Footballing Finance Crisis

[Sylar]

To be honest, I tend not to pay much attention to the plethora of threads which continually litter this board in relation to the finances of Hearts. Some of the desperate delight which plagues these threads is downright disturbing, considering how close we ran to diving out of business, and for this reason (amongst a few others), I avoid reading them.

However, I was reading the interview with Jim Jeffries on the BBC Sportscotland website and it suddenly struck me just how ludicrous their financial situation is, not to mention in the bigger scheme of Scottish Football as a whole.

Rangers are currently £25 million in debt and this looks likely to increase (if they are, as expected, hammered for their tax issues). Assuming their debt rises to nearly £30 million they STILL won't have the same level of debt as Hearts. Now consider how both these clubs finance their debts:

Rangers will have sufficient income from season ticket sales - they have something in the region of 38,000 season ticket holders - assuming an average ST price of £300, that's almost £11.5 million. Include their £10 million for getting into the Champions League, income from player sales (inevitably), income from sponsors, income from winning the league and league cup, television money, PATG money, hospitality sales etc etc and you can see how their debt is somewhat servicable.

Hearts on the other hand are starting with £35 million in the red. Now, lets assume that 2/3 capacity (11.5k) is season ticket sales (median cost of £275) - they take £3.2 million from the word go. IF they beat us to the European position, they only enter into the first round qualifying, so aren't guaranteed decent financial compensation (though granted, better than not). They will obviously get some money from the TV deal, sponsors, PATG, hospitality etc, but with a smaller fanbase, dwindling interest in Scottish Football from larger sponsors, they'll do well to receive another £5 million on top of their ST intake - they will probably take in good finance if they manage to offload players like Driver, Wallace, Johnson etc, but in todays market, they're hardly going to reap a large financial windfall from these guys.

This problem is by no means exclusive to Hearts, but considering they start with -£35 million, surely their position is extremely precarious! It amazes me that so many fans of football clubs continue to believe that these levels of debts are acceptable. Looking down south, the wheels are starting to come off of clubs who overspend, with clubs like Portsmouth and Hull being hammered as way of example.

Like most people, I don't understand the finer financial issues facing Hearts and who actually owes who what, but surely, with banks looking into clubs with lesser debt than our city neighbours, they must be facing some uncertainty ahead?

We might end up behind them in the league, and we might all complain that we've had a very poor second half of the season. We'll probably complain about having to see players released over the summer, we would rather see playing at Easter Road next and we might continue to listen to comments about us being the "wee team", but to be 100% honest, if it means we are one of the only clubs in Scotland with a highly manageable debt, then it's a worthwhile sacrifice in my opinion.

Pardon any cross-posting.

[H18sry]

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To be honest, I tend not to pay much attention to the plethora of threads which continually litter this board in relation to the finances of Hearts. Some of the desperate delight which plagues these threads is downright disturbing, considering how close we ran to diving out of business, and for this reason (amongst a few others), I avoid reading them.

However, I was reading the interview with Jim Jeffries on the BBC Sportscotland website and it suddenly struck me just how ludicrous their financial situation is, not to mention in the bigger scheme of Scottish Football as a whole.

Rangers are currently £25 million in debt and this looks likely to increase (if they are, as expected, hammered for their tax issues). Assuming their debt rises to nearly £30 million they STILL won't have the same level of debt as Hearts. Now consider how both these clubs finance their debts:

Rangers will have sufficient income from season ticket sales - they have something in the region of 38,000 season ticket holders - assuming an average ST price of £300, that's almost £11.5 million. Include their £10 million for getting into the Champions League, income from player sales (inevitably), income from sponsors, income from winning the league and league cup, television money, PATG money, hospitality sales etc etc and you can see how their debt is somewhat servicable.

Hearts on the other hand are starting with £35 million in the red. Now, lets assume that 2/3 capacity (11.5k) is season ticket sales (median cost of £275) - they take £3.2 million from the word go. IF they beat us to the European position, they only enter into the first round qualifying, so aren't guaranteed decent financial compensation (though granted, better than not). They will obviously get some money from the TV deal, sponsors, PATG, hospitality etc, but with a smaller fanbase, dwindling interest in Scottish Football from larger sponsors, they'll do well to receive another £5 million on top of their ST intake - they will probably take in good finance if they manage to offload players like Driver, Wallace, Johnson etc, but in todays market, they're hardly going to reap a large financial windfall from these guys.

This problem is by no means exclusive to Hearts, but considering they start with -£35 million, surely their position is extremely precarious! It amazes me that so many fans of football clubs continue to believe that these levels of debts are acceptable. Looking down south, the wheels are starting to come off of clubs who overspend, with clubs like Portsmouth and Hull being hammered as way of example.

Like most people, I don't understand the finer financial issues facing Hearts and who actually owes who what, but surely, with banks looking into clubs with lesser debt than our city neighbours, they must be facing some uncertainty ahead?

We might end up behind them in the league, and we might all complain that we've had a very poor second half of the season. We'll probably complain about having to see players released over the summer, we would rather see playing at Easter Road next and we might continue to listen to comments about us being the "wee team", but to be 100% honest, if it means we are one of the only clubs in Scotland with a highly manageable debt, then it's a worthwhile sacrifice in my opinion.

Pardon any cross-dressing.

Good points tho S

[.Sean.]

I heard on the radio earlier that when (or indeed if) that Ellis boy does buy Rangers, they will then become debt-free. How does this work? He buys them back from the bank and he himself ends up 30-odd million quid out of pocket?

Where are the logistics to that? As far as i'm aware he's an English businessman with no great interest in Rangers. Why would he plough money into something he probably won't get a return from?

[noseyhibby]

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To be honest, I tend not to pay much attention to the plethora of threads which continually litter this board in relation to the finances of Hearts. Some of the desperate delight which plagues these threads is downright disturbing, considering how close we ran to diving out of business, and for this reason (amongst a few others), I avoid reading them.

However, I was reading the interview with Jim Jeffries on the BBC Sportscotland website and it suddenly struck me just how ludicrous their financial situation is, not to mention in the bigger scheme of Scottish Football as a whole.

Rangers are currently £25 million in debt and this looks likely to increase (if they are, as expected, hammered for their tax issues). Assuming their debt rises to nearly £30 million they STILL won't have the same level of debt as Hearts. Now consider how both these clubs finance their debts:

Rangers will have sufficient income from season ticket sales - they have something in the region of 38,000 season ticket holders - assuming an average ST price of £300, that's almost £11.5 million. Include their £10 million for getting into the Champions League, income from player sales (inevitably), income from sponsors, income from winning the league and league cup, television money, PATG money, hospitality sales etc etc and you can see how their debt is somewhat servicable.

Hearts on the other hand are starting with £35 million in the red. Now, lets assume that 2/3 capacity (11.5k) is season ticket sales (median cost of £275) - they take £3.2 million from the word go. IF they beat us to the European position, they only enter into the first round qualifying, so aren't guaranteed decent financial compensation (though granted, better than not). They will obviously get some money from the TV deal, sponsors, PATG, hospitality etc, but with a smaller fanbase, dwindling interest in Scottish Football from larger sponsors, they'll do well to receive another £5 million on top of their ST intake - they will probably take in good finance if they manage to offload players like Driver, Wallace, Johnson etc, but in todays market, they're hardly going to reap a large financial windfall from these guys.

This problem is by no means exclusive to Hearts, but considering they start with -£35 million, surely their position is extremely precarious! It amazes me that so many fans of football clubs continue to believe that these levels of debts are acceptable. Looking down south, the wheels are starting to come off of clubs who overspend, with clubs like Portsmouth and Hull being hammered as way of example.

Like most people, I don't understand the finer financial issues facing Hearts and who actually owes who what, but surely, with banks looking into clubs with lesser debt than our city neighbours, they must be facing some uncertainty ahead?

We might end up behind them in the league, and we might all complain that we've had a very poor second half of the season. We'll probably complain about having to see players released over the summer, we would rather see playing at Easter Road next and we might continue to listen to comments about us being the "wee team", but to be 100% honest, if it means we are one of the only clubs in Scotland with a highly manageable debt, then it's a worthwhile sacrifice in my opinion.

Pardon any cross-posting.

Good post