Hearts administration: Gordon McKie hopes for club

Gordon McKie hauled the SRU back from the financial abyss and wants to do the same with Heart of Midlothian. Picture: SNS
Gordon McKie hauled the SRU back from the financial abyss and wants to do the same with Heart of Midlothian. Picture: SNS
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WHEN he was chief executive of the Scottish Rugby Union, from August 2005 to June 2011, Gordon McKie used to joke that if he pulled up his shirt you’d see the scars he bore in trying to deal with the personal fiefdoms of a crisis-ridden organisation.

Alickadoos abounded in those days. Free-spending and unaccountable. By the time the bank sent McKie to Murrayfield to halt the financial haemorrhage, the SRU was a basket case and perilously close to being insolvent, the fiscal calamity playing out against a backdrop of political in-fighting. The Union was dysfunctional. It was McKie’s job to turn it around.

He did, but it was bloody. Given the mess it was in, there was no other way. He broke up the little empires up and down the country, laid waste to the expensive perks of the blazers, cut budgets and shut down a team, the Borders outfit being binned on his watch because of its low crowds and ailing finances. He took huge grief for that and for other things, but McKie brought the SRU back from the brink of economic disaster. You don’t win friends doing what he was charged to do. He made enemies. Plenty of them. In the end, he was surrounded. In the summer of 2011 he made an inevitable exit from rugby after almost six years.

In November 2011, he embraced football. From frying pan to fire, he became chief executive of the Hong Kong Football Association. He lasted eight months. All he will say about his turbulent time in Hong Kong, and the association’s refusal to accept reform and proper governance, is that he left because of his objections to some “interesting business practices of a few gentlemen” there. There were things going on in Hong Kong that he had to stop, but wasn’t allowed to. He won’t say precisely what they were. “Let’s put it this way, they saw me as an irritant.” Leaving his post in May 2012 came as something of a relief.

It was then that Sale Sharks owner Brian Kennedy phoned and asked him if he could be persuaded to return to Scotland and be chief executive of Rangers in the prospective era of the Blue Knights. “I said I wouldn’t take a lot of persuading because I was coming back anyway. I did some diligence on behalf of Brian and the Blue Knights, but it wasn’t to be because the process that was run by Duff & Phelps had some interesting twists in it.”

And now he is back in the game. Or wants to be. Kennedy said on Friday that he is talking to McKie but only from the perspective of somebody who has vast experience of owning professional sports teams. He is not financially involved in McKie’s group, he says. The group consists of five or six investors, some based in London, some in Edinburgh, most of them Hearts fans. McKie says his team is ready now, but understands that administrators BDO have duties to perform before anything can happen.

His hope is that a deal can be done to get Hearts out of administration and active in the transfer market before transfer deadline day on 31 August. His dread is that they may not be.

McKie met with Bryan Jackson of BDO on Thursday and with Ian Murray of the Foundation of Hearts. He wants to embrace the Foundation. “For me, this is an opportunity to help Hearts. I met on Thursday with the Foundation. I met Ian to say ‘Look, we would like to work together on this’. We want to encourage supporter ownership of some kind, but we’re not sure what that means at the moment. If we’re putting in the lion’s share of the money we would want control in the beginning, but we are prepared to embrace supporter ownership and board participation.

“I met with Ian and bounced a few ideas around with him. Together we are more powerful, unless he can find another bidder. And I don’t know if there is anybody else out there. I certainly haven’t heard of anybody. If they have 5,000-6,000 pledges, that’s a chunky audience. Now, a pledge is one thing and turning it into cash is another so it remains to be seen what they actually generate. But we want to engage with them.

“I think he welcomed the fact that I have a background in sport and experience in turning around troubled businesses. Also, we’re not a bunch of spivs. The people around me are reputable, credible and wealthy and have Hearts’ best interests at heart because most of them are Hearts supporters. Not all, but most. Hearts have been part of their life and they are dismayed at what they hear and what they read.”

The mantra of potential bidders claiming that they are not in it for the money is well-worn, but in this case it is entirely believable. Who, after all, would invest in Hearts if they were looking for profit? Only a madman.

“The guys behind me are not doing it to make money, that’s the truth. Football clubs don’t make money. I know that sounds twee, but they are genuinely doing it because they want to save Hearts. It’s unlikely the club will ever make money. If you sell a player there is pressure on you to spend on strengthening the squad, so I don’t see profit happening in professional football in Scotland.”

McKie has been working quietly on this project for months. It was back in February when he made his first approach to Sergejus Fedotovas, telling the former director that he could bring together a consortium that would be interested in taking over the club. Fedotovas appeared interested but said he was also talking to other interested parties on behalf of Vladimir Romanov. Things have moved slowly since then. It is only in the last fortnight or so that the pace has been upped.

It looks like McKie’s group is well down the road of information-gathering. “I’ve got the funding based on what we perceive to be the value of the club and we could get on with this next week if that was possible. But BDO have only just been appointed and they have a lot of things to sift through. They need to evaluate what is real and what isn’t. I would hope in the next two or three weeks we will have clarity as to the process. BDO will know then what level of interest they’ve got. And hopefully they’ll have eyeballed prospective bidders and will know who is serious.”

There has been talk about what the Lithuanians are looking for in order to do business. The word – and its accuracy is not at all clear – is that they are looking for full value for the stadium and 10p in the pound for the debt, totalling about £8 million. “If you do the sums then that would mean that the stadium is being valued at about £5.5m. We haven’t had it surveyed and valued yet but it’s certainly not worth £5.5m. Ultimately it’s only worth what somebody is prepared to buy it for. That seems very high, but I’m not sure if that’s what the Lithuanians are looking for. If they find a buyer who thinks the stadium, with all its restrictions, is worth £5.5m, fair enough. But what would be their objective? Is it to be a landlord to a football club or is it to turn it into a supermarket?”

McKie describes the Hearts supporters as very tolerant given all that they have been put through by the previous regime. He also talks about Tynecastle and the suggestion in certain quarters that his group would not be adverse to moving out and sharing a newly-built ground with the Edinburgh rugby team.

“No truth in it at the moment,” he says. “The stadium strategy is very much stage two. Stage one is stabilising the club, then making it competitive and once we’re breathing easy let’s sit down and work out some other things. Do we stay at Tynecastle given its limitations, its limited hospitality facilities and the general condition of the stadium? Or do we go out and consult with the supporters and ask them what do they want? If they feel that moving to a new stadium would be beneficial and in Hearts’ longer term interests then OK, where might that be built and might it embrace rugby? But that’s strike two. It’s not on the agenda right now, it’s not real, it’s a vision down the line.”

If they get that far, that is. For sure, nobody else has done the homework that McKie has done on behalf of his investors. That would appear to put them in the box-seat, but these are early days and they know it. As much as he wants a quick sale, McKie knows that it will be anything but. His group are at the forefront, though. You have to see them as the early favourite in what constitutes the race to save the stricken club.