Patience and trust key as Hibs eye further commercial growth

New training pitches and a swish new hospitality offering are all well and good, but how does the club go from making money off the pitch to using it in a bid to pursue on-field success? Is there a simple formula? Does selling one Josh Doig and one Ryan Porteous equal one big screen and one new pitch? Unsurprisingly, everything is interwoven, interlinked, interconnected. 

"A little over two years ago, when I first arrived, the club didn't seem to have a plan or an identity to how it would like to grow. It had a vision, but no roadmap for how to get there. So very quickly we pulled together a strategy; a three-to-five year plan that was signed off by the board with visions, values, objectives, three-year goals, five-year goals, things like that," chief executive Ben Kensell told the Hibs Observer in an exclusive interview.

"It was centred around four pillars. One is club-controlled income - everything generated by the club through ticketing, hospitality, retail, all of the things that the fans ultimately pay towards and that we can control as a club whether we win, lose, or draw on the pitch; second is player trading. We needed to get better and smarter at player trading and we needed to see the fruits of it. The third pillar was central distribution - whether you finish eighth, or fifth, or third, you get revenue from the SPFL centrally and we need to extract as much revenue as we can by having international players at the club, as well as central funding through the SFA and SPFL for our academy, so the better the academy, the more money we will generate because we will have UEFA Youth League runs like we had last year, and it will also increase the asset value of our players which takes us back to pillar two and player trading. The fourth pillar is external investments, so if we put forward a business plan in which the Gordon family, or Ron prior to his passing, believed there was a natural return on the investment, then they would invest."

Kensell's last posting before Hibs was at Carrow Road where he served as chief operating officer. But while he had access to three of the four pillars he described, he wanted the fourth to complete the set - and for good reason.  

"I didn't have that fourth pillar at Norwich City; I just had the first three," he explained. "And I wanted that fourth pillar. That's the premise of how this football club is run. We extract the maximum value from those four areas, or three to begin with, and then if we put a plan together to increase the asset value and increase the revenue streams, then we could lean on that fourth pillar of external investment."

Introducing big screens at Easter Road was one of Ron Gordon's primary aims when he took the reins at the club, with a view to improving the matchday experience, and two were duly installed a little over two years ago, joined in time by the LED advertising boards. Both are used before and during matches held at the stadium and are capable of carrying team line-ups, photos, videos, and of course, adverts.

"A good example of [external investment] would be that in the last two years, we've invested in the big screens and the LED advertising boards, and they have in turn increased the revenues that we can get from commercials," Kensell continued. "So while they have improved the matchday atmosphere, whch is the primary objective, the secondary objective is: how does it help drive revenue? External investment has led to new pitches at the training centre and Easter Road, and that therefore gives us a better opportunity to achieve objective two, which is to effectively grow our player trading or achieve what we need to on the pitch, because a better pitch helps us play the style of football we want to play. Those are just two examples of external investment that can help with growing revenue or achieving our footballing objectives. Before we came in the plan was, 'win on the pitch' - which should always be the overall objective - but in order to get better players, you need to grow the overall club. And that wasn't happening," he added. 

Kensell and Murray Milligen, the club's head of commercial, are eager to stress that the sum of all parts is the key takeaway - given that the club was underperforming not all that long ago. Milligen, who joined the club in late 2019 and was appointed to his current role as head of commercial in November last year, explained how the club's investment in the infrastructure has helped to boost the hospitality offering.

"With the trackside LED, the big screens, and hospitality we've opened ourselves up to a whole host of new commercial partners and grown a portfolio year-on-year but you don't get that without the facilities that we have," he said. "The investment the club has made into the infrastructure has played a big part in that. In terms of returns from the new hospitality, we've pretty much tripled our revenue since the 2018/19 season - basically a 200 per cent increase in revenue in terms of what we're striving towards for this season so it's a massive difference. Across the LED, screens, floodlights, I'd say we've spent a significant seven-figure fee on all of that. What that does is allow us to achieve the growth that we're talking about. From a corporate partnership point of view we've more than tripled our revenue and we're seeing growth in all our key areas - player sponsorship, matchday sponsorship, that sort of thing. It is big growth but having that improved infrastructure in place means we're well placed to continue growing," he said.

Milligen believes the club has 'probably doubled' the covers in terms of what they have to offer from a hospitality point of view, and a big part of turning round the club's hospitality offering was by moving from an in-house operation to one run by stadium catering experts Elior, who also work closely with Scottish Rugby at Murrayfield. 

"Everything's just sort of gone up a level. It is so important that you have the right partners around you on the journey, and I'm pleased for everyone here who works consistently hard to ensure we not only meet, but exceed our targets when it comes to club-controlled income. The owners' dedication to investing in the infrastructure means we can keep providing that best-in-class experience for our fans and corporate partners which in turn helps us invest on the football side of things, and I'm particularly grateful to all our partners for their continued support," he continued.

Kensell's vision was to revamp hospitality and get that 'wow' factor; to bring it more in line with something you might see at an English top-flight club. Part of the plan in overhauling things off the pitch was to focus on more than just the 90 minutes of football. 

"The investment plan in terms of what we were putting solely into hospitality was a significant seven-figure sum, with a view to tripling the turnover in that area by doubling the capacity, but also be best in class," the CEO explained. "We wanted it to be an English Premier League-type hospitality, befitting of a city like Edinburgh, and the business we can now attract. Before, that wasn't the case: why spend your money at Hibs, despite your love for the club, if you're not getting what people would perceive as good entertainment beforehand? What happens on the pitch is the most important thing but you need to get the experience right, and we weren't getting that right."

Some elements of the fanbase might grumble at the prospect of spending over a million pounds on hospitality rather than a new centre-forward but both Milligen and Kensell keep coming back to the interwoven, interlinked interconnected approach as a way of explaining that getting things right off the pitch will have a knock-on effect to things on the pitch. 

"It takes a lot of belief from the fanbase when you're investing in stuff that isn't players, that it will eventually lead to producing better players on the pitch because we're making more money at the football club. You need to have patience and trust that the management of the football club are investing the right amounts of money on players to remain competitive and if not exceed the targets we set ourselves, but also that they know how to generate more money to get better players year on year, by improving the team or infrastructure."

With the interior of the Main Stand having been transformed, attentions are now turning towards the Famous Five Stand, which Kensell has already earmarked as the next phase of development.

"I think that could take many shapes or forms. There needs to be a conversation about relocating the ticket office, and a merge with the retail store. I think the whole of the bottom floor [of the stand] can be expanded and seen as a fan hub of sorts - for ticketing, retail, things like that. We've got some conceptual plans and how we would work that through.

"We're also really conscious that as Ron did, the Gordon family want to focus their efforts on the community and we believe that second floor, where 'Behind the Goals' was, could be a comunity hub, and then the top floor could be something that mirrors what we have in the Main Stand. I think we're in the middle of our journey but we need to make sure with every step we take that we plan appropriately, we review, we assess what we did right and wrong, and we listen to what our fans want in these areas. And then we deliver it to the best of our capabilities."

Kensell uses the example of two summer signings to explain how the work undertaken off the pitch is affecting the product on the park, and also challenges the view of Hibs as a selling club in the traditional sense. 

"It comes back to that patience and trust, wanting people to trust us that what we're doing off the pitch is generating revenues that do go back onto the pitch. No one's taking any money out of the club. The signings of Dylan Vente and Dylan Levitt cost us large, large sums of money, and we can do that within our model. Before, that was never the case. Now, we'll only sell a player when we have to and when we feel it's the right deal, and we sell them knowing full well that that could benefit the club off the pitch with some of the infrastructure changes we need to make, but it also benefits the club on the pitch because we'll invest all of our monies on making the team better, or improving the fan experience. I would like to think that people are starting to trust that model and see that having patience is worthwhile because they're starting to see what we're doing."

It's easy to think of the process as a Mobius strip of sorts. Increased revenue off the pitch means a higher quality of player, which (ideally) means going deep in both domestic cup competitions and finishing as high up the league as possible, and getting into Europe, and trying to stay in Europe for as long as possible, which brings in more commercial partners, and the cycle begins again. But it's clear to see that the trust element is perhaps the one on which Kensell and Milligen are placing the most emphasis. 

"The club has to stand on its own two feet long after we're out of the picture," Kensell continued. "I think most fans would want to see a really good, healthy club moving forwards that is fit for purpose for the future so I would hope that there's an element of pride that we're trying to set the club up for the future in terms of good pitches, infrastructure, floodlighting, while also trying to maintain a club on the pitch that can be competitive and achieve our objectives of third place or winning cups."

Kensell mentioned player trading as one of the four key pillars of his vision, and stressed the need to be both better, and smarter, when it came to transfers, as well as explaining how recruitment can both affect, and be affected by, off-field growth. While Hibs inserted a sell-on clause as part of John McGinn's transfer to Aston Villa in 2017, that sort of trigger is effectively mandatory in any departure under the new regime.

"What you have to bear in mind is that we've sold players like Kevin Nisbet, Josh Doig, Ryan Porteous, and even a couple of the younger lads who have come through our academy like Ethan Laidlaw and Connor Young, for good numbers and we can afford to do a lot of these things because we've made fantastic movements on the pitch," he explained. 

"The money we got for Josh has probably helped us on and off the pitch in terms of some of the infrastructure changes we've been able to afford. Kevin, the same. Ryan, the same. But they also might be able to help us in the future with the sell-ons that we've negotiated. They could be paying it forward as well as paying it back by the sheer amount of money that we could make from them. And the players have pride in that. When we explain the model to them, they get it.

"Ryan wanted the club to do well out of his move, and it was the same with Josh, and others. They wanted the club to benefit because the club had given them an opportunity. So when I explain to them that that's why I'm negotiating hard for their exit, they get it. They understand that the club needs to earn out of it and the club has to come first.

"It's the same with new signings.  If we give a player the opportunity to come in and give them every chance of being successful and they move on and become more successful, Hibs need to get something out of that. And the fans have to understand that that's a good model for us. We will start to see large windfalls that come in from some of our sell-ons. All of the transfers we've done include sell-ons and other triggers meaning, if the player is successful and goes on to achieve what we think they can achieve, then the club continues to earn out of them," he added.

Hibs are confident of being able to increase their turnover from around £10 million to more than £15 million this year which will, among other benefits, be able to increase the wage budget - another example of every bit of growth being traced back to the on-field product. 

"You're talking about nearly £3 million of growth, purely from commercial functions, over the last two years combined," Milligen said. "It's the sum of all parts; we look at the overall growth number holistically. Within club-controlled income, to get that type of growth in that short period of time from commercial areas only, is nothing short of staggering. And it's not just one, or two, or three people, it's a whole club movement to commit to this and deliver tough targets year on year. It's not just commercial it's comms, it's marketing, it's content, it's the football department when it comes to player appearances, and things like that, and that's something I think we've improved on since I came in. But you do need that buy-in."

Lewis Stevenson spoke recently about the change in mentality since Nick Montgomery's arrival. 'If we want to be a big club we need to act like a big club' was the message that the defensive stalwart relayed. And you can see why the former Central Coast Mariners manager was the club's first choice as new head coach. While Kensell accepts that mistakes have been made regarding previous managerial appointments, he remains confident that the recruitment of Montgomery is a case of 'third time lucky' - possibly because he just 'gets' the club. 

For Hibs to keep growing, both the on-field and off-field activities need to be constantly evolving and progressing. Montgomery has wasted no time in changing the culture on the playing side, which goes hand-in-hand with what Kensell believes has been a 'seismic change' in culture behind the scenes. 

"Culturally, there's been a massive change from just two years ago in terms of what we're going after, what good looks like, and what our targets are. Every individual in the club knows their job, and how they can contribute towards being successful on the pitch to help Nick, the players, and to try to help make the fans proud of this club," he explained. 

Supporters have had fun with the club's social media whenever a new commercial deal has been announced in recent months, be it the record-breaking kit deal with Joma or, more recently, the tie-up with principal partner Bevvy, suggesting that there have been more commercial partnerships than signings. But the irony is that the better Hibs perform on a commercial front, the greater the likelihood of bringing in more signings of a high quality, and those fans will get their wish of more signings.

Montgomery's message about acting like a big club in order to be a big club has certainly resonated with the players. But with Hibs doing their best to act like a big club off the pitch as well, the head coach may find that 'big club' mentality is adopted far quicker than he might have anticipated.