Hibs return to profit on back of Scottish Cup triumph
Scottish Cup glory has put Hibs back in the black, the Easter Road club today revealing their Hampden triumph helped return them to profit after two years of making a loss.
Winning the trophy for the first time in 114 years, allied to reaching the final of the League Cup earlier in the season and the play-offs in the Championship, resulted in the Capital outfit’s turnover soaring by £1.4 million, allowing them to post a modest profit of £200,000 for the 11 months to June 30.
And, it was revealed, supporters now own almost one-third of their club, a share issue pumping £1.1m into the coffers which, chairman Rod Petrie said, had helped fund “a sporting ambition which has turned into sporting success”.
Details of Hibs’ financial standing were dropping through the letterboxes of shareholders this morning, the figures contained within them underlining the difference success on the pitch means for an operation of Hibs’ size – a Premiership club playing in the Championship, in Petrie’s estimation.
As turnover rose staff costs were also up, from £3.4m to £3.8m, partially as a result of taking the club’s hospitality business in-house, but the all-important wages-to-turnover ratio fell from 61 per cent to 54 per cent.
Despite being relegated to the second tier of Scottish football, the Easter Road board’s determination to maintain Hibs as a “Premiership club” had seen them lose £840,000 in the previous financial year after suffering a similar loss the year before, figures which serve to amplify the impact sporting success has on a football club’s finances.
Petrie also paid tribute to the part supporters have played in backing the club’s move to widen ownership by making new shares available to fans, an issue which, if fully subscribed, would see them hold a 51 per cent stake.
And, he revealed, supporters are already well on the way to achieving that figure.
He said: “The board asked supporters to help fund sporting success through the share issue. The club received a total of £1.1m in cash from supporters subscribing for new shares between February 2015 and June 2016. This undoubtedly contributed to the club’s ability to maintain a squad of players and a management team capable of reaching two cup finals.
“In doing that, the club faced Aberdeen, Dundee United (twice), Heart of Midlothian, Inverness Caledonian Thistle, Ross County and St Johnstone from the Ladbrokes Premiership and overcame them all apart from Ross County at Hampden in March.
“At June 30, Hibs supporters owned 31.8 per cent of the club, up from 18.2 per cent as of July 31, 2015. Of this 23.6 per cent was held directly by 2400 supporter shareholders and 8.2 per cent was held by Hibernian Supporters Limited on behalf of its members.
“The success of the share issue is down to the commitment made by supporters of the club. The board has used those funds, as it said it would, to help fund sporting ambition. And that sporting ambition turned into sporting success.”
Hibs have moved to bring their financial year forward a month, aligning it with the sporting calendar given the new format of the League Cup, meaning it will start in July each year. As a result, the latest financial statements cover the 11 months to June 30 although, the club said, they would still have shown a small profit had it been for a full year.
Petrie said: “The financial statements show a robust financial position. The club had cash balances of £2.5m and no external debt. The cash balance is required to fund the annual working capital cycle and the loss anticipated from being a Premiership club in the Championship. Clearly that budgeted loss may be mitigated by further sporting success.”
Promotion at the third time of asking would obviously play a big part in doing so, as Petrie conceded. He said: “The sporting challenge now is promotion. Everyone at the club is focused on that. Almost 11,000 supporters have bought season tickets, the attendance at Easter Road for the first home league match of the season against Dunfermline was more than 16,000.”
“These are big numbers. The club needs this continued level of support to help fund a promotion season.”
In his letter to shareholders, Petrie spoke of the emotions felt as the final whistle sounded on the 3-2 victory over Rangers at Hampden on May 21, ending Hibs’ Scottish Cup hoodoo.
He said: “To say this was a momentous achievement for the club is a massive understatement given the anxiety and emotions which had pent up over the decades since previous wins.
“That was evident on the day at Hampden. Great joy and jubilation also was evident the next day and tens of thousands of supporters witnessed the open-top bus parade from the City Chamber to Leith Links.
“Who can look back on these events without a lump in their throat and a tear in their eye remembering all those who have gone before and who would have wished to share this achievement with us?”
The financial statements also disclose that the club’s tangible fixed assets (Easter Road and East Mains) were £24.3m.
Hibs’ annual general meeting will take place at Easter Road on Monday, November 7.