Swansea City have announced a £16m profit for the six months to 30 November 2012 and with it, for the first time, a dividend for the club's shareholders – £1m for this and last season in the Premier League.
The chairman, Huw Jenkins, says the £2m dividend justly rewards the owners, mostly directors too, who have worked unpaid to steer a remarkable rebuilding, but it risks taking a little shine off Swansea's halo. In a game acclimatising to a new culture, in which club owners are no longer "custodians" but motivated by making money for themselves, Swansea have stood out as an exception, until now.
Since the current group of nine owners, notably including the Swansea City Supporters' Trust, put in £50,000 each in 2002 to buy the club and save it from its grimmest crisis, none has taken a penny out. The partnership with the supporters' trust, which raised £200,000 over the years to buy 20% of the club and has an elected director, Huw Cooze, on the board, is hailed as a model, recently described as "probably ideal" by the Premier League chief executive, Richard Scudamore.
Now the trust stands out too, in its attitude towards the £2m windfall. The other owners will be paid the dividend in proportion to their shareholding and are free to keep it. Martin Morgan, who owns 22.5% of the club according to its ownership statement, will receive £450,000. Brian Katzen, another original shareholder, owns 20%, having paid in £200,000, so will be paid £400,000.
Jenkins, who was paid a £200,000 salary last year and is widely admired for the shrewd way he has steered the club's recovery, owns 12.5%, so his share of the £2m dividend will be £250,000.
The trust surveyed its members in anticipation of the payout – 20% of the £2m dividend, £400,000 – and 78% responded that the trust should keep it, waiting for more shares to buy so it can increase its stake. As no other owners are selling, the trust will spend a little of it sponsoring south Wales junior football leagues and put the rest in the bank for investment should the club need it.
Jenkins argues the dividend is correct, as it reflects the club's aim to make a profit, not huge losses like so many others. Dividends, he said, are a more "tax-efficient" way of remunerating directors because national insurance is not paid on them. And he argues payments to directors could be disguised in the general wage bill, while a dividend must be declared: "We have been open," he told the Guardian. "Our shareholders are mostly working directors and you can't keep expecting them to be unpaid, with the millions going out to players and managers." Yet some sense of Swansea as devotees to a more purist way for football is being shaken. Then there is the company voluntary arrangement (CVA), on which the club's great progress since 2002 has been built – debts to a barrage of creditors, amassed by the previous regime, were settled for 5p in the pound. The City and County of Swansea was owed £35,000. Three other local authorities had to write off money and Dillwyn Llewelyn community school was owed £1,175. Swansea NHS trust was owed £1,960, the South Wales police authority, £10,448.76 and the Welsh Ambulance Service, £1,063.97. St John Ambulance was there too, its training company owed £2,411.10. The total owed to unsecured creditors was £271,208, less than a third of the dividend the owners are now declaring for themselves.
Jenkins said he believes the creditors were never fully recompensed, although St John Ambulance says its debt was recouped via advertising at the ground. The local council clearly did not hold a grudge because shortly afterwards it built the Liberty Stadium with £27m public money for the Swans and is delighted with the wider economic benefits brought to a recession-hit region. Still, it would have been classy to recompense all those old creditors from the Premier League bounty before the owners helped themselves.
After football clubs first formed into companies in the 1880s the Football Association restricted dividends, to prevent owners taking money out for themselves. The character of the clubs as member associations was to be preserved, and owners and directors were to be custodians, not in it for profit. In the Premier League era that rule was serially bypassed when the clubs floated on the Stock Exchange, and the modern FA finally gave up on it.
Swansea City had seemed to embody the former ethos, a beaming exception, and now, with this dividend, that has changed. Except for the supporters' trust, which holds its shares as a mutual body, still for no pay, just for the committed sense of belonging.