Hearts on the right financial track

The authoritative Swiss Ramble reviews the 2020/21 accounts of Hearts.

After Ann Budge transferred the shares to the Foundation of Hearts in August 2021, Hearts became the biggest fan owned club in the United Kingdom. It is difficult for any Scottish club to compete financially with Celtic and Rangers, but Hearts seem to be on the right track

Hearts 2020/21 accounts, when they increased pre-tax profit from £0.4m to £2.0m, despite the impact of relegation and COVID, which reduced revenue from £12.3m to £7.7m, mainly thanks to £6.4m donations.

Hearts reported the largest profit in Scotland with £2.0m, albeit only because of their “very generous” donations of £6.4m. In contrast, both Rangers and Celtic made large losses with £24.2m and £12.6m respectively, followed by Aberdeen £2.3m.

The last loss Hearts reported was £0.9m in 2015, when they also won the Scottish Championship. Since promotion, they have been profitable 6 seasons in a row, though the £27m profit in 2014 is a bit misleading, as it included £27m debt write-off following administration.

Despite revenue falling £4.6m (37%) from £12.3m to £7.7m following relegation, Hearts pre-tax profit improved from £0.4m to £2.0m, mainly thanks to £6.4m donations from benefactors and the Foundation of Hearts, while profit on player sales was up £0.6m to £0.9m. Apart from the Glasgow giants, few clubs in Scotland make big money from player trading.

Hearts £7.7m revenue in the Scottish Championship was decent, especially with the adverse impact of COVID. However, it was nowhere near Celtic £61m and Rangers £48m. A more reasonable comparison would be with Aberdeen, who generated £11.1m in the Premiership.

Despite relegation, Hearts broadcasting revenue was unchanged at £2.0m, though down from the club’s £3.0m peak in 2019. In Scotland, only Rangers £19m and Celtic £11m earn more than £4m from this revenue stream, mainly thanks to money from European competition.

There was a new five-year Scottish TV deal with Sky Sports worth £30m (€34m) a year from 2020/21 (up from £25m), but this is not going to move the needle by much. It’s still much lower than Poland Ekstraklasa €58m & Belgium Jupiler League €83m, let alone Premier League €3.6 bn.

Hearts average attendance in 2019/20 was 16,751, the 3rd highest in Scotland, just ahead of local rivals Hibernian 16,729. Over 13,000 season tickets sold for the 2021/22 season, described by the club as an “over-whelming response” to current uncertainty.

Match day revenue is particularly important for Scottish clubs, given the low TV deal. According to Deloitte, this accounted for an incredible 48% of total revenue in Scotland in 2018/19 (pre-pandemic) with the next highest country being significantly lower, i.e. Belgium 26%.

Hearts £7.5m wage bill is still the fourth highest in Scotland to date in 2020/21, though Celtic’s £52m is an incredible 7 times as much, while Rangers’ £48m is 6 times as much. It was also below Aberdeen £9.5m (in the Premiership). Hearts wages to turnover ratio increased from 71% to 94%, obviously impacted by the pandemic and relegation. They were sandwiched between Rangers 100% and Celtic 85%.

Hearts have only spent a total of £2.0m on bringing in players in the last five years, though this was actually around 3 times as much as £0.7m in the preceding five-year period.

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