Hearts finance breakdown: From benefactor spending to staff costs

Thursday's AGM is due to be her last as she ran through the club's finances in a typically clear and detailed manner.

"Many people in those sorts of jobs will have six-month notice periods," the club's chief executive Andrew McKinlay, who has been carrying out the interviews with Duncan, said, "so we are speaking to some high calibre people.

"She came in at a time when the club had not long come out of administration and you look at some of the graphs [from the AGM] to show where the club was and where the club is now.

"I think too many of us in all walks of life, we are always in the here and now, we don't maybe sit back and reflect on what we have achieved and I think in a quieter moment hopefully Jacqui will look back at what the club has achieved and she has been a huge part of that in those 10 years.

"She will be a hard act to replace."

Returning to the club's AGM, Duncan was able to provide more detail and insight into the numbers that were released in the financial accounts last month.

Commercial success and Euro football importance

Hearts recorded a turnover of more than £20million for the second year running in the financial year covering 2023/24. It is all the more impressive considering there was no European group stage football.

In the previous year's set of accounts, European football accounted for more than £6million compared to just £2million this past year. Gate receipts also fell by £300,000 to £5.9million due to five fewer games although the average attendance grew to 18,000.

"The fact that our year-on-year revenue reduction is only £0.5 million is again testament to the real growth generated within our commercial businesses," Duncan said.

There was a 40 per cent year-on-year increase in sponsorship and advertising, the club attracting new business with a "significant number of new lucrative deals over the year".

Retail brought in £2.6million aided by the sale of 25,000 shirts, an increase of 8,000.

HeartsTV subscriptions increased by 10 per cent, contributing to an increase of £100,000 in the club's broadcasting income.

Staff costs

In the accounts, an eye-catching number was £16.5million on staff costs, an increase of £1.1million. That figure covers 17 different departments which are broken into four categories: Football, commercial, partnerships and centre support,

Duncan provided shareholders with a breakdown of those categories. £11.8million for the football department and its 190 staff - an average over the year - £2.8million for commercial and its 73 staff members, £200,000 for the 11 in partnerships, and £1.3million for 22 employees in central support. There was an additional £400,000 for 128 staff members who work part-time on a matchday.

The football department consists of first-team, B team, academy, women's team, performance, recruitment, and support staff.

The club's player investment, which covers such elements as players' costs, salaries, bonuses, is 50 per cent of the club's revenue which sits within UEFA's acceptable limits. A limit that will drop to 70 per cent for the 2025/26 season.

Meanwhile, the total staff costs are 64 per cent of the club's total income. The average for clubs across European football is 67 per cent.

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Benefactor spending

Up until June 24 this year, the club had received more than £45million in benefactor donations, £16million from the Foundation of Hearts and nearly £30million "from a series of benefactors". It is a bone of contention among some fans. Not the benefactor money, of course, but where it has been spent.

Duncan sought to provide a breakdown of where a lot of that money has been spent since 2014, namely infrastructure and player registration costs (transfer fees, not wages).

"Cumulatively we have spent around £44million on a number of initiatives to improve the future of our club," she explained "If you cast your mind back a little, remember we started in a position where we had very little money. We had a run-down stadium where little or no maintenance had been done for many years. It was pretty much starting again.

"We received £45million but basically, we have largely spent it on upgrading our infrastructure and making Tynecastle Park the place it is today. In addition to all of this, we spent over £7million on player transfer fees, with the majority of that in the last three years."

In the 2014/15 season, working capital was required. In 2016 there was the purchase of an administration building and Main Stand planning. The following year had Main Stand work and Wheatfield Stand office development. In 2018, the investment for the supporters' bar, TV studio, and hybrid pitch. The following year brought about the Skyline Lounge, UEFA standard changing rooms, new CCTV, and more works around the stadium.

In more recent years there has been investment in the hotel as well as floodlights and other elements which bring the stadium up to UEFA standard.

Bidco loan and £7m loan facility

One of the eye-catching figures within the financial accounts was the drawdown of £1.5million from Bidco (1874) Limited (aka Ann Budge). It took the loan figure to £3.3million. In addition, it was noted that the club had obtained a new 10-year £7million term loan facility.

This will be used to pay off the loan owed to Budge in 2025.

That new loan facility will also, as Duncan explained at the AGM, be used to help with cash flow problems that are encountered throughout the year.

There are peaks and troughs through the football season where the club will bring in more money in certain periods while in others the outgoings are more with the aim of breaking even across the year (Hearts budget to break even). 

For example, at the start of the campaign the club will receive the first lot of prize money from the SPFL and then in September can have European revenue to bank. From then until January costs exceed income with the costs associated with playing football games.

Football clubs can no longer go to banks for loans therefore Hearts, like other football clubs, rely on owners, benefactors, shareholders, or external investors to be able to cover those problem times.

"I talked to many other finance directors in the Premiership and I can assure you that we all have the same cash flow issues, with probably Celtic being the exception – who are rather fortunate to sit with £70m in the bank, but that really is another story – and we do all we can to deal with it," Duncan said at the AGM.

"We have a renewed focus on repositioning the business to ensure continued revenue growth with cost flexibility and containment and less reliance on donation income. Challenges will continue of course but we do believe we are in a good place to deal with them."

Financial position

Hearts are sitting with £20million worth of net assets, a significant growth from 2014 when the net asset base was just over £1million.

Ten years ago there was £6.5million of revenue generated amounting to a more than 200 per cent growth since then.

"The key message, the company at the end of the 2023-2024 financial year continues to be in a strong financial position," Duncan said.