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Hearts Football Club Case Study Thursday 3rd
February 2005
Group 1 Laurel Brinkman Alex Proctor-Pearson Kaita
Sugihara David Turner-Kerr Laura Hoyle
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Hearts FC-an introduction

• One of two football clubs based in the capital of
  Scotland Edinburgh.
• Founded in 1874-firmly established in the
  Scottish Premier League.
• Rivals to the Glasgow-based football clubs
  Rangers and Celtic and locally to Hibernian FC.
• Back-to-back 3rd place finishes resulting in
  European competition via UEFA
• Current Stadium is at Tynecastle-Capacity 25,000
• Star Player Scotty McWooly-Kilt! (Player F)
• only 1 year left on contract but key to future
  sponsorship deals.

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Where it all went wrong

• Record losses recorded 31st July 2004 of 1.59m
• Average attendances have dropped to 60 capacity
• Team sponsorship deals are up for renewal
• Current stadium is owned by the City of Edinburgh
  council
• Stadium was built in 1932- old fashioned and in a
  state of disrepair-No Corporate Hospitality
  facilities
• Spiralling wage bill and unexploited revenues.

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A New Future

• The Board agreed plans to build a brand new
  stadium which Hearts FC would own.
• Planning Permission granted for a new
  40,000-seater stadium at a new site in The
  Meadows-estimated cost 50mn.
• Local Government to pay 50 of the cost of
  stadium development. National Lottery have also
  committed 5mn.
• 20m remainder to be funded through stock issue.
• New management team established to deliver
  financial stability for the flotation.

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The New Management Team!!
Laurel Brinkman Sales and Marketing
David Turner-Kerr Chief Financial Officer
Kaita Sugihara Asia Commercial Development Officer
Laura Hoyle Sponsorship Partners
Alex Proctor-Pearson Communications Officer
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SWOT Analysis
Opportunities
Pressures
International Markets
Image
Stadium safety
Fans Expectations
Sponsors
Credit Rating

Broadcast Rights
Local Fan Base Ticketing
Merchandising
European Football Revenues
New Stadium
Financial resources
Corporate Hospitality
Profitability
Competition from Other sports
Partnerships Alliances
Powerful Scottish Brand
Internet New media
Local Rivalry
Players Wages
Dominance by Celtic And Rangers
Alternative Revenue Streams
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Financial Analysis-Cost Reduction

• Poor current financial position
• Return on Equity -0.45
• Return on Assets -0.12
• Current Ration 0.19
• Total Asset turnover Ration 0.64
• Working Capital -313mn
• Reduce labour costs
• Renegotiation of existing contracts
• Sell Players P and R
• Funds to be used to keep player F (contract due
  for renewal)
• Funds to be used for Youth Development-future
  sustainability

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Financial Analysis-Revenues

• Amortise Players over 10 years
• Increase stadium capacity prior to development of
  new stadium
• Reduce transaction costs Player disposal
• Leverage intangible assets to add value to
  sponsorships and TV deals-Player F

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Raise revenues by 20, Reduce Costs by10
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Actions on the Revenue side

• Gate Receipts
• GOAL INCREASE SEASON TICKET HOLDER BASE
• Long-term season ticket loan-high initial cash
  injection
• Open up brand to international markets-buy
  Japanese player
• Flexible season tickets-attracts more supporters
  to come to the games.B2C
• Develop corporate hospitality packages-marquees,
  meet-and-greets B2B
• Priority seating opportunities for all STH

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SPONSORS

• Develop official sponsorship packages
• Exclusive category sponsors e.g. kit, mobile,
  software, car, airline, etc
• International (Asian reach e.g. Sony, LG, Toyota)
• Emphasis on long term partnership
• e.g. technology sponsors to vertically integrate
  new media opportunities/kit sponsor -
  merchandising
• Match and enhance brand values
• - develop package to increase exposure
  premium
• Create Tier 2 Sponsorship package
• Fixed price/flexible menu
• Aimed at local sponsors
• Emphasis on corporate hospitality
• Exploit stadium naming rights
• Long term
• Identify and deliver unique international
  opportunities (Kaita)

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Global market -current situation-

• Many competitors using 'same strategy'
• Making contract with 'their' players
• Summer tournament
• - 'Mass marketing'

China Japan US
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Global market our strategy-

• Long term strategy based on CRM
• Focus on different segment from competitors

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Global market case of Japan-

• Long term strategy based on CRM
• Focus on different segment from competitors

Competitors target
Our target
15-35 Male (Football fan)
15-35 Female (Beckham fan)
0-10 Male (Football kids and their family)
25-40 Male/Female (Keen to new style)
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Global market case of Japan-
0-10 Male (Football kids andtheir family)
25-40 Male/Female (Keen to new style)

• Soccer school
• Youth cup competition

• Collaborate with Scottish Beer Company
• Collaborate with Scottish Restaurant chain

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Global market case of Japan-
0-10 Male (Football kids and their family)
Core football fan
25-40 Male/Female (Keen to new style)
Long term goal More merchandising/Sponsorship/adv
ertisement/TV rights for core football fan
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• Thank you