LESSONS are being learned the hard way at Hearts as Vladimir Romanov’s years of largesse threaten to undermine the good work of those left holding the baby at Tynecastle.
Cutbacks and squad downsizing leave the Edinburgh club self-sustainable for the future, but they could yet be haunted by their recent ostentatious past. Romanov’s squandering of money for the last eight years is now catching up with all concerned. He claims to be bankrupt, his Ukio Bankas Investment Group (UBIG) claims to be insolvent. Hearts haven’t received funding from either for almost 18 months and are running independently. Nonetheless, they could still receive a hefty points deduction for next season if parent company UBIG is officially declared insolvent in Lithuania.
Debt of £25 million is attached like lead weights to the club. It could have been obliterated with the money which has been blown on transfer fees, salaries for overpaid players, compensation to sacked managers, needless SFA fines and expensive pre-season tours. Had it been, Hearts would be debt free. The success of the Romanov era amounts to two Scottish Cups and a Champions League qualifying place, but the financial failure is also rather conspicuous.
Few people objected to signing sprees following Romanov’s takeover in February 2005. Suspicions that Hearts could not afford the salaries being paid were not voiced, or at least not loudly enough.
Players like Mauricio Pinilla, Larry Kingston, Ibrahim Tall, Edgaras Jankauskas, Takis Fyssas, Jose Goncalves, Bruno Aguiar, Ruben Palazuelos, and Christos Karipidis all earned £10,000 per week or more before tax. Mirsad Beslija, the club’s record signing in January 2006 for £800,000, earned £9000 per week. Class acts like Fyssas justified their wages. Certain others, not so much.
There were sums of £4000 a week paid to strikers like Christian Nade and Juho Makela, who did not provide value for money. Others, many loaned from the Romanov-financed FBK Kaunas of Lithuania, proved to be squad members who simply could not cope with Scottish football. See Eduardas Kurskis, Arkadiusz Klimek, Nerijus Barasa, Linas Pilibaitis, Kestutis Ivaskevicius, Ricardas Beniusis and Tomas Kancelskis. Add to that group the Austrian striker David Witteveen and Portuguese full-back Tiago Costa.
At one point there appeared to be planeloads of footballers arriving at Riccarton from Lithuania for trials, all travelling and residing at Romanov and Hearts’ expense. Then there was the incredible month of January 2006, when an entire team of new players was signed at a cost of more than £2m. Goncalves cost £700,000 from FC Thun, Makela £500,000 from HJK Helsinki, Beslija £800,000 from Genk, Lee Johnson £50,000 from Yeovil Town, Chris Hackett £20,000 from Oxford United. Also incoming were Aguiar, Barasa, Neil McCann, Martin Petras, Ludek Staceny and Rais M’Bolhi. Some of the above were loaned from Kaunas initially, but later transferred to Hearts’ payroll.
All the while, Hearts went further into the red as the sums had to go through the accounts. Debt was well over £30m by 2007. The vast expenditure, or investment as the Lithuanian hierarchy preferred to call it, was not exclusive to the first team. A host of youth players were granted five-year contracts long before they were likely to get the opportunity to earn such long-term security.
The financial return was zero in many cases, although Christophe Berra and Eggert Jonsson did emerge from the academy to bring in over £2.5m in transfer fees by joining Wolverhampton Wanderers. Craig Gordon, of course, was already a first-team regular when Romanov arrived at Hearts. His £9m record move to Sunderland in 2007 was possibly the Russian tycoon’s finest piece of business in Scotland.
Yet incomings continued to pale when compared to outgoings, a fact not helped by the number of lavish pre-season stays Hearts undertook. The summer of 2006 saw the squad and backroom staff treated by Romanov to a week-long stay on a ship off the south coast of France, followed by a ten-day stint in the mountain resort of Windishgarsten in Austria. The following year they returned to Austria for a week in Walchsee, three days in Vienna and an 11-day trip to Germany. All hotels were five-star and Hearts footed the bills. By the end, even the players were privately complaining at the amount of time they were away from home.
In 2008 they stayed near Wiesbaden in Germany for a week, and 2009 saw a four-game tour of the same country from their base near Hannover. Once back in Britain, Hearts headed to England’s south coast to play friendlies against Southampton and Plymouth. There was little sign of any concern over cost and summer 2010 took them to the luxurious surroundings of Tuscany in Italy, where they stayed at the plush Il Ciocco complex. Again they headed to England upon their return, this time to take on Gillingham and Millwall. The next year it was again a week at Il Ciocco, followed by a stay in Berlin for two games. But by then the penny was beginning to drop, quite literally, with Romanov and UBIG withdrawing funding. Last summer Hearts’ only pre-season venture outside Scotland was to face Rotherham United, and there will be no extravagance this year either as the club operates strictly within its means.
Players have been responsible for costing their club money at times too. Six successive penalties for on-field indiscipline amounted to more than £200,000 in fines from the Scottish Football Association between 2006 and 2011. Again, lessons had to be learned over how not to incur the wrath of referees by gathering yellow and red cards. That problem now seems to have been eradicated.
Romanov himself has been personally responsible for throwing cash away. He brought the game into disrepute on a number of occasions through ill-advised ranting on the club website. He has questioned the integrity of referees, the SFA, the media and former players and cost Hearts tens of thousands of pounds in fines.
Then there were the many managers sacked and paid compensation, although the amounts were never disclosed. Plans for a new main stand at Tynecastle cost close to £1m by the time a planning application was submitted to City of Edinburgh Council in February 2008. Later that year, Romanov acted to reduce the pressure on Hearts with his first debt-for-equity swap. This saw UBIG “forgive” £12m owed to them in exchange for extra shares in the club. Debt continued rising and peaked at £36.1m in 2010 before another debt-for-equity deal was done, this time erasing £10m from the accounts.
A share issue saw fans commendably raise over £1m last year, but that money is needed to help meet operational costs like bills and salaries, whilst many players are being released this summer to reduce the wage bill.
Player sales during the Romanov era have been infrequent as football’s economy has shrunk along with the rest of the world’s. However, the Russian has proven adept at securing high fees for players under contract. Gordon’s deal remains a club record, whilst Paul Hartley (£1.1m to Celtic), Roman Bednar (£2.5m to West Browmwich Albion), Andrius Velicka (£500,000 to Viking Stavanger), Berra (£2.3m to Wolverhampton Wanderers), Jonsson (£250,000 to Wolverhampton Wanderers) and Lee Wallace (£1.5m to Rangers) all provided a return for the investment in them.
Far too many others could not say likewise and the club owners have no way of making up the shortfall. It all leaves Hearts in a predicament which may yet prove costly if a points deduction is enforced.