WHEN Vladimir Romanov took control of Heart of Midlothian in early 2005, the club’s debt stood at around £25 million. As the same man now finally and officially relinquishes control, the club’s debt is almost exactly the same.
The virtual identity of the two sums might give the impression that the past eight years have been a period of stability, albeit a massively indebted one. The reality is that they were the wildest, craziest years in the club’s history.
The positive side of Romanov’s reign was that he kept the club at Tynecastle at a time when the previous owner, Chris Robinson, had made an agreement to sell the ground and rent a home at Murrayfield. The negative was that he could have done so much more – including eliminating the debt entirely.
You will still get those who insist that the Kaunas-based businessman’s entire career in this country was based on smoke and mirrors. The impression was perhaps started when it took him and his company UBIG months to get round to formulating a proper bid for the majority stake on the club, and perpetuated by the painfully slow working of the administrative wheels at Tynecastle.
But Romanov had money, all right. Money to burn – or throw in vast bundles at mediocre players, which amounted to the same thing.
The public-relations advisers Romanov appointed in this country liked to depict him as a principled entrepreneur, battling bravely against the worst excesses of Soviet bureaucracy to build up his portfolio of businesses. “Vladimir Romanov isn’t like you or me,” one of those advisers told this reporter in the early months of the new regime in Gorgie. “He has higher moral standards.” In reality, Romanov built up his empire with the support of some powerful figures – something that is thought to continue to this day, as he is said to remain outwith the reach of European Union law thanks to the shelter of the former president of Chechnya. And, far from being a poster boy for free enterprise, he employed some of the oldest, most discredited working methods of the Soviet system.
The salary budget was the classic example of that. The wage bill will be £10m a year, he decreed – and his frightened underlings ensured they complied with his command. Never mind the quality of the players who were being signed – even though some, during George Burley’s brief time as manager, were first-rate. That budget would be spent.
Hence the stories that came filtering out of Tynecastle from incredulous agents. One, for example, decided to aim high and ask for a certain sum – let’s call it £5,000 a week. He was shocked when the executive then in charge of negotiations offered £7,000 as his opening gambit – but the said executive interpreted his shock as anger, and promptly upped the offer to ten.
Such largesse would have been bad enough in the case of those genuinely talented players such as Rudi Skacel and Takis Fyssas who might easily have settled for a smaller basic wage without being at all demotivated. But it was incomprehensible in the cases of some players who were notably less able than the ones they were replacing, yet for some reason ended up receiving a small fortune for their smaller contribution to the club.
Then there were the players who were vanity projects. The signings made because they were box-office in Romanov’s eyes, even though they were such wayward personalities that they were disruptive influences in the dressing room. The ones brought in from Lithuania – often on loan from Kaunas – as a favour to some business mate of Romanov’s.
There was at least a rationale to that policy of recruiting many players, and not just Lithuanians, and officially keeping them on loan from Kaunas. Romanov and his associates thought it would help them save money, by paying tax on those players in the Baltic republic, where rates are lower, rather than in the United Kingdom.
It is the kind of tax-avoidance scheme which is attempted by many companies who are big enough to fend off the attentions of the British state with the help of a platoon of lawyers. Unfortunately for Romanov, he fell well short of that stature, and eventually had to reach an out-of-court agreement with Her Majesty’s Revenue & Customs for back payment of taxes due.
HMRC had asked for £1.75m, and the agreed sum was £1.5m, so in that sense Romanov could claim the settlement was a victory. If so it was a Pyrrhic one: Hearts had to pay the first tranche of £500,000 by last month, and that financial commitment was one of many that together pushed them over the brink into administration.
Many things have yet to be explained about Romanov’s now-ruined business empire, and perhaps there was a sane explanation for some of his apparently unhinged spendthrift ways. Perhaps, in the context of his whole group of companies, overspending at Hearts helped lessen his tax obligations elsewhere. But that is mere speculation. The key fact is that overspending at Hearts certainly did nothing to help Hearts.
There was nothing inevitable about it at all: it was caused simply by the caprice of one man and the connivance of his colleagues and underlings. Had he been a different character, he could have used the money far more wisely. That £9m received for Craig Gordon, for example, could have made a significant and lasting impact on the debt.
But in the end, Romanov did not change his ways: neither his self-indulgence, nor his habit of delaying everything for months. This showed, above all, in his announcement in late 2011 that he was putting Hearts up for sale. He had fallen out of love with football, he said, and was going to move into the theatre.
If he had sold in the few months after that statement, UBIG might have avoided some of its subsequent troubles, and Hearts would have been in new hands by now. But Romanov slapped a figure of £50m on the club, warning off anyone with the slightest interest. Then, when his senior lieutenants at Tynecastle began the process of a share issue which would see fans buy 10 per cent of the new total, he could not decide whether he was still offering the entire club for sale or merely 50 per cent.
Hearts are still alive today, and probably will be for some time: their fan base is big enough to ensure that much, provided the Foundation of Hearts or a similarly stable organisation takes over in the relatively near future. But they could, and should, have been in a far healthier state, had the man who bought them over in 2005 exercised even a modicum of restraint with his riches.