An SFA Judicial Panel yesterday found Hearts guilty of breaching disciplinary rule 14(g) in suffering an insolvency event when they entered administration on 19 June. Already under an automatic player registration ban imposed by the former Scottish Premier League until they exit administration, in addition to a 15-point deduction with which they will start the new Scottish Premiership season this weekend, Hearts are now prohibited from signing players aged 21 and over until 1 February. It effectively means they cannot operate in that market until the summer 2014 transfer window opens.
But although BDO insolvency expert Birch expects the new sanction to make life more difficult on the pitch for manager Gary Locke as he attempts to keep Hearts in the top flight, he believes it could be academic as he warned of a potentially lengthy spell in administration for the club. “We had a fair hearing, but I’m slightly disappointed in the embargo, which has been extended to the end of January for players over 21,” said Birch as he left Hampden following a two-hour hearing in front of the three-man SFA panel.
“So we are allowed to sign players under the age of 21 once we come out of administration, but not to sign anybody over 21 until 1 February 2014.
“How can I say how it is going to impact us on the pitch? It is certainly not going to help. We had hoped they would just extend it to the end of December and give us the opportunity to refresh the squad in January.
“But that’s presuming, of course, that we are out of administration by then. It is not going to be a quick resolution, which is why I’m saying we may not even be out of administration by January. Therefore, in that situation it wouldn’t affect us. We still have the situation in Lithuania to resolve. That process will take time. It may well drag on and we have to be prepared for that.”
The administrators for Hearts’ biggest creditor Ukio Bankas, who are owed almost £15.5 million by the club, declared earlier this week that offers to BDO from supporters group Foundation of Hearts and former Livingston owner Angelo Massone’s Five Stars Football Ltd are not sufficient to allow them to facilitate an exit from administration through a Company Voluntary Arrangement and warned they could seek liquidation of the club instead.
“There has been no further update from Lithuania yet,” added Birch. “We are just continuing to talk to them about the various offers and hopefully push one of them through at the appropriate stage.”
Birch was relieved that Hearts, whose debt to creditors amounts to a total of £28.5 million, did not receive a financial sanction from the SFA panel. “There is no fine, so that’s the good news,” he said. “It’s a big relief, because there were a big range of fines they could levy on the club. So they have recognised that the cash we have at the moment has come from the fans, therefore it would be wrong to levy a fine.”
Birch dismissed a suggestion Hearts had been dealt with leniently in comparison to Rangers, who were fined £50,000 last year for going into administration. Rangers put a statement up on their website last night from chief executive Craig Mather, expressing surprise at “glaring differences in the sanctions” and he says he could “understand rising anger” among Ibrox fans.
But Birch insisted: “Each situation is different, so I think with the extension of the embargo we have been dealt with in relatively the same manner. Hearts supporters will be disappointed by the extension of the player embargo, but of course it won’t prevent us signing players who are out of contract. It’s not ideal, but those are the cards we have been dealt and we have to get on with it. I appreciate SFA rules state clubs in administration will face sanctions, but Hearts have already had a points deduction and player embargo and it feels like we’re being penalised twice.”