Hearts accounts: Administration halves wage bill

Costs were cut dramatically after Hearts entered administration in June 2013
Costs were cut dramatically after Hearts entered administration in June 2013
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HEARTS today released their latest annual accounts showing that their wage bill almost halved during the year spent in administration.

Costs were reduced dramatically after the club entered administration in June 2013, with several experienced players leaving Tynecastle. That helped bring the total salary bill down from £5,414,000 to £2,890,000 for the year ended June 30, 2014.

That figure will have risen since then as several experienced players joined Hearts over the summer, such as Morgaro Gomis, Prince Buaben, Osman Sow, Adam Eckersley and Miguel Pallardo. However, new owner Ann Budge has stressed that the club will not live beyond their means while she is in charge and, as such, salary costs will remain manageable.

Budge is determined to run Hearts sensibly after funding the £2.5million Company Voluntary Arrangement (CVA) which allowed the club to exit administration in May this year. More sensible wages are part of that policy - sitting in stark contrast to a wage bill which peaked at £12m per year under former owner Vladimir Romanov.

Hearts’ turnover for the last year was down from £7,342,000 to £6,550,000, and £234,000 of that money came from teenage midfielder Adam King’s transfer to Swansea City. Deferred income of £1.8m is detailed from season ticket sales and sponsorship.

The accounts show more than £27 million of debt was written off as a result of the CVA. It was primarily bank debt and debt to companies owned and controlled by Romanov. In total, more than £700,000 was spent on completing the CVA and on a deal for Budge’s BIDCO 1874 company to take charge at Tynecastle.

Foundation of Hearts, the fan group which hopes to assume control from Budge, is also providing funding through its 8000 members, who pay monthly subscriptions. The accounts show they had loaned £1.22m up until June this year and are currently contributing £120,000 per month.

In total, Hearts’ net debt currently sits at £3,166,000, which is owed to Budge’s BIDCO 1874 and Foundation of Hearts. Those amounts are to be repaid as part of the agreement between both parties which should see the Foundation assume control at Tynecastle within five years.