THE future of Heart of Midlothian football club is in serious doubt, after the announcement on Monday that it is to go into administration with debts of £25 million, on what was described as “the darkest day” in the club’s 139-year history.
The club lodged its intention to enter administration at the Court of Session in Edinburgh, in a move that threatens more than 130 jobs at Tynecastle and the club’s standing in the top division of the Scottish game.
It is expected that the accountancy firm KPMG will be appointed administrators, marking the end of Lithuanian businessman Vladimir Rom-anov’s turbulent eight years in charge. The club’s debt is owed to companies formerly owned by Romanov, which are themselves facing insolvency.
Hearts last week put its entire playing squad up for sale, saying the club needed £500,000 to avoid going into administration, but it was not enough to stave off its financial problems.
The crisis is the latest to hit the top tier of the Scottish game, 16 months after Rangers entered administration – later having to drop down to the Third
Division – and three months after
Dunfermline Athletic were forced to take the same measure.
Last night, Hearts fan groups remained defiant and reiterated their plans for a buyout through the supporters’ umbrella body, the Foundation of Hearts.
Ian Murray, MP for Edinburgh South, who chairs the foundation, said the club and its followers would recover provided unity was maintained, and pointed the finger at the Romanov regime.
“Today is the darkest day in the history of Heart of Midlothian Football Club, a club with a history as rich and proud as any in the world,” he said.
“The decline of Hearts into administration is not as a result of those people who are tonight suffering – the staff, who have long worked under great pressure, and the supporters, who have put in millions to keep the club alive are not to blame. Those who have caused this pain are culpable. But our focus must be on the future, even if today hurts as much as it does.”
Romanov’s company UBIG –Ukio Bankas Investment Group – has been in serious difficulties for some time, and recently applied to enter insolvency in the Lithuanian courts. Ukio Bankas itself, a separate company but one in which Romanov had a controlling interest, is already in administration.
Hearts had hoped to avoid the same fate, and for some time now it had insisted it was making ends meet. But last week the club announced that the entire first-team squad was up for sale, and also revealed that it had been unable to pay in full a bill from HM Revenue & Customs for £100,000.
The club is also saddled with £25m worth of debt – £10m to UBIG abd £15m to Ukio – and the loan to Ukio is secured against Tynecastle Stadium. Ukio owns 29.9 per cent of the shares in Hearts, UBIG has 50 per cent, and a further 15 per cent is owned by a little-known company called Quantum. The administrator, when appointed, will attempt to broker an agreement with creditors over the debt to allow the club to exit administration and continue in business.
Hearts had reacted angrily to several recent suggestions that the club was about to go into administration, banning a TV channel from the ground after one such report. Yesterday, however, a brief statement from the club confirmed it now intends to do just that.
“Heart of Midlothian plc can today confirm that it has served a notice of intention to appoint an administrator,” the statement read. “The notice was served at the Court of Session in Edinburgh this afternoon.”
Once it is confirmed that Hearts have suffered an “insolvency event”, the club will be penalised 15 points ahead of the start of the new season in August by the Scottish Premier League as a result of regulations brought in last summer. With a squad already severely depleted by cost-cutting, Hearts will be favourites to be relegated from the SPL at the end of next season.
Last night Former Hearts chairman Lord Foulkes vowed to use his political influence to ensure that the club’s stay in administration is as short as possible.
The former MP said he had held discussions with the Lithuanian ambassador to the UK, and is planning further discussions.
He said: “I’m devastated. The fans will all be distraught about it. I’m very sad for the effect it will have on both administrative staff and the playing staff. There needs to be pressure put on the situation in Lithuania to get that resolved, as far as Ukio Bankas and UBIG are concerned.”
The attention of many fans will now turn to a potential takeover.
Mr Murray said last week that he planned to make an offer for the club by the end of this month, and accepted that
administration, while undesirable, made that process simpler.
More than 4,000 supporters have pledged a monthly sum to help with the running of the club. Mr Murray said: “The Foundation of Hearts is backed by every one of the key supporters groups, a significant group of former players and key players in the Edinburgh business community.
“We are set to launch our pledge conversion campaign in the next 24 hours and with time of the essence we ask all supporters to pledge what they can in preparation for the biggest fight of our lives, to keep our club alive.”
“There has been speculation upon speculation as to potential bidders for the club but that is all that it has been. The only real and credible [bidders] at this stage are the Foundation of Hearts and that is why we are asking every Hearts fan for their support.”