Hearts chief Ann Budge means business
It’s a busy day at Tynecastle. Buoyed by a 1-0 away win in Aberdeen the night before, Hearts fans are swarming into the stadium’s ticket office to renew their season passes, which went on sale the day before.
“That’s what I like to see,” laughs Ann Budge, chairman, chief executive and majority shareholder of Heart of Midlothian Football Club. “We sold more season tickets yesterday than we did on the first day of sales last year.”
As they pass through the smartly-dressed club shop, fans have the chance to buy not only replica football kits, but also teddy bears, cool bags, autograph books and even Hearts-branded toothbrushes. Football is big business.
Budge’s office at the stadium in Edinburgh’s Gorgie district could be mistaken for the nerve centre of any business operating in any industry if it wasn’t for the array of historical photographs on the walls. One of the largest prints is of Hearts’ Scottish Cup winning side from the 1900-01 season, when the team beat Celtic 4-3 in the final; with the ever-growing fascination with hipsters and their weird and wonderful beards, perhaps it’s just a matter of time before the handle-bar moustaches and other facial hair displayed in the photo also come back into fashion.
Though football may now occupy her working life, it was in a different industry that Budge, now 68, made a name for herself. Back in 2005, she sold information technology (IT) services firm Newell & Budge to French peer Sopra for €48.45m – or about £32m at the contemporary exchange rate – with her 57% shareholding triggering an estimated pay-out of around £18m. Budge founded the eponymous firm in 1985 alongside Alison Newell, with Budge buying out her fellow founder when Newell retired in 2001. Private equity house 3i backed Budge’s management buyout (MBO), with members of staff also taking an equity stake in the business.
After studying psychology at university, Budge joined the IT department at brewing giant Scottish & Newcastle in Edinburgh. Newell recruited her to join IT services firm F International – later Xansa – in 1981 to initially setup and run the London-based company’s Scottish operations. “I was then asked to add the North of England to my remit,” explains Budge. “At the time, the ‘North’ for F International extended down to Derby, which was fair enough. But then I was asked to take on the Midlands too. Then they explained they were adding the South-West into the Midlands. I ended up being general manager for UK operations excluding London and the South-East.
“So I would fly to, say, Manchester on a Monday, and then Bristol on a Tuesday, and so on. I found myself sitting in a plane on the tarmac at Edinburgh airport at six-thirty in the morning asking myself ‘Why am I doing this?’”
Asking that question prompted Budge to realise that she wanted to continue to live and work in Scotland. This ultimately led to her decision to leave the security of her position with F International and, in turn, Newell & Budge was born, with Newell running operations in the South-East of England and Budge once again building a business from scratch in Scotland.
The two arms of the business were very different – Budge’s operation offered IT services to large financial service companies such as Bank of Scotland, Royal Bank of Scotland and Standard Life, as well as to central government departments, while the southern operation provided more niche services for clients in and around the City of London.
Budge grew her Scottish operations by listening to her clients’ needs. With an enormous skills shortage in the IT sector and technology changing evermore rapidly, there was a huge opportunity for IT services companies able to support legacy systems. In-house staff tended to want to work on the latest technology rather than helping to maintain backwards compatibility, so Budge offered to provide support for those systems on behalf of her clients, as well as building bespoke software systems using the latest technologies.
Over time, the natural progression of outsourcing was to look for offshore companies that could offer lower labour costs. Newell & Budge initially partnered with a couple of Indian firms to offer international outsourcing to its customers but, to ensure control over the quality of the programmers, the firm took the plunge and bought Momentum Technologies in 2005 to create its own offshore operation.
“I think the fact we had operations in India had initially put off Sopra,” Budge confesses. “It wasn’t something that French companies did. But once we sat down with them and explained how we used our operation in India, they saw the benefit of it.”
Testing software to make sure systems worked immediately for clients was crucial for a bespoke development company. “If things went wrong after then we would step in to sort the problem,” she says. “We never went to the desk drawer and pulled out the contract to go looking for a get-out clause.
“We always asked our clients for feedback and something that came through again and again was that, on the rare occasions when things went wrong, we would always be there to sort them out. It was one of the biggest selling points for the company in Scotland – if something went wrong then the clients knew where I was and how to get hold of me.”
After selling her business, which had grown to encompass a workforce of more than 1,000 people and £38m of revenues, Budge stayed on to run Sopra’s operations in the UK, integrating the French company’s existing smaller UK operation into the wider Newell & Budge business. “Although it was Sopra taking over Newell & Budge, in UK terms it was more like Newell & Budge taking over Sopra,” she explains. “That’s why I was able to stay on – I had a great deal of autonomy. That made it easier to go from being the majority shareholder to working for someone else.”
Budge stepped down from her role with Sopra in 2008. “The pages on the calendar were turning and I was approaching 60,” she recalls. “My daughter was having my first grandchild so I wanted to spend more time with my family.”
At both Newell & Budge and F International – which was founded to allow women to work from home and balance the needs of family and a career – much was made in the press of Budge’s role as a senior woman in the IT industry. Since retiring from Sopra, Budge has continued to be involved with debates within the industry about how more women can be encouraged to consider a career in IT. So would she be in favour of quotas to encourage more women into the boardroom?
“No, I’ve never been in favour of quotas,” Budge replies. “When I worked in IT, I avoided being part of any women-only business groups. I believe people should be appointed based on their skills and not on their gender or ethnicity or any other aspect of equality or diversity. I didn’t have much time for people who thought women needed special treatment.
“Hence the fact that the gender split at F International in Scotland was fifty-fifty, while women outnumbered men by four-to-one in its other regions.
“Since I’ve retired, I think my views have mellowed. I realise that I was very lucky because my mother could look after my daughter when I went out to work and a lot of women don’t have that opportunity.
“What I think is more important is that the IT industry needs to get better at communicating to the outside world about what a career in IT actually entails. If you’re a pupil at school then you know what a doctor does all day or what a lawyer does all day. It’s not the same in IT – there are so many diverse careers.”
Whether it was in IT or now in her current role at Hearts, recruiting the right people has been one of the biggest challenges, both in scaling-up the size of Newell & Budge and now in stabilising the operations of the football club. “When I arrived at the club, there were members of staff who hadn’t had a pay-rise for years,” she says.
“Working in IT is hard and working for a football club is hard. We need people who feel motivated and want to go the extra mile for the club. And so that means we need to treat them fairly.
“We were one of the first companies to sign-up to pay the Scottish Government’s living wage to our staff. I was amazed by how much publicity we got for doing it. That wasn’t the aim; it wasn’t a gimmick. But it was amazing how people latched onto this idea of a football club doing the right thing.”
Budge bought the 79% majority stake in Hearts in 2014 for £2.5m as part of a deal to take the club out of administration and eventually sell it to fans’ group Foundation of Hearts. Her involvement in the rescue of Hearts goes back much further though.
“I always said that I wouldn’t lose a fortune on a football club,” Budge smiles. “I received a hand-written letter from some fellow supporters of the club asking if I would come and listen to their plans. I was very intrigued because it was a hand-written letter, which is quite unusual these days.
“So, out of courtesy, I went along. I kept being asked to go along to meetings and I did. I put the supporters in touch with people who could help with putting together a website, with marketing their message, and with setting their strategy.
“We soon realised that the most likely way of achieving the transfer of shares from the previous owner was if the club went into administration – but little did we realise that we’d end up dealing with so many administrators. By the time it came round to me being asked to put forward the money to buy the club, it wasn’t a hard decision to make.
“I bought the club on the Friday and then came in on the Monday and had to tell the manager and a number of players that we weren’t renewing their contracts. One of the headlines in the newspaper said it was ‘Budgement Day’,” she groans.
Budge doesn’t take a salary for acting as the club’s chief executive or chairman. Under the original plan, Foundation of Hearts would have bought Budge’s stake in 2019, five years after she purchased the club. But the team won promotion back up to the premiership only one-year into a five-year plan, and fans have continued to invest their money in the club. That financial security has allowed Budge to offer to extend her investment in Hearts to allow the club to draw up plans to redevelop one of its stands.
“If the money continues to come into the club at its present rate to buy my shares then that will only add a further eight months to our initial agreement,” says Budge. Hearts finished in third place behind Celtic and Aberdeen in the 2015-16 league table, giving the club the chance to play European football next season, offering a further potential boost to the side’s finances.
Budge’s father was born in Leith – firmly on the green rather than the maroon side of Edinburgh. So how did the daughter of a Hibernian fan – who herself was born in West Pilton, one of the city’s poorest areas – end up as a Hearts supporter?
“It was through my daughter,” Budge laughs. “My husband was a Hearts fan and so he took my daughter to games. The marriage didn’t last but my daughter’s interest in football did and so she asked me to go to matches with her.
“My sisters and I weren’t interested in football when we were growing up, but our brother was. He was a Hibs fan and we had uncles who were Hearts and Hibs fans. So we have both Hearts and Hibs fans in the family. It makes things interesting. My nieces come up to me and say ‘We used to hope Hearts would lose, but now that’s Aunty Ann’s team’, so it
Published: 16 September 2016