Club News

Chairman's statement

2nd August 2019

As we head into the new 2019/20 season, it is time, once again, to give you an update on how things are going at the Club and to outline our plans for this season/financial year.

However, before doing that, given that it is now 5 years since we exited Administration in June 2014, I thought it would be appropriate to remind everyone of just how far we have come in that relatively short time.

Rather than put out one overly long statement, I have decided to split my communication into two parts, namely Part 1 – a Strategic Overview and Part 2 – a Seasonal Update. I hope this will enable me to cover everything the supporters want/need to know in a manner that makes it more readable.

 

CHAIRMAN’S STATEMENT - PART 1

STRATEGIC OVERVIEW – AUGUST 2019

1. LOOKING BACK : PERFORMANCE SUMMARY (2014 – 2019)

Our initial 5 year plan set out to achieve the following objectives.

 

Objective No 1

Return the Club to a position of financial stability ensuring that we balanced our expenditure to our income at all times.

Over the last 5 years we have grown our revenues year-on-year from circa £6.5m to over £15m. More importantly, we have managed our costs… despite considerable investment…such that we have achieved an operating profit every year.

 

Objective No 2

Rebuild the “Hearts Brand” to a position where all Hearts supporters could once again be proud to call themselves Hearts supporters and where businesses, small and large, local and national, would be proud to do business with the Club.

Hearts’ brand has never been stronger. Our players… and our supporters… are proud to wear Save the Children on their shirts.

Hearts’ proud heritage has been celebrated with the opening of our museum and our memorial garden.

We are proud to include brands such as Mercedes, Heineken, Baillie Gifford, Dell and Umbro among our business partners.

We are recognised as a Club, where promoting supporters’ interests, family values and the local community feature heavily in our operational planning.

Hearts’ charity, Big Hearts, is one of the strongest Community Trusts in Scottish Football.

Perhaps the strongest evidence of our success in rebuilding our brand is the fact that we have attracted in excess of £10million of funding from benefactors, who are fully supportive of what we have set out to achieve and of how we are going about achieving it.  This funding has supported our Save the Children shirt sponsorship, our Innovation Centre, our building project and, of course, the development and strengthening of our Football operation.

 

Objective No 3

Invest in our Football Academy and in our Youth Players to the extent needed to ensure a steady supply of home-grown talent for the foreseeable future.

In season 2017/18, no fewer than 8 of our academy players were given their first professional contracts. In that season, we played more youngsters in our first team than any other professional Club in Europe. In season 2018/19, we continued that trend, with 9 of our academy players signing professional contracts.  For the 2019/2020 season we have offered professional contracts to a further 6 of our young players.

Over the last 5 years, we have invested in excess of £4million in our Youth Academy and additionally, we have invested in our very own Performance School. Strong foundations have definitely been laid, from which we hope to reap substantial future benefit.

 

Objective No 4

Put in place a Coaching and Scouting operation that would see us achieve promotion from the Championship to the Premiership within 2 seasons and thereafter would see us consolidate our position as a Top 6 Club.

We achieved promotion within 1 season. We went on to reach 3rd place in the Premiership and once again, brought European football to Tynecastle.  We have achieved a Top 6 finish each season since.

 

Objective No 5

Put plans in place to improve the physical infra-structure of the Club in order to create a solid foundation for continued growth.

We have replaced our 103-year-old main stand with a fantastic new stand of which we can all be proud.

At the same time, we have invested heavily in upgrading much of our infrastructure… the development of the Wheatfield undercroft, the opening of a new Club shop, a “first ever” supporters bar… and, we have put down a new state-of-the-art hybrid pitch at a cost of circa £1m.

Solid foundations indeed.

 

Objective No 6

Win the confidence and trust of the supporters and by working closely with the Foundation of Hearts, enable the smooth transfer of 75.1% of the shareholding of the Club to the supporters group thereby creating the largest majority “fan-owned” Club in the UK.

We have developed a very strong relationship with the Foundation of Hearts which should enable this objective to be achieved within 6 years of exiting Administration.  I think it is evident to all that the confidence and trust of our supporters continues.

In summary, I hope you will agree that we have achieved (and in some cases over-achieved) against all of our original objectives.  Every single employee, every single supporter and every single sponsor/benefactor should be enormously proud of the part they have played in helping the Club get to this point.  I thank you all.

But... enough of looking back… we must always be looking forward. 

 

2. LOOKING FORWARD : THE NEXT 3 YEARS

2.1       Overview

In recent times, we have seen the landscape of Scottish Football changing, not least in terms of Club Ownership.  We are seeing increasing investment from overseas investors, while at the same time, we are seeing the increasing involvement of fans’ Groups…led, of course, by ourselves through the Foundation of Hearts.  The competitive landscape is changing in line with this, as evidenced by the fact that the last season’s Premiership was one of the most competitive for many years.  With this in-coming overseas investment in a number of Scottish Clubs, I can only see Scottish Football becoming ever more competitive.  While this will be good for the Game here in Scotland, it will also present some new challenges for many Clubs.  The European Landscape too is changing; hopefully offering increasing opportunity for successful Clubs to achieve European football.  This in itself is likely to encourage/demand even more investment from Clubs.

Against this backdrop, our focus must be on further enhancing our already much improved position, to allow us to continue to compete at the highest level in Scottish Football. We will achieve this by continuing to focus on long-term continuous improvements and not short-term success. We must never slip back into the bad practices of the past or the poor financial management that almost destroyed the club… no matter what the temptation.  My view is that this can best be achieved by continuing along our current path.  We have a solid plan, a strong Board, an excellent Executive Team, a totally committed workforce and an immensely loyal supporter base. 

We are now well on course to achieving the business growth and the on-field performance that is key to securing a stable future for the Club.  We must successfully transition to majority fan ownership in a manner that ensures we in no way undermine what we have all worked so hard to achieve, but rather, in a manner that will continue to underpin our future growth and success.  As we move forward the financial and emotional backing of our fans, pledgers and sponsors will remain as vital as ever.  Unlike other clubs, there will be no single Owner or indeed group of Investors to help the Club ride a difficult period financially or to fund new Capital Projects or indeed Player recruitment.  We, the Board and Management Team, have to ensure that our business initiatives are successful and sustainable; and we, the supporters and pledgers, must continue to financially support the Club.  By doing so, the Club will be able to build significant reserves that will enable us to both ride any storms that come our way and to invest in the future.  Please never lose sight of the fact that while we have come a long way, the journey continues.  We need our supporters to be “supporters for life” and we need our pledgers to “Pledge for Life”, wherever that is possible.

 

2.2       Strategic Objectives

Our overall objectives remain largely unchanged in the broadest sense but as the organisation continues to develop and grow, we must regularly assess what is needed to ensure our continued success.

Our most recent strategic review has confirmed the following areas as those on which we will focus to ensure the future of the Club is secure.

 

a.         Strong Infrastructure

·      Implement strong corporate governance*.

·      Build a stable and effective organisational structure.

·      Invest in the “right” people to lead the organisation.

·      Continue to develop a stadium that is “fit for purpose” in the 21st Century.

*  This is of particular importance given the forthcoming transition to majority fan-ownership.

There is still much lack of understanding by sections of the supporter base as to what majority fan-ownership actually means.  It is important that supporters understand that the 75.1% shareholding ensures protection in a number of key areas which the supporters feel strongly about. 

·      The Board cannot sell the Club or change its name.

·      The Board cannot sell Tynecastle Park.

·      The Board cannot change Club colours, badge design.

What it does not mean, is that the supporters, represented by the FOH Board, will appoint or remove the Chairman, Chief Executive or indeed other Board members.  Nor will they appoint or dismiss the Manager; and nor will they pick the team!

The supporters will continue to be represented, as they are now, by 2 members of the FOH Board, who will sit on the Club Board.  Clearly, at any point in time, as majority shareholders, they can vote at an AGM or call an Extraordinary General Meeting to vote on any matter which is causing concern.  FOH have their own voting rules for ascertaining feedback from their members.

In short, it is important that supporters realise that even after the transfer of shares to FOH, the Club will continue to be run by the Board and by the Executive Management Team on a day-to-day basis.

 

b.         Financial Stability

·      Deliver revenue growth and profitability year-on-year*.

·      Ensure strong financial governance and control.

·      Enable strong financial resilience through a policy of minimal debt and strong supporter engagement.

*  While over the next 3 years, we will be striving for growth, the focus will remain on profitable growth.

 

c.         Footballing Department Objectives

·      Achieve, at a minimum, a Top 6 finish in the Premiership year-on-year, striving always for a finishing position that will ensure European football.

·      Achieve the latter stages of both domestic cups.

·      Create and maintain a proven pathway for boys (and girls) to graduate from the Academy to First Team football.

·      Develop a successful Hearts Women’s Team, achieving promotion to, and a regular position in, the Premier Division.

·      Develop our Global Partnership model to maximise income and recruitment opportunities.

·      Generate a regular income stream from the planned development of, and sale of, Academy graduates, in timescales which meet the needs of both the Club and the Players.

 

d.         Operational Excellence off-the-field

·      Establish Tynecastle Park as one of the premier conferencing / events facilities in Edinburgh.

·      Establish Tynecastle Park as one of the best entertainment venues in the West of Edinburgh*.

·      Establish Tynecastle Park as the most hospitable, supporter friendly and family friendly stadium in Scotland.

·      Further enhance the Marketing and Communications function to support all areas of our Commercial (and Footballing) Operations.

·      Ensure Quality of Service is at the heart of everything we do.

*   Central to this will be the delivery of first-class food, drink and entertainment offerings to the local community and to our supporter base, through utilising the stadium facilities to their full potential.

This will include maximising the use of our Supporters Bar and our Skyline Restaurant.

We have already demonstrated how successful this can be by bringing the LA Philharmonic Orchestra to Tynecastle Park for the opening event of the Edinburgh International Festival.  Similarly, for the second year in succession we are hosting the Edinburgh Fringe production of “A War of Two Halves”.

 

e.         Community Alignment

·      Establish the Club at the very heart of the community through the work of our charity, Big Hearts; our community football offerings in support of grass-roots football; our Innovation Centre offerings for digital skills development and business support… to name but a few initiatives.

·      Adopt a strong approach to our Corporate Social responsibilities, building strong links and relationships with leading organisations in Edinburgh.

·      Focus heavily on our Heritage offerings to ensure our supporters, young and old, are able to understand and enjoy our rich heritage.

 

2.3       Our Vision

It is important to remember that everything we have achieved to-date has been under-pinned by a set of values which have driven all behaviours, with all stakeholders, at all times. 

These core values are:

·      Integrity and Honesty

·      Openness and Transparency of communication

·      Never compromising on Quality

·      Always treating others with respect

These core values have stood us in good stead and must remain at the centre of everything we do as a Club and indeed as individuals.  As we look ahead to the next 3 years, we have to build on what we have achieved, as outlined above.

·      Long Term Financial Sustainability remains key

·      Continued Investment in our Physical infrastructure remains key

·      Continued Investment in our People…on and off the field …remains key

·      Jealously guarding our ”Hearts Brand” and our reputation remains key

·      Putting Supporters and our local community at the heart of what we do remains key.

My Vision for Hearts is quite simple… “To be the best we can be in everything we do and to be the most family/supporter friendly Club in the Country”.

 

In conclusion, I promised to look after the Club… on behalf of the fans… for 5 years.  At the end of this current financial year, I will have been filling the joint role of Chairman / Chief Executive for 6 years.  Becoming the largest majority fan-owned club in the UK will require a smooth transition, particularly when we can anticipate considerable change in the Scottish/European football landscape. Additionally, given all of the good work that has been done over the past five years, we absolutely do not want to stand still during this transition. To help achieve all of this, I am fully committed to leading the club forward for a minimum of a further 2 years in order to provide both stability and continued growth and development so that we can continue to reach new heights in both a business and footballing sense.

For those of you who have taken the time to read this, I thank you.  For those of you who are more interested in the current situation and next season’s plans, Part 2 will follow shortly.