Foundation of Hearts chairman Ian Murray yesterday referred to a “Dragons’ Den scenario” where Edinburgh business people have agreed to provide the initial capital for a proposed fans’ takeover of the Tynecastle club.
The MP for Edinburgh South has described the strategy as a “win-win” situation for the club since it guarantees business expertise as well as the financial outlay required to deliver supporter ownership.
Although their identity is being withheld for the time being, Murray gave an assurance that the individuals involved were established Edinburgh business people who have the club’s best interests at heart. “They are doing this for absolutely no personal gain whatsoever,” he said. The backers will be repaid at an interest rate akin to one attached to a standard bank account.
The Labour MP for Edinburgh South sought to play down fears that another set of Scottish football fans were again being asked to place their faith in anonymous parties. He explained how FoH, through a “special purpose vehicle” called Bidco, propose to enter into a binding contract with BDO, the club’s administrators, and bring about ultimate fan ownership. Murray stressed that the Bidco funders would all pass the fit and proper person test demanded by the Scottish Football Association.
“BDO will have to satisfy those rules so they will have to be satisfied in their own mind that these people can pass these particular tests,” he said. “It definitely won’t be an issue.
“I think when you find out who these people are you will be relatively comfortable that these people are top Edinburgh business people and top Hearts supporters who only have the best interests of the club at heart,” he added. Although he was prepared to give little away about the those involved in Bidco, Murray did reveal that, rather than a consortium of 100 people all contributing a “a few quid”, it was a consortium made up of a “very few people”.
These private individuals will be paid back gradually by fan contributions. “Of course they will be named eventually,” Murray promised. He explained that the businessmen do not want to be identified at this stage as there is still a long way to go before FoH, who were conferred with preferred bidder status last Thursday, are able to push through a CVA [Company Voluntary Agreement].
Bidco will pay for the CVA. The ownership of the club will then be transferred over time to the fans through another special purpose vehicle called Fanco, which is paid for by monthly supporter contributions.
More than 6,700 supporters have set up direct debits from £10 to £500 a month, the first instalment of which will be collected on 2 September. Bidco will then sell the club to Fanco over a predicted three-to-five-year period.
“The beauty of this particular deal is that it is a bit of a Dragons’ Den scenario – not only do we get the capital up front, we also get the business expertise as well,” said Murray, with reference to the group of wealthy Edinburgh businessmen who have come to the club’s aid at the last moment. “I think having football professionals at this club, strong Edinburgh expertise and the partnership with the fans gives us the best of all possible worlds. It keeps the assets, the stadium and the club, together as well.”
The extent of fan influence when and if the bid is successful is still to be determined. “The Hearts FC board won’t be fully just fans who have pledged their resources to the Foundation,” said Murray. “The body of the Foundation, which is the membership organisation, will feed into the membership of the board, which will consist of business people and football professionals.
“These things have to be worked out but Bidco cannot sell the club to anyone else but Fanco,” Murray added.
“That will be a legal agreement and that legal agreement will also contain an immediate influence for Fanco on the Heart of Midlothian Football Club board.
“So there’s a real possibility for a very strong partnership that keeps all the assets and the football club together along with the supporters’ involvement.”
Trevor Birch, the club’s joint administrator, applauded the efforts of FoH, but he warned that there is still a lot of work to be done to ensure that their bid produces an acceptable CVA for the club’s Lithuanian creditors.
“It has been a great achievement by staff, players, management and fans to enable the club get to this stage,” said Birch.
“At the moment we cannot put a timescale on the process as a number of negotiations with various parties still need to take place and we are waiting for the appointment of administrators to UBIG to be ratified.
“However, we can ensure that collectively we make as much progress as possible on our side so we are able to finalise the matter quickly once the opportunity presents itself.”
All parties wish a swift conclusion to the process but much still hinges on events in Lithuania. Murray confirmed that the FoH are not in contact with the administrators of Ukio Bankas, which holds the security on Tynecastle on the £15 million it is owed. “It is all through BDO,” he explained. “It would be inappropriate for us to circumnavigate that process.
UBIG, the club’s major shareholder, applied for insolvency two and a half months ago. While an administrator has been appointed through the Lithuanian courts an objection has since been lodged.
“That is part of the normal liquidation/administration process but at the same time it delays it – we need the Lithuanian courts to determine who the administrator/liquidator will be and then once they are appointed then the formal discussions can start,” said Murray. The FoH chairman described the day after the CVA is agreed as “day one” in a new era. Much still needs to happen before then but yesterday was another step towards the realisation of a vision where the club is restored by – and for – the local community.