There are a number of ways at looking at debts. These are shown below. The one most often quoted is the last one on this page.
One way is to look at all the assets of the club. The assets are made up of the ground and the like, these are known as fixed assets. There also the players, these are known as intangible assets. The worth of a player can go up or down and is less dependable than a fixed asset of land, or a building. The assets are shown below.
This shows that the assets are fairly flat. Only the addition of say a new stand would change much here.
The 2008 results shows the annual revaluation of Tynecastle. This added roughly £1m to the assets of the club. It is unclear whether a revaluation will be done in 2009. £450,000 was spent on planning for development of Tynecastle.
As well as fixed assets there are things that are called current assets. Current assets covers money you could easily get your hands on. So this would be things like cash at the bank, or money owed to you that you expect to get in soon.
On the opposite side of things is how much the club owes, its liabilities.
These can again be split in to two, current liabilities and long-term liabilities. Current liabilities are things that need to be paid within the next year. Often these are not paid off within a year, and are just re-financed later on. Long-term liabilities are things like mortgages, or other long term loans.
The first graph below show the balance between current assets and current liabilities. Up to 2005 there seemed to be little change in the difference between the current assets and the current liabilities. In 2006 then again in 2007 the liabilities have leapt dramatically. In 2007 the short term liabilities were up to over £30m. This figure is roughly the same as that at Rangers.
The 2008 results show that the short-term liabilities reduced by £9m. This came from a £6m reduction in the amount owed to UAB Ukio Banko and £3m from amounts owed to others.
An item in the accounts mentioned in the accounts is how long on average it takes Hearts to pay people they owe money to. In 2004 this was 36 days, in 2005 it was 47 days, by 2007 this had stretched to 82 days. This is often an indicator of problems with an ability to pay.
The next thing to look at is whether the club has the ability to cover the money it owes. So if the business had to sell all the players, then the ground, everything, would this cover all the money they owe in the next year. This is graph of how this has progressed is shown below.
Even when the club was viewed as being in financial difficulties in the time up to 2005 the assets always covered the money owed. In 2007 this was not the case, however the owners deal to swap debt for shares has reduced the liabilities enough to make things look better. A further year of huge losses would obvious take things the wrong way.
Another way to look at debts is to look at the long term picture. This takes into account long term issues like paying off the mortgage. This graph is shown below.
This shows why there were such concerns about the long term future of the club back in 2005. The assets of the business were way out of line with the amount owed in total. Since 2005 things have become hugely worse. Even with the money from selling Craig Gordon coming in there would seem to be little hope for the situation to become any better.
As a comparison Hibs have Net Assets of just under £5m, Aberdeen of just under £3m.
In both 2006 and 2007 the huge liabilities with the huge annual losses prompted the auditors to state these " .... indicate an existence of a material uncertainty which may cast significant doubt about the Company's ability to continue as a going concern".
The final, most often quoted figure to judge the club on is "net debt". This is the total of all the money borrowed. For Hearts this is all owed to their parent company/owner.
