The financial crisis at Hearts
An interesting and detailed analysis can be found here of the financial crisis at Hearts. The article points out that the situation is not sustainable when there is a wages-to-turnover ratio of 120 per cent. Most accountants would think 50 per cent is safe, but 60 per cent is acceptable given that football is a business built around 'skilled' labour.
Hearts have brought their wage bill down. In 2007 it was £12m and they have cut it by £1m a year. However, at £8m it compares with around £5m at Aberdeen and £4.8m at Edinburgh rivals Hibernian. It is the case that Hearts have long had aspirations to be a 'third force' in football and that is a realistic target for a club from the capital city. However, attendances and other sources of revenue do not justify the level of spending that has occurred, even given the presence of a 'benefactor'.
Where I think that the article loses its way a bit is by ruling out a fire sale of players in the January transfer window. Of course, it wouldn't make sense for Hearts to sell their best players to their rivals at knock down prices, replacing them with journeymen and youth team players. However, it also admitted that club valuations cannot be met.
When a club is against the financial wall, decisions that are poor ones have to be balanced against the imperative of survival. Hopefully it can be avoided because it would not be good for Scottish football which has enough problems already with the lack of real competition in the SPL.