Hearts 2017/18 financial results covered a “disappointing” season as they finished 6th in SPFL Premiership, but they “managed to deliver a very credible financial performance, while making great strides forward in terms of rebuilding infrastructure.” Some thoughts follow #hmfc
Hearts profit fell from £2.3m to £1.8m, despite revenue rising £0.8m (7%) to £12.3m (including player loans) and profit on player sales doubling to £0.4m, as these were offset by £2.1m cost growth. Included £3m donations: for stadium redevelopment £2m and player costs £1m #hmfc 
Hearts revenue growth driven by gate receipts, which increased £1m (24%) to £5.3m, and commercial income, up £0.2m (4%) to £4.3m, offset by lower TV, down £0.3m (11%) to £2.5m. Exceptional donations from unknown benefactors were £0.5m higher at £3.0m #hmfc
Funded by the £1m donation, Hearts wage bill climbed £1.1m (19%) to £7.0m. There was also cost growth elsewhere: player amortisation and depreciation up £0.1m to £0.6m; other expenses rose £0.7m (14%) to £6.1m; net interest payable was £0.1m higher #hmfc
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, 8 of the 12 clubs in the Scottish top flight make money with only Rangers reporting a sizeable £14.3m loss #hmfc
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) #hmfc
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. The £27m profit in 2013/14 is misleading, as this included a £27m debt write-off following administration #hmfc
In fact, Hearts figures have been significantly impacted by exceptional items in the last few years, ranging from £17m of debt forgiveness in 2010-11 to £5.5m donations in the last 2 seasons (£4.5m for the redevelopment of Tynecastle stadium and £1.0m for player costs) #hmfc
Hearts have made very little money from player sales, actually less than £6m profit from this activity in the last nine years. The highest profit made in this period was £2.0m back in 2012 (mainly Lee Wallace to Rangers and Eggert Jonsson to Wolves) #hmfc
Hearts EBITDA (Earnings Before Interest, Tax, Depreciation & Amortisation), which can be considered as a proxy for cash operating profit, as it excludes player sales and exceptional items, fell from £0.3m to £(0.8)m, though this is a lot better than the £(5.7)m in 2010 #hmfc
Hearts “continue to grow our business across all areas”, as revenue has increased by 75% (£5.3m) since promotion in 2015, mainly commercial (partly due to bringing retail operation in-house in 2016). Aim to grow revenue to £15m in 2-3 years following stadium redevelopment #hmfc
As is the case for most Scottish clubs, Hearts are mainly reliant on match day income, though this has fallen 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% #hmfc
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 #hmfc
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 #hmfc
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) #hmfc
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 4 matches at Murrayfield). Third highest income in Scotland, but Celtic £32m and Rangers £23m far higher #hmfc
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. 18/19 ticket prices up around 5%, but 17/18 prices frozen for 3 years if donated £100 to stadium development fund #hmfc
Hearts stadium development will cost £18m and should be completed during 2019/20 season. Increased capacity to 20,000 and improved other facilities (hybrid pitch, undersoil heating & supporters bar). Owner Ann Budge says that it should generate an additional £3m each season #hmfc
Hearts commercial income rose by £0.2m (4%) to £4.3m, comprising commercial £2.9m, sponsorship & advertising £0.8m and other income £0.7m. Close to Aberdeen £6.4m and Rangers £5.3m, but long way below Celtic £37m. Main sponsor is Save the Children; kit deal with Umbro #hmfc
An exceptional £1m donation free m benefactors towards player costs allowed Hearts to increase the wage bill “considerably” by £1.1m (19%) from £5.9m to £7.0m. Since promotion in 2015, wages have risen by 85% (£3.2m), while revenue is only up 75% (£5.3m) in the same period #hmfc
Despite the increase, Hearts £7m wage bill is still the fourth highest in Scotland, just below Aberdeen £7.8m. Rangers £24m is more than 3 times as much, while Celtic £59m is an incredible 8 times as high #hmfc
Hearts wages to turnover ratio increased from 51% to 57%, though this is still pretty good and about the same as Celtic 58% and Hibernian 56%. Maybe of more interest, it is a lot lower (better) than Rangers 74% #hmfc
Hearts player amortisation, the annual expense to write-down transfer fees, dropped slightly from £0.3m to £0.2m in 2018, but the low amount reflects the limited investment in the playing squad #hmfc
As a rule, Scottish clubs do not pay big money to sign players, meaning that their player amortisation charge is normally very low. In fact, Celtic £9m and Rangers £4m are the only clubs booking more than Hearts £245k a year #hmfc
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 & Rangers £10m #hmfc
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 #hmfc
Hearts gross debt rose from £2.3m to £4.5m. Almost all of this is owed to owner Ann Budge, including £2.4m to her company Bidco (1874) Ltd. The club’s debt was significantly cut a few years ago via a combination of administration, equity conversion & debt forgiveness #hmfc
Hearts £4.5m debt is the third highest in Scotland, behind Rangers £22.5m and Celtic £6.8m. The idea is that Budge will be repaid in 2020 when the fans’ organisation Foundation of Hearts is due to take on her shareholding #hmfc
It is worth noting that Hearts cash balance decreased from £5.5m to only £0.2m, which is one of the lowest in the Scottish top tier, only above Motherwell. For some context: Celtic £43m, Hibernian £4.2m and Aberdeen £3.5m #hmfc
Hearts £5.3m cash outflow in 2017/18 was largely due to £12.5m of capital expenditure on the Tynecastle redevelopment. Much of this was covered by donations from benefactors plus £1.7m from Ann Budge and £1.3m from Foundation of Hearts (treated as equity) #hmfc
Since 2013 Hearts £31m available cash sourced largely from loans £21m, donations £5m and player sales (net) £4m. Nearly 60% (£18m) of this has gone on the stadium (“key investment to secure the future of the club”), while £13m was used to cover operating losses #hmfc
As a club, Hearts also invest heavily in youth, described as “a cornerstone of our business model”. In fact, the club claim that more young players take to the field in its first team than any other club in Europe #hmfc
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 #hmfc
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 #hmfc
