After gaining control of Hibs in the summer of 1990 and thwarting the so-called 'merger' with Hearts, Farmer confided: "I am a Leither. I was born there, I grew up there and I played in the streets. I know what Hibernian mean to that community and to the city of Edinburgh. But we all have to recognise that drastic changes will have to be made in the way Hibs are run."
Farmer meant what he said all those years ago. And the benefits of those 'drastic changes' came to fruition yesterday when the Easter Road club published its latest impressive set of accounts which disclosed a spectacular profit of 7.4 million. Under the shrewd guidance of chairman Rod Petrie, the figures reveal how a debt level that once soared as high as 16m has been whittled down to 2.8m thanks to a combination of prudent management and a production line of exceptional young footballers.
According to the annual report, the club is now in such a sound financial position that it was able to return, unused, a loan to complete the construction of the new 4.2 million training academy in East Lothian.
As well as showing a net gain in transfer fees for the financial year of 6.4 million, Hibs also reported increases in attendances, up to 14,500,and season tickets, up by 11 per cent to 10,500, which again contributed to the club trading at a profit, excluding income from transfers, for the third year running.
This healthy underpinning of a successful approach to the buying and selling of players is explained by a wages to turnover ratio of just 41 per cent. The figure is in stark contrast with Edinburgh neighbours Heart of Midlothian which last reported a wages to turnover ratio of 97 per cent and debts of 28 million.
Hibs, on the other hand, have reduced their net debt to 2.8 million. Bear in mind Steven Whittaker was sold to Rangers for 2 million since these latest accounts were compiled and it becomes clear the Easter Road club are in a healthier financial state today than at any other time over the past 20 years. With record turnover of 9.8 million, profit for the year of 7.4 million and an operating profit of 1.4 million, these accounts are the boardroom equivalent of braiding the cup with green and white ribbons.
Nevertheless, a section of the club's support continue to fret about lack of investment in new players at a time when Hibs have brought in such large sums from the sale of Scott Brown and Kevin Thomson. Those who can remember the storm clouds of 17 years past, however, may be more sympathetic to the emphasis placed on debt reduction by Farmer and Petrie. Since ill conceived investments and unsustainable expenditure once left Hibs on the brink of closure, it's little wonder the current management err on the side of caution when it comes to paying wages and transfer fees.
Petrie insisted the Hibs board had taken a long term view and wanted the club to live within its means. "To that end, it is important that capital windfalls - such as transfer fees received for players - can be used to secure the long-term future of the club rather than subsidise unsustainable levels of expenditure," reported the chairman. "Debt reduction is one sensible strand in that strategy, particularly at a time of high interest rates. Each pound can only be spent once, so money spent reducing debt cannot somehow be spent again doing other things, however laudable.
"The completion of our new training centre in East Lothian later this year represents a 4.2 million investment the board is making for the long-term benefit of the club. Successive managers have told us this is the best investment we could make. At the start of the year the club negotiated a loan to fund this expenditure, ring-fencing it from the working capital required to fund day to day operations. The level of transfer fees negotiated later in the year means that the club no longer needs this loan as the training centre can be fully funded from transfer fees."
On the field, it's worth recalling how diligence in the board room doesn't have to equate with lack of ambition. Hibs won the CIS Cup last season and currently lie third in the SPL behind the Old Firm. The board say they have increased the budget for players four times in the past two years and spent nearly 1 million on attracting new players.
"Everyone knows there needs to be a balance and the board has supported the manager in shaping his squad for the season ahead," said Petrie. "Our players, coaches and management team continue to ensure the club is competing at the top end of our game, playing an attractive, attacking brand of football while off the pitch the board and staff at Hibernian continue to ensure that the club's financial affairs are in great shape."
Although Farmer once said he wanted his epitaph to read that he fitted more tyres than anyone else, turning Hibs into a profit-making business might yet rival his achievement with Kwik-Fit.
BALANCE SHEET HIGHLIGHTS
Turnover: 9.8m (2005-06: 8.7m) up 13 per cent
Operating Profit: 1.4m (2005-06: 1.2m)
Transfer income: 6.4m (2005-06: 1.5m)
Profit: 7.4m (2005-06: 2.2m)
Average attendance: 14.500 (2005-06: 13,800) up 5 per cent
Season tickets: 10,500 (2005-06: 9,500) up 11 per cent
Wage/Turnover ratio: 41 per cent (2005-06: 42 per cent)