Heart of Midlothian released the accounts for the year ended June 2024 earlier on Monday.

The key points from the accounts show a £1.2million operating loss but a turnover of over £20million for the second consecutive year. Staff costs have increased by £1.1million with the club spending nearly £1.5million on player registrations.

There has also been a strong performance in commercial, advertising, and sponsorship deals.

Digging a bit deeper into the account what can we see...

Operating loss v total loss

The club's release revealed a £1.2million operating loss but in reality, the total loss is £4.144million. The former number is on ordinary activities before interest, depreciation, amortisation, and other exceptional items.

When depreciation and other amounts written off tangible and intangible fixed assets are taken into account it takes the loss to the higher figure.

Impressive turnover

The turnover dropped from £20.778million to 20.25million. Yet it is an impressive return despite the decrease. The first of those figures included involvement in the Conference League group stage. The income from Europe was nearly offset by impressive returns in sponsorship and advertising and commercial. The former rose by nearly £500,000 and the latter by nearly £1.5million.

It was aided by a record-breaking deal with long-term sponsor and new front-of-shirt partner, Stellar Omada. The company's logo is on all three of this season's shirts.

"From a financial standpoint, season 23/24 was challenging," chairwoman Ann Budge wrote in the financial statement. "We reported turnover of £20.25m and whilst this is a marginal decrease from the prior year, it does demonstrate significant year-on-year growth given the absence of European group stage football.

"Growth was prevalent in our sponsorship, broadcasting, and commercial areas, with a marginal reduction in our gate receipts, and a reduction in our football prize monies, due to our non-participation in the European group stages."

Importance of Europe

Playing several games in Europe is quite clearly beneficial and the club are "confident" of bouncing back from this year's loss due to playing at least eight European games once more.

Chief executive Andrew McKinlay revealed last week that the club had budgeted for two wins which have already been achieved. 

The financial benefit of European football can be seen in black and white. UEFA solidarity and prize money was £7.391million in 2023 and then £5.047million this year. Gate receipts also dropped albeit marginally, from £6.224million to £5.949million.

"We are reporting an EBITDA loss of £1.2m this year, the first time for many years, and whilst this is disappointing, we are confident that we can return to profitability given our European group stage participation in season 24/25," Budge wrote.

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Player trading

Staff costs rose to £16.459million from £15.381million. Those costs include all staff, not just players. There was also an increase in the number of staff from 276 to 296. That will be partly down to the opening of the hotel on the second floor of the Main Stand.

In addition to the increase in staff costs, Hearts spent £1.426million on player registrations, bringing in Frankie Kent, Calem Nieuwenhof, Kyosuke Tagawa, and Kenneth Vargas on permanent deals. All four arrived on undisclosed deals with Vargas a loan move that the club made permanent in March.

On the flip side, Hearts made just £5,000 from player sales. While £125,000 was brought in from the proceeds of the sale of player registrations, £120,000 was spent on the costs of player registrations sold or terminated.

The next set of accounts will take in Alex Cochrane's move to Birmingham City, a deal which could net the club a seven-figure fee.

Donations and loans

In the 2023 accounts, donations from benefactors and the Foundation of Hearts were £6.167million. That figure dropped to £5.478million.

The benefactor donation decreased by more than £500,000 to £4million while the FOH donation decreased from £1.627million to under £1.5million.

The account notes state: "During the year, the company received £6.0m (2023: £4.0m) in donations from a director. Of this £6.0m received during the year, £2.0m has been recorded as deferred income as this relates to the season 2024/25."

As for loans, while the club made a repayment of £250,000 to Bidco (1874) Limited on the consolidated loan agreement signed in 2021 for £3.089million, a further drawdown of £1.5million was made. The loan to Bidco (1874) Limited now stands at £3.339million. 

That loan is to be repaid during the year ended 2025 via another loan from a director.

"On 28 September 2024, the company acquired a £7m 10-year term loan facility from a director," the accounts notes stated. "£4m of this was received in advance on 8 August 2024. Interest on this loan is at commercial rates.

"Part of this loan will be used to repay the loan outstanding to Bidco (1874) Limited during the year ended 30 June 2025."

Budge and contractors

One inclusion under related party transactions caught the eye of fans. The club purchased services worth £2.113million from JB Contracts (Scotland) Limited. It is noted that Ann Budge has "a family connection" with the director and controlling shareholder of this company.

"The board are satisfied that the services were purchased on an arm’s length basis," the accounts read.