Ann Budge turns on her ‘ill-informed’ critics

Hearts owner
Ann Budge has explained in more detail the financial situation at Tynecastle
and the reasons why she asked staff at the club to consider reducing their
salaries by 50% during the present suspension of football due to the
coronavirus pandemic. She released the following statement to the official
Hearts website:

“Firstly, I hope you are all well and coping with the changes to daily
life and challenges we all are facing in these unprecedented times. Please do
continue to follow the latest government advice and stay safe.

There are obviously far more serious concerns
in the world at this time and other matters I and those at the Club would
rather be focusing on.  I feel, however, for the sake of our supporters I
need to address the enormous amount of ill-informed and self-opinionated
commentary coming from some sections of the media at the moment (in particular
from The Sun and their usual pundits). 

Please find below an accurate statement
regarding how we at Hearts are dealing with the current crisis caused by the
Coronavirus global pandemic.

Financial Position

Firstly, let me reassure all Hearts’
supporters that our financial position is no worse (nor better) than almost
every other senior football club in Scotland, despite the recent continuous
supply of misinformation and malicious speculation.

In line with most other Clubs, we aim to hold
sufficient cash reserves to cover 2-3 months of normal trading
operations.  The reason we are implementing cost control measures is
because we could be facing up to 6 months of totally abnormal operations. 
Given that we all know we have to plan for that eventuality, I see absolutely
no reason for sitting back and waiting either on a miracle or for the
Government to bail out every company in the country….in a timely enough
manner.  Neither of these options is likely to happen and, therefore, I
make no apology for putting immediate plans in place to mitigate the problems
heading our way.

Nor do I make any apology for being open and
transparent with staff, players and supporters about the potential scale of the
issue.  Faced with this unprecedented set of circumstances, it is
incumbent upon all employers to be totally upfront and open with their
staff.  They, too, have to be able to plan.

In light of so much uncertainty, let me remind
all of our supporters of a few important financial principles to which we, at
Hearts, subscribe. 

Over the last 6 years:

·      We have always
lived within our means and have never spent what we did not have.

·      We have not
been building up cash reserves beyond the normal levels mentioned above. 
Instead we have been investing to secure our long-term future.  I am
hopeful that these investments will help us to recover quickly when this crisis
is over.

We have managed cashflow very tightly during
these years of investment.

·      We have NO
external debt. While we do have some loans on the books, they relate entirely
to money that I, either directly or through Bidco 1874, have provided to the
club.  These loans have enabled our investment programme to continue
apace.  Let me assure you that I have never had any expectation and nor
does the club have any commitment that these will be repaid until the Club’s
financial position is secure.

In short, despite the unsubstantiated claims
in recent media articles, the financial management of our Club is as tight and
professionally sound as any in the country.

Cost-cutting plans

Let me move on to explain the approach we are
taking to managing down our costs over the next few months.

·      Clearly,
Riccarton and Tynecastle are now closed down in line with the Government
restrictions.  Equally clearly, however, we have a large number of fixed
overheads, the costs of which we still have to cover.

·      The Government
has announced a number of packages aimed at helping companies to stay in
business during this period of close down.  We are following up on all of
these initiatives.  However, in every case the devil is in the detail and
none of these packages are as straight-forward as they might seem when reported
in the headline announcements.  As an example, although it was announced
that Banks would be able to help businesses of our size, having approached our
Bank we have been formally advised that their policy towards Football Clubs
hasn’t changed and they remain unable to lend to us!  I would stress that
we are not alone in this.  This is not a Hearts problem; it is a Football
problem.  We will continue to pursue this, but it is indicative of the
fact that Football is not very high on the list of priority sectors for
support.

We are, of course, following up on all other
packages including Rates relief and Job Protection schemes.  However, I
repeat that there is a dearth of detail available as yet and it is incredibly
difficult to be clear on what level of support we can get.

   Payroll, as with all Clubs of our
size, is by far our biggest monthly cost.  Notwithstanding the Job
Retention scheme mentioned above, there is little doubt that we will have to
implement a salary reduction programme across the Club.  We simply will
not survive a 6-month close down, unless we implement this.

I have been roundly criticised for even
suggesting such a thing.  However, as you will read below, our staff have
been amazing. There is wide-spread recognition that to get through this period,
everyone has to stand together and do what they can.  This is the approach
most likely to allow us to avoid redundancies and to save jobs and contracts.

 Standing Together

Since announcing the proposed implementation
of a substantial wage cut across all staff, coaches and players, the media
pundits have been scathing in their criticism of apparent financial
mis-management; clear indications of panicking; and the very suggestion that
players should take a cut in wages is clearly a concept they don’t even begin
to grasp.  (Possibly, because so many of them are themselves, former
players.)  Fortunately, our players do not appear to have this same sense
of entitlement. 

 I have detailed below where we are in
our discussions.

·      On Monday,
16th March, I addressed a full gathering of players, coaches and back-room
staff and explained the severity of the situation following the shut-down of
football on 13th March.  I explained the immediate/short-term implications
in financial terms, and stressed that despite what was being said publicly, the
consensus, among most people involved in running football clubs in Scotland,
was that football was not likely to start again until late July/early August.

I emphasised the importance of maintaining
regular dialogue to enable us to provide as much clarity as possible during
these uncertain times.  We set up a Communications Group to facilitate
this.

  On Tuesday, 17th March, I met with a
large group of Senior Managers to discuss the full implications of the close
down and to consider options.  Our over-riding principles were:

 1.     To implement
any changes at the end of April to give staff the chance to consider their own
personal situations, while awaiting any Government interventions, the benefits
from which would be used to limit any wage reductions.

2.     To avoid
redundancies and protect all jobs and contracts.

3.     To treat all
employees, regardless of status or roles, fairly and equitably.

4.     To take steps to
protect staff and players on the lowest earnings.

5.     To ensure everyone
knew that they should not panic and that they should discuss any personal
financial challenges with their manager, HR or myself.  We would do everything
possible to help people meet their financial commitments.

6.     Anyone who wanted
to move on from the Club for whatever reason (e.g. disgruntlement, desire to go
home/back to families, etc) should talk to us and we would try to help.

·      On Wednesday,
18th March, I arranged meetings at Riccarton and at Tynecastle to explain the
proposed way forward to all.  I also spoke to Steven Naismith and asked
him to relay the message to all players, who were already at home, via the
aforementioned Communications Group.

 Where are we now?

In a very short space of time, we were able to
reassure a number of individuals who were worried about meeting their financial
commitments; we were able to re-assure others who were worried about being out
of contract; and we were able to expedite arrangements for those who wanted to
get home as quickly as possible.

I received numerous emails, messages and
visits from staff assuring me of their support and their belief that we will
get through this by standing together.  A number of staff and managers
offered to take no salary or a larger wage reduction to enable us to better
support those who needed it more.

To summarise, I asked all employees to stand
together to ensure we can survive the next few months.  Their response has
been amazing.  Most of the staff agreed immediately.  Given the added
complexities around players’ contracts and the wide range of personal
circumstances, a number of players are still reviewing their situations. 
However, I believe we will reach a good outcome as I know they want to do what
they can to support the Club.

Much has been made of an email, sent by our
Head of Player Recruitment, to agents with regard to potential recruitment
requirements once football resumes.  We must continue to plan for football
returning and make sure we are in the strongest possible position possible when
that happens.  I would however like to make it clear there is no pot of
money sitting in the bank that could be going towards player or employee wages
and there is certainly no intention of paying transfers fees under the current
circumstances.

To summarise, we have consulted with a wide
range of senior employees and managers and we have communicated fully to all
staff in an open and transparent manner.  I did so quickly, not to create
panic, but to give everyone time to plan and consider their own
circumstances.  Cost-cutting is going to come, and I see no point in
sugar-coating this news.

What about Revenue Generation?

Clearly, opportunities to generate revenue are
minimal.  We have kept our on-line store open to receive orders but, for
reasons of social isolation, we are restricted in our ability to fill these
orders.  Thank you to everyone who is supporting us in this manner. 
We will, of course, fill all orders at the earliest opportunity.

We will be putting Season Tickets on sale as
soon as we can.  Obviously, we are constrained in a number of ways, not
least the uncertainty surrounding which Division we will be playing in, when
this season will end and when next season will start.  We will, however,
put maximum protection and maximum flexibility into any terms and conditions
surrounding the purchase of season tickets or hospitality packages.  I
want to thank all of those supporters who have indicated that they are keen to
support us in this way.

I have been overwhelmed by the support we have
received from our sponsors and want to thank all who have been in touch and
offered their backing at this time.

I also want to give special mention to the FOH
Pledgers who are continuing to pledge, knowing how reliant the club is on this
source of funding.  Once again, we can demonstrate that we have the best
supporters in Scotland, given that pledger numbers and pledged amounts have
increased since the scale of the difficulties facing the Club in the wake of
the corona pandemic have become known.

Thank you all and please use our website and
our social media channels as your source for accurate information.”