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?681k loss


andy-y

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Hearts had an operating loss of ?681k and paid ?1.5m in debt off. Considering we were in the championship and still upped our turnover by ?0.5m looks very good to me or are we still big lying cheerturz?

 

I'm guessing this will not include our monthly pledges?

 

Taken from the Scotsman. http://m.scotsman.com/sport/football/latest/hearts-reduce-debt-despite-681k-operating-loss-1-3938024#axzz3qZWGJgtq

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Guest Bilel Mohsni

This debt pay off... How much does that take our debt to bidco down to? I was under the impression we were going to be using the FoH money to fund the running of the club for a couple of years before it went to paying anything back to bidco. I've obviously missed something here.

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This debt pay off... How much does that take our debt to bidco down to? I was under the impression we were going to be using the FoH money to fund the running of the club for a couple of years before it went to paying anything back to bidco. I've obviously missed something here.

FOH made an agreement to provide certain funding.

 

When taken over we (the club) were not free of every debt owed to other parties and those needed paying for example Heriot Watt or other footballing debts.

 

I'm pretty sure the above and other examples are the 'debt' referred to.

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Guest Bilel Mohsni

FOH made an agreement to provide certain funding.

 

When taken over we (the club) were not free of every debt owed to other parties and those needed paying for example Heriot Watt or other footballing debts.

 

I'm pretty sure the above and other examples are the 'debt' referred to.

Ah, right. I thought football debts had to be paid before we could exit administration. I thought the terms of a CVA meant we were unable to pay historical debts once our agreed debt payments were taken care of by the pot put forward by BIDCO. I had put forward a suggestion on another thread at the time about offering free advertising space in the stadium and program to reimburse some of the parties who lost out when we went in to administration, but was told this would breach the terms of our CVA.

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Ah, right. I thought football debts had to be paid before we could exit administration. I thought the terms of a CVA meant we were unable to pay historical debts once our agreed debt payments were taken care of by the pot put forward by BIDCO. I had put forward a suggestion on another thread at the time about offering free advertising space in the stadium and program to reimburse some of the parties who lost out when we went in to administration, but was told this would breach the terms of our CVA.

Paying football debts was a condition set by the football authorities, it was nothing to do with the cva process.

It was only after we came out of administration that the club set about paying the football debts

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There is no such thing as "free" advertising space or hospitality. Giving these things away for nothing means lost opportunities and actually costs the club money.

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There is no such thing as "free" advertising space or hospitality. Giving these things away for nothing means lost opportunities and actually costs the club money.

Well yeah, but he clearly means at no charge to the businesses in question rather than at no cost to the club- the idea was to give them something of value for nothing, but we can't

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I think the footballing debts were cleared last December. I assume we've already started paying Ann/Bidco so we can achieve full fan ownership within the 5 year time frame. Whether that appears on these accounts or not I don't know.

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When does the FoH start repaying Anne Budge? Have they already begun the process of repaying Anne for the money she put up to keep the Hearts afloat. Also what is the interest rate that Anne is charging the club for this loan?

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Marooned In Oz

I think the footballing debts were cleared last December. I assume we've already started paying Ann/Bidco so we can achieve full fan ownership within the 5 year time frame. Whether that appears on these accounts or not I don't know.

The entire foh money was intended to be used for running the club for the first two years with Ann not being paid back until after this time period.

 

By the looks of these accounts it appears that we are well ahead of schedule.

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Sorry but can we get some Hibs fans on here to give us some clarity on our financial affairs?

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That 'loss' helped us get out of the Championship at the first time of asking. We'll make that up with ease being in the Premiership.

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jonnothejambo

Sorry but can we get some Hibs fans on here to give us some clarity on our financial affairs?

SirGay, Vagillians and Greenminger are holding a meeting to pour through this as we speak ; in a telephone box.

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Ann Budge made a loan of ?2.4m to the club, which in turn used it to buy it from the Administrators.  ?172k was paid in interest on that loan, 7.2%, the recipient being Ann Budge.  But for that, as well as a club to support, we get Ann's wealth of business acumen.  A good deal for both of us.  It's clearly given her an interest and passion in later life and few would argue that she's done a more than decent job so far.

 

Any losses have been more than exceeded by the FoH Subscription Money, ?1.4m per annum, which for the 1st 2 years is working capital only and not yet used for paying Ann Budge back, though it will be at a later date.

 

We're absolutely fine, breath out.  Ms Budge knows exactly what she's doing. She's a hard headed and extremely successful businesswoman as well as a lifelong Jambo.

 

Don't believe any of the bitter,jealous ill informed bollocks you may read "over there".  But it's good for a bit of entertainment :)

Edited by SwindonJambo
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We'll make that up with ease being in the Premiership.

 

I hope you're right.  I'm not so sure though.  Somehow running a football club seems to turn good business people into financial illiterates almost overnight.

 

I don't think Hearts should be making a profit (IMO, every penny should be spent on the team, the stadium or Hearts-related social enterprises), but we can't always be making a loss either.

 

Break-even every year = perfect

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Gene Parmesan

Cash reserves of ?3.5m guys. And all the debt owed to FoH (in principle) and Bidco.

 

Very positive set of results.

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Ann Budge made a loan of ?2.4m to the club, which in turn used it to buy it from the Administrators.  ?172k was paid in interest on that loan, 7.2%, the recipient being Ann Budge.  But for that, as well as a club to support, we get Ann's wealth of business acumen.  A good deal for both of us.  It's clearly given her an interest and passion in later life and few would argue that she's done a more than decent job so far.

 

Any losses have been more than exceeded by the FoH Subscription Money, ?1.4m per annum, which for the 1st 2 years is working capital only and not yet used for paying Ann Budge back, though it will be at a later date.

 

We're absolutely fine, breath out.  Ms Budge knows exactly what she's doing. She's a hard headed and extremely successful businesswoman as well as a lifelong Jambo.

 

Don't believe any of the bitter,jealous ill informed bollocks you may read "over there".  But it's good for a bit of entertainment :)

Thanks for clarifying that.

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Cash reserves of ?3.5m guys. And all the debt owed to FoH (in principle) and Bidco.

 

Very positive set of results.

That can't be right, seems very high

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FOH made an agreement to provide certain funding.

 

When taken over we (the club) were not free of every debt owed to other parties and those needed paying for example Heriot Watt or other footballing debts.

 

I'm pretty sure the above and other examples are the 'debt' referred to.

The creditors for the year 2014 included more than ?1m relating to the Vlad share issue which has now been resolved.

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Gene Parmesan

That can't be right, seems very high

Page 10 of the accounts. "Cash at bank and in hand: ?3,520,000"

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Page 10 of the accounts. "Cash at bank and in hand: ?3,520,000"

Assuming that includes this years season ticket money to pay wages etc. Or at least the money received up to that point. We still sold some after that accounting period no doubt

Edited by Disco Dave
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Page 10 of the accounts. "Cash at bank and in hand: ?3,520,000"

Yeah, it is correct.

 

Given the balance sheet is a snapshot as at June 30th it does reflect the time of year when we will be most cash rich with season ticket income.

 

Even allowing for that we are in a very secure position and ahead of schedule.

 

The next step will be financing the new Main Stand and I'm very intrigued to see how this is planned.

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Indeed so, and its a lot nicer looking than the old Vlad  ?20M  plus debt we used to have. 

 

PS  Ann Budge will live in my Heart as our most important benefactor that I can remember. 

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Page 10 of the accounts. "Cash at bank and in hand: ?3,520,000"

I haven't seen it myself, but I'm struggling to see how a business in its second year has a cash reserve that high compared to our turnover.

This snapshot must have been at a point when ST money was in but not all spent yet, if so I wouldn't call it cash reserve as that figure will go down as wages etc get paid as the season goes on.

 

So I'd think anyway

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Guest Bilel Mohsni

I haven't seen it myself, but I'm struggling to see how a business in its second year has a cash reserve that high compared to our turnover.

This snapshot must have been at a point when ST money was in but not all spent yet, if so I wouldn't call it cash reserve as that figure will go down as wages etc get paid as the season goes on.

 

So I'd think anyway

Aye, that's true, but if crowds keep up, and merchandising etc, then hopefully it goes down less and at a slower rate. :thumbsup:

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So thats it then ? us nasty yams are back to financial doping

 

:pleasing:

 

 

Seriously though, whoever coined the phrase 'financial doping' needs shot - ****ing gimp

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The lovely maroon track must have set us back a few bob as well, won't need to replace that soon. And how much does it cost to relay a new pitch as that might have been factored into the send prior to 30 June. Spending to get the scouting up to scratch etc as well. A decent amount for other things will have been included that wont expected to be required each year as well I'm sure

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Lord Beni of Gorgie

If we finish second, if the report was correct on the telly the other night, that secures 2 million. A good run in the Scottish Cup would secure 500k to the semis for example. These are important numbers in our quest to clear all debt

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The lovely maroon track must have set us back a few bob as well, won't need to replace that soon. And how much does it cost to relay a new pitch as that might have been factored into the send prior to 30 June. Spending to get the scouting up to scratch etc as well. A decent amount for other things will have been included that wont expected to be required each year as well I'm sure

That's exactly it. It was pointed out that the old regime had neglected certain areas that would need to be addressed in the short term.  Hence the ?1m initial payment from FOH followed by the 2 annual payments of ?1.4m, to provide extra working capital during the early period.  The fact we only posted a loss of ?681k shows that we aren't eating into all of the extra working capital from FOH, and hopefully building up a healthy reserve.

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I hope you're right.  I'm not so sure though.  Somehow running a football club seems to turn good business people into financial illiterates almost overnight.

 

I don't think Hearts should be making a profit (IMO, every penny should be spent on the team, the stadium or Hearts-related social enterprises), but we can't always be making a loss either.

 

Break-even every year = perfect

 

 

Of course, and that should be the aim, but planning requires a certain level of speculation and forecasting and 2014/15 involved a highly specific aim.  The signings of Pallardo and Zeefuik for instance pushed the boat out but it helped get us that automatic promotion back. A very shrewd move by the Ann and her team.

 

We'll generate more income in the Premiership. I'm confident that in our case, we have the right people to guide our club.

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Footballfirst

The debt figure in the accounts will go up over the next couple of years. By the time Ann Budge is paid off FOH will be owed ?6.2M by the club.

 

If further FOH funds are set aside,e.g. to fund a new main stand, then the debt figure will rise further.

 

Net Debt isn't really a good measure of the health of a company as it can be easily manipulated. Look at outstanding loans instead. Turnover, operating expenses and cash flow are also better indicators. e.g. Rangers accounts yesterday showed a figure in their cash flow under  "Cash used in operations" of  a negative ?12.2M.  That was their cash burn over the year, equivalent to over ?1M a month. Two thirds of that was funded  by a share issue and loans from SD, King and the 3 Bears, but they ended the year with ?3.5M less than they started it.

 

Hearts equivalent cash flow was positive at ?840K and taken with the FOH money and other adjustments meant that we had approaching ?2M more cash at the end of the year than we did at the start.

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Cast No Shadow

I want Mrs Budge to remain at the healm forever.

 

It will be a nightmare when the dafties take over things. :(

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I want Mrs Budge to remain at the healm forever.

 

It will be a nightmare when the dafties take over things. :(

 

I've mentioned this previously. Don't be under the impression that when the fans 'take ownership' so to speak, that it'll be a whole new backroom team in place consisting of Tam & Boaby from the Tynie Arms.

 

Fan ownership has NOTHING to do with running the club imo. Those at the foundation will ensure that the existing team are still in place after the hand over. Whether or not that includes Ann Budge will be very much her decision.

 

People need to stop worrying about the lunatics entering the assylum.

 

Things will be run just as well & in all probability, by the same people.

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The debt figure in the accounts will go up over the next couple of years. By the time Ann Budge is paid off FOH will be owed ?6.2M by the club.

 

If further FOH funds are set aside,e.g. to fund a new main stand, then the debt figure will rise further.

 

Net Debt isn't really a good measure of the health of a company as it can be easily manipulated. Look at outstanding loans instead. Turnover, operating expenses and cash flow are also better indicators. e.g. Rangers accounts yesterday showed a figure in their cash flow under  "Cash used in operations" of  a negative ?12.2M.  That was their cash burn over the year, equivalent to over ?1M a month. Two thirds of that was funded  by a share issue and loans from SD, King and the 3 Bears, but they ended the year with ?3.5M less than they started it.

 

Hearts equivalent cash flow was positive at ?840K and taken with the FOH money and other adjustments meant that we had approaching ?2M more cash at the end of the year than we did at the start.

 

Sorry if this is obvious, but why is the club building up a debt to FOH?  I thought the money we paid to FOH was then being put towards running costs and repayment of the funds to Bidco?  How does that then result in a debt for the club?

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Gene Parmesan

Sorry if this is obvious, but why is the club building up a debt to FOH?  I thought the money we paid to FOH was then being put towards running costs and repayment of the funds to Bidco?  How does that then result in a debt for the club?

It is classed as a debt in case the takeover doesn't go through for whatever reason. An insurance policy for the supporters' cash.

 

I guess it will be up to the members of the FoH what to do once it takes over the reins. Write off the debt somehow, I guess.

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It is classed as a debt in case the takeover doesn't go through for whatever reason. An insurance policy for the supporters' cash.

 

I guess it will be up to the members of the FoH what to do once it takes over the reins. Write off the debt somehow, I guess.

 

ok, so we're effectively loaning our pledges to the club and FOH will then convert the loan into shares when they take over?

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Footballfirst

Sorry if this is obvious, but why is the club building up a debt to FOH?  I thought the money we paid to FOH was then being put towards running costs and repayment of the funds to Bidco?  How does that then result in a debt for the club?

 

Its designation as a loan has a couple of benefits. 

 

If there was some financial calamity that hit the club before FOH take over, or if there was a fall out with Bidco (heaven forbid), then FOH could reclaim the fans pledges from the club.

 

Once FOH has control of the club, if the club was to get into financial difficulties, then the FOH loan would probably make them the biggest creditor and because of the security it will hold over Tynecastle the long term future of the "club" and its assets should be secure.

 

The debt can remain on the the clubs balance sheet without impacting the day to day operation of the club.  However, if we engage a third party to help redevelop the main stand, then FOH may have to give up their first/second ranking security until such time is any new loan is paid off.

Edited by Footballfirst
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If we finish second, if the report was correct on the telly the other night, that secures 2 million. A good run in the Scottish Cup would secure 500k to the semis for example. These are important numbers in our quest to clear all debt

 

We'll do better than a good run in the Scottish Cup.

 

We're winning it.

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Its designation as a loan has a couple of benefits.

 

If there was some financial calamity that hit the club before FOH take over, or if there was a fall out with Bidco (heaven forbid), then FOH could reclaim the fans pledges from the club.

 

Once FOH has control of the club, if the club was to get into financial difficulties, then the FOH loan would probably make them the biggest creditor and because of the security it will hold over Tynecastle the long term future of the "club" should be secure.

So do you think the plan is to retain it as a liability indefinitely? I have no problem with this but hadn't realised if this is the plan.

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Footballfirst

So do you think the plan is to retain it as a liability indefinitely? I have no problem with this but hadn't realised if this is the plan.

 

I don't know if it is the plan, but I would consider it a reasonable position to take.  It will ultimately be up to the members to decide whether or not to write it off.

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kingantti1874

I don't know if it is the plan, but I would consider it a reasonable position to take. It will ultimately be up to the members to decide whether or not to write it off.

Once shares transfer is complete I don't really see any benefit to writing it down ?!?

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Why are these accounts being reported so positively when there's a ?681,000 loss?

 

Probably because in the circumstances, a ?681,000 loss was very positive.

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Probably because in the circumstances, a ?681,000 loss was very positive.

1) We were in the Championship.  That impacted our revenue.

 

2) There was a lot of housekeeping to take care of.  Ann Budge and FoH knew this, and that's why the first two years of cash tranches from FoH go to operations instead of debt payment.

 

3) FTH.  (Sorry, that's relevant somehow, even if I'm not sure how.) 

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I hope you're right.  I'm not so sure though.  Somehow running a football club seems to turn good business people into financial illiterates almost overnight.

 

I don't think Hearts should be making a profit (IMO, every penny should be spent on the team, the stadium or Hearts-related social enterprises), but we can't always be making a loss either.

 

Break-even every year = perfect

 

The loss doesn't take into account the money coming in from FoH. There's actually a strong possibility that if FoH member contributions continue in the long term, the club will make regular losses in the long term, with those losses being covered by the contributions.  This will be absolutely fine, as long as the losses are planned, controlled, and a reasonable level of cash reserves is held in case FoH contributions drop significantly.

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1) We were in the Championship.  That impacted our revenue.

 

2) There was a lot of housekeeping to take care of.  Ann Budge and FoH knew this, and that's why the first two years of cash tranches from FoH go to operations instead of debt payment.

 

3) FTH.  (Sorry, that's relevant somehow, even if I'm not sure how.) 

 

That's always relevant, no matter the context!

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The loss doesn't take into account the money coming in from FoH. There's actually a strong possibility that if FoH member contributions continue in the long term, the club will make regular losses in the long term, with those losses being covered by the contributions.  This will be absolutely fine, as long as the losses are planned, controlled, and a reasonable level of cash reserves is held in case FoH contributions drop significantly.

My hope is that FoH money is reserved for things like the academy and the stadium.  10 years post-admin with the best young talent pipeline and the best mid-sized stadium in Scotland would suit me fine.

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My hope is that FoH money is reserved for things like the academy and the stadium.  10 years post-admin with the best young talent pipeline and the best mid-sized stadium in Scotland would suit me fine.

 

Can't argue with any of that!

 

I wasn't suggesting that any regular losses would be down to extra spending on players, etc, but simply pointing out that if overall spending by the club (including, for instance, running of a bigger, better academy, paying off of loans for stadium redevelopment, etc) was roughly matched to 'normal' business turnover plus FoH contributions, that would be likely to result in accounting losses on a regular basis, but would not be any cause for alarm.

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