general the significant operating costs of running a top-level football club.” In fact, the importance of player trading to #Swans has even been noted by the auditors.
If #Swans forecast player sales are not achieved, they would need to find further sources of funding to maintain cash flow. The auditors said, “This represents a material uncertainty which may cast significant doubt about the club’s ability to continue as a going concern.”
#Swans EBITDA (Earnings Before Interest, Tax, Depreciation & Amortisation), considered a proxy for cash operating profit, as it strips out player sales and exceptional items, declined from £7m to £(2)m, a lot lower than the £23m peak in 2014.
In fairness, only three clubs in the Championship managed to generate positive EBITDA, so #Swans £(2)m was actually one of the better performances, placing them in the top five. To put this into perspective, five clubs reported EBITDA worse than £(20)m.
#Swans revenue has fallen by £59m (46%) from £127m to £68m and it will continue to fall as parachute payments tail off. Birch warned that turnover would decline to £17m in 2021/22 if the club is not promoted – a drop of £110m in total.
Despite the steep decrease, #Swans £68m revenue is the second highest to date in 2018/19 Championship, only behind fellow relegated club Stoke City £71m (though the other relegated club WBA and Aston Villa are yet to publish their accounts for last season).
In fact, #Swans £68m revenue is the 6th highest ever in the second tier, only surpassed by Newcastle United £86m (2016/17), Norwich City £75m (2016/17), Aston Villa £74m (2016/17). Stoke City £71m (2018/19) and Aston Villa £69m (2017/18).
Obviously, #Swans benefited from £43m parachute payments, which will fall to £35m in 2019/20, £16m in 2020/21 and nothing in 2021/22. Stoke City and WBA received the same amount, while Hull City, Middlesbrough and Sunderland got £34m; QPR £17m; and Aston Villa £15m.
If parachute payments were excluded, #Swans £30m would still be among the highest revenues in the Championship, though they would be behind Norwich City £34m, Stoke City £33m and Bristol City £30m (in 2018/19) and Leeds United £41m and Aston Villa £39m (in 2017/18).
Even though #Swans broadcasting income more than halved from £105m to £52m following relegation, this was still a lot more than the £8m most Championship clubs received, including £2.5m EFL central distribution and £4.6m Premier League solidarity payment.
Nevertheless, this is a lot less than the TV riches available in the Premier League with revenue distributions ranging from £97m to £152m in 2018/19. That said, #Swans did earn over half a billion Pounds from their seven years in the top flight.
#Swans average attendance dropped by more than 2,000 from 20,623 in the Premier League to 18,444 in the Championship. Their advance through the leagues had been matched with growth in attendances, facilitated by the move to the Liberty Stadium in 2005.
#Swans 18,444 attendance was mid-table in the Championship, sandwiched between Bristol City and Ipswich Town. Early Bird season ticket prices for 2020/21 have been frozen, the 8th consecutive season of no price increases. After a cut in 2015, tickets are cheaper than 2012/13.
#Swans bought the land at the south end of the stadium for £1.4m, while acquiring 100% of the company responsible for the Liberty Stadium management. This would facilitate stadium capacity expansion, but this would only be considered after a return to the Premier League.
#Swans commercial revenue was down £6m (45%) to £8m, comprising £5.3m commercial income and £2.6m other. This was mid-table in the Championship, but miles behind the likes of Leeds United £22m and Bristol City £16m.
#Swans 2018/19 shirt sponsor was Bet UK, but after just one season there is a new deal with YOBET from 2019/20. They also have a long-term kit supplier agreement with Joma.
#Swans wage bill cut 47% (£43m) from £91m to £48m (excluding £1m onerous contracts provision in reported £49m), as relegation clauses were applied, though Birch said “some contracts are close to Premier League level”. Lowest wage bill since £48m in 2013.
#Swans wages to turnover ratio improved from 72% to 70% (72% including the onerous contracts provision), one of the lowest (best) in the Championship. Worth noting that more than half of the clubs in the Championship have ratios over 100%, with Reading 197% “leading the way”.
Remuneration for #Swans directors decreased by £411k (nearly two-thirds) from £655k to £244k, though 50 people lost their jobs following relegation, as total number of employees fell from 409 to 359.
#Swans player amortisation, the annual charge to expense transfer fees, fell £9m (24%) from £37m to £28m, the first time this expense has declined in many years following numerous player sales, though it was still three times as much as £9m in 2012/13.
Despite the decrease, #Swans player amortisation of £28m was still the second highest in the Championship, only below Stoke City £29m. As a comparison, it was 25% more than the highest charges from the previous season, namely Middlesbrough and Aston Villa with £24m.
#Swans also booked a £1m impairment charge in 2019, compared to £15m the prior season. This reduces the value of a player in the books to an amount based on directors’ assessment of achievable sales value and is common practice for clubs relegated to the Championship.
#Swans made just £3m player purchases, significantly less than the £120m splashed out in the previous two seasons in the Premier League (£55m in 2018 and £64m in 2017). Massively outspent by Stoke City £67m, around the same level as Millwall and Hull City.
#Swans gross transfer spend nearly quadrupled over last 5 years from an annual average of £12m to £40m, though this was offset by a similar increase in sales from £5m to £37m. Money has been spent, but the owners admitted that “our recruitment strategy hasn’t been good enough”.
#Swans gross debt decreased from £16m to £10m, of which only £1m is from group undertakings. Most is a £9m bank loan, which was repayable in August 2019. Thanks to cash increasing from £0.5m to £19m, Swansea had net funds of £9m.
#Swans £10m gross debt is one of the smallest in the Championship. Moreover, other creditors, including amounts owed on transfers, fell from £43m to £8m, and contingent liabilities, dependent on player appearances, team success, etc dropped from £21m to £10m.
#Swans bank loans accrue interest at 4.5% a year with the amount paid increasing from £133k to £835k, which is towards the upper end of the Championship, where most debt is provided interest-free by club owners.
Maybe surprisingly, #Swans cash balance of £19m is the highest in the Championship to date in 2018/19, well ahead of Hull City £10m and Stoke City £6m. Swansea’s figure includes £12.5m held on short-term deposit at 0.8%.
#Swans generated £8m cash from operations, boosted by £20m net player sales. The club then repaid £5m loans, invested £2m into infrastructure and made £0.8m interest payment. This resulted in a net cash inflow of £20m.
In the last decade #Swans generated £93m cash from operations, bolstered by £7m loans. Most was spent on new players £44m and £30m on infrastructure, though £4m went on dividends and £2m interest. The rest simply increased the cash balance by £21m.
#Swans are now in the fourth season under the control of an American consortium led by Stephen Kaplan and Jason Levien, who own 68% of the shares. To date, these owners have been unwilling (or unable) to put any money in, saying player sales should cover any shortfall.
Birch argued, “Plenty of clubs have received substantial funds from owners and still not achieved success.” This is undoubtedly true, but #Swans fans will have noted the club’s decline since the arrival of their current owners.
There have been media reports that the owners are looking to move on, reportedly placing a price tag of £38m on the #Swans (higher if they are promoted), but Birch has denied this is the case: “They certainly have not mandated me to sell the club.”
One area of focus for the #Swans has been to develop talent at the academy, one of only a few with Category 1 status in the Championship, though Birch has cautioned that this will need to be reviewed if the club does not secure promotion.
Following relegation, #Swans had to significantly reduce playing and running expenses - and more is to come. Club’s strategy remains “to work hard to find the right balance between success on the field and prudent financial management for an eventual return to the Premier League”
