The authoritative Swiss Ramble has taken an in depth look at the recently published accounts of Hearts. Here are some of the highlights from his comments.
The last loss Hearts reported was £0.9m in 2014/15, when they won the Scottish Championship. Since promotion, they have been profitable three seasons in a row.
Hearts £12m revenue is the fourth highest in Scotland, within striking distance of Aberdeen £15m, but only around a third of Rangers £33m, while Celtic’s £102m is miles ahead. Indeed the revenue gap between Hearts and the big two Glasgow clubs is now at its highest for a while: £89m to Celtic and £20m to Rangers. On the other hand, they are £2.7m higher than Edinburgh rivals Hibernian.
Given Hearts stadium investment, they did well to deliver the second largest profit in the SPFL Premiership with their £1.8m only beaten by Celtic £15.4m. That said, eight of the 12 clubs in the Scottish top flight make money with only Rangers reporting a sizeable £14.3m loss. One reason Celtic’s profit was so large was £16.5m profit on player sales (mainly Virgil Van Dijk sell-on fee and Stuart Armstrong to Southampton). In contrast, Hearts only made £0.4m from this activity (largely Jamie Walker to Wigan and Isma to Pakhtakor).
SPFL chief executive Neil Doncaster described the latest domestic TV deal as 'the highest prize fund in the history of the Scottish game', but Hearts 6th place in the league was only worth £1.5m. For perspective, English Championship clubs get almost 5 times as much (£7m).
As is the case for most Scottish clubs, Hearts are mainly reliant on match day income, though this has fallen as a proportion of total revenues from 59% in 2013 to 43% in 2018. Over the same period, commercial has more than doubled from 16% to 35%, while broadcasting is 20%. Hearts gate receipts rose £1.0m (24%) to £5.3m, as capacity increased after completion of main stand saw average attendance rise from 16,338 to 18,163 (including four matches at Murrayfield). Third highest income in Scotland, but Celtic £32m and Rangers £23m far higher.
Hearts stadium development will cost £18m and should be completed during 2019/20 season. This will deliver increased capacity to 20,000 and improved other facilities (hybrid pitch, undersoil heating and supporters bar). Owner Ann Budge says that it should generate an additional £3m each season.
Hearts average attendance of 18,163 is around 40,000 lower than Celtic and 30,000 less than Rangers, but just ahead of Hibernian 17,964 and Aberdeen 15,633.
Hearts commercial income rose by £0.2m (4%) to £4.3m, comprising commercial £2.9m, sponsorship and advertising £0.8m and other income £0.7m. Close to Aberdeen £6.4m and Rangers £5.3m, but long way below Celtic £37m.
Hearts wages to turnover ratio increased from 51% to 57%, though this is still pretty good [the recommended level is 50 per cent] and about the same as Celtic 58% and Hibernian 56%.
Although Hearts said “the last two transfer windows have seen the club make significant signings”, they only had £0.3m player purchases in 17/18, which was actually lower than £0.5m in 16/17. The only clubs that spent big money last season were Celtic £17m and Rangers £10m. In fact, Hearts have only spent a total of £1.5m on bringing in new players over the last 9 years (though £1.0m of that was in the last 3 years). In the same period, they have had player sales of £5.8m, leading to £4.3m net sales.
The Swiss Ramble concludes, 'Hearts have come a long way since the club was placed into administration in 2013, deducted 15 points and then relegated to the Scottish Championship. Much of the credit is due to Ann Budge, who took ownership in June 2014, following the misguided Romanov regime. Budge noted, 'As a business we are in good shape: growing revenues and managing costs. The future looks bright indeed.' Of course, it is difficult for any Scottish club to compete financially with Celtic and Rangers, but Hearts are at least on the right track.
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