Hibs warn of impending cost reductions as club reveal ‘unsustainable’ financial position
HIBS have warned of impending cost reductions at Easter Road due to an "unsustainable strain" on club finances caused by coronavirus.
It is reported that this will include salary reductions for the first team squad, following on from the wage deferrals that have been in place since the start of the football shutdown in March.
The loss of gate income from the curtailed 2019/20 campaign, and the prospect of closed doors matches once the new Scottish Premiership season starts in August, has left the club facing a "significant loss" with cuts required in order to safeguard its future.
Edinburgh rivals Hearts secured wage cuts of up to 50 per cent for their first team squad last month after owner Ann Budge raised the possibility of terminating contracts under the controversial clause 12.
Easter Road bosses will now hope to reach an amicable agreement with players and staff ahead of the squad's return to training next Monday, with any signing plans on hold until the internal financial situation is addressed.
The club stated: "It is now important to let supporters know that difficult choices must be considered to reduce costs to protect the future of Hibernian.
"We are today embarking on a process of consultation with our people over proposals to find cost reductions. This is no different from any other business in this economy, many of which have already taken steps to protect their future. We must all recognise that the club must be financially sustainable.
“When we outlined our ambitious plans at our AGM a few months ago, no-one could have predicted that the healthy cash balance the club enjoyed at that time would be severely depleted a few months later as we faced this crisis and no revenue being generated from normal operations.
"The club has continued to meet its full liabilities, internally and externally, with some of these deferred but still due later in the year. This initial action was a vital step, allowing us breathing space to manage cashflow and, importantly, to engage with our staff.
“With no clear end in sight and a full return to football in stadia full of supporters likely to be in 2021, there has been, and there will continue to be, a substantial and unsustainable strain on the club’s finances. We forecast that our revenues will be halved in 2020-21 and we anticipate a significant loss for the current season that was cut short in March, despite the support shown by fans so far.
"That is the reality we face, and the continued uncertainty and restrictions mean our current cost structure is not sustainable.”
Chairman Ronald Gordon explained that the club has been forced to put a number of plans on hold while it addresses the economic challenges of the Covid-19 outbreak.
“We’re all excited that football is returning - but it will be behind closed doors, with likely limited attendance as a next phase. That means we continue to endure limited revenue opportunities for the foreseeable future," he said.
"Therefore, several initiatives, activities and services at our club need to be paused or scaled back until it is safe, permissible and financially prudent for us to resume activity.
“We must now focus our limited resources on our core business – and that is supporting our first team to deliver success on the pitch. That is what we are here to do. This scaling back will have an impact on our people, and we enter into a period of consultation with them to discuss the potential impact on them. I would like to thank the contribution and efforts of all of our staff during this difficult time."
Mr Gordon also paid tribute to Hibs supporters with around 8500 season tickets sold thus far and only 15 per cent of last season's number requesting a refund on four unfulfilled home fixtures, while the club's "Thank You NHS" shirt has also achieved record sales.
“We will get through this by all working together," he added. "Supporters, staff, management and players have all played their part so far, and I believe will continue to do so."
The club confirmed that season ticket holders will be able to watch closed-doors home games live via a streaming service, promising fans a "unique, exciting and enjoyable matchday experience".
Leeann Dempster, chief executive, added: “I would add my thanks to Ron’s for the professionalism shown by our staff throughout this crisis.
“From the start, in light of the uncertainty around what shape next season will ultimately take, we have sought to ensure our supporters have the fullest understanding of the situation before us, and that includes what your ticket will secure for you.
“Any supporter who cannot commit to travel this difficult journey with us will be treated fairly, with respect, and with our understanding, but we hope and believe you will want to be with us every step of the way.
“We understand not everyone is able to help as they might like in these difficult times, however if you can help, we thank you for it.”