After weeks of speculation, Hearts have served notice of their intention to appoint an administrator and papers have now been lodged with the Court of Session in Edinburgh to formally begin the process.
Earlier this month, the club were threatened with a winding-up order by HM Revenue and Customs over an unpaid £100,000 PAYE tax bill. The majority of that sum has been paid, however on Friday, the club informed the SPL that a number of employees had not been paid, and were immediately hit with a ban on registering newplayers.
The SPL said in a statement: -“The Scottish Premier League has been informed by Heart of Midlothian FC that the club has failed to pay a number of its players on time today. This is a Remuneration Default in terms of the SPL Rules and the Club is therefore subject to an automatic transfer embargo while that Remuneration Default continues.
“The actions also indicate a potential breach of SPL rule A6.21 and a disciplinary hearing will be convened in due course.”
In addition, the club announced that every player was available for sale, although chief executive David Southern insisted that only realistic bids would be considered, and claimed that they needed £500,000 to reach the start of the new season when match-day income would kick in.
Hearts then issued a statement in the club website urging fans who had not renewed their season tickets to do so; however the wording caused anger amongst many supporters who believed that they were being blamed for the club’s financial woes. “Our financial deficit can, in part, be attributed to our worst league finish in over 30 years last season. This had a significant direct impact on the business. Other factors that hit revenues include the absence of Rangers Football Club from the SPL and significantly increased stadium costs particularly in relation to the Main Stand.
“The biggest threat to the club at present however is hesitation and inaction. We hope that those supporters who have purposely held off will reconsider and make the decision to back the club in the best way possible in order that we can meet our targets.”
On Friday, a meeting organised by ‘The Foundation of Hearts’ took place at Tynecastle outlining their plans to buy the club. Without providing exact figures, the FoH claimed to have already signed up more than 4,000 fans, who have pledged between £10 and £100 a month to back its takeover effort.
Edinburgh South MP Murray, who addressed the meeting, hopes to front a bid by the end of the month.
In a statement in Monday, Murray said:- “Now only us, the supporters can ensure Hearts has a future, and not just a future, but a future we can be proud of. Today is the darkest day in the history of Heart of Midlothian Football Club, but in tragedy which has finally befallen the club, we must look to the future. We are backed by every one of the key supporters groups, by a significant group of former players and by key players in the Edinburgh business community”
“The decline of Hearts into administration is not as a result of those people who are tonight suffering. The staff, who have long worked under great pressure, and the supporters, who have put in millions to keep the club alive are not to blame. Those who have caused this pain are culpable, but our focus must be on the future, even if today hurts as much as it does.
“The Foundation of Hearts is committed to a fan-led, community governed, transparent, and well-structured football club, at which supporters are at the very heart. We are backed by every one of the key supporters groups, by a significant group of former players and by key players in the Edinburgh business community.
“We are set to launch our pledge conversion campaign in the next 24 hours and with time of the essence we ask all supporters to pledge what they can in preparation for the biggest fight of our lives, to keep our club alive.
“There has been speculation upon speculation as to potential bidders for the club but that is all that it has been. The only real and credible buffers at this stage are the Foundation of Hearts and that is why we are asking every Hearts fan for their support.”
KPMG will be the company taking on the administration. Hearts are believed to employ over 130 staff on a full time and part time basis, including a first-team pool of 26, with 10 players remaining in the youth set-up, so there is likely to be job-cuts.
Hearts owe £15m to Ukio Bankas, which has been declared bankrupt, and the appointed liquidator can sell the 29.9% shareholding it has in the club as well as Tynecastle Stadium, which was held as security for the debt.
Many fans believe that with the downturn in the housing market coupled with the lack of planning permission in place, the site is not an attractive one for property developers, whilst most major supermarkets have stores in the area and with the lack of parking available, that avenue is also unlikely, leaving the value of the stadium as minimal.
This could leave the way open for potential buyers of the club to acquire Tynecastle at a knock down price.
Another £10m is due to the club’s parent company, UBIG, which has close to 50% of the shares and is currently claiming insolvency. A liquidator with the power to sell UBIG’s Hearts shares will only be appointed if and when the company’s bankruptcy is formalised. All the assets of UBIG have been frozen by the Lithuanian courts.
SPL rules state any club suffering an insolvency event will be stripped of 10 points or a third of their previous season’s tally, whichever is the greater. As Hearts finished last season with 45 points, they will start the next campaign in the top flight with a deduction of 15 points. The club avoided a points deduction and relegation in May after the SPL decided the club’s financial problems had not breached its rules before the end of the season.
With a signing ban in place and current players likely to leave, the points deduction will almost certainly lead to relegation from the SPL, and see the club in Division One for the 2014/15 season. The likelihood is that Rangers will be promoted from Division Two, so both clubs would potentially meet, lessening Hearts’ chances of promotion at the first attempt, although the ‘play offs’ would be in place by that time.
No-one at Tynecastle is thinking that far ahead at the moment however.
Media reports suggest that at least six parties have expressed an interest in buying the club.
The matter is further complicated however with the news that Vladimir Romanov’s whereabouts are unknown, with the Lithuanian authorities planning on issuing an arrest warrant after he failed to appear for questioning on 2 May over the alleged embezzlement of £12.3 million relating to the collapse of Ukio Bankas.
Romanov’s spokesman subsequently claimed that he was unable to attend because of the alleged heart attack, and he subsequently told local news agencies that he had no plans to return to Lithuania, saying “I’ve just been released from the hospital – I go back to see the doctor again next week.”
Since then there have been no sightings of the 67 year-old who took over Hearts in 2005.
John graduated from Telford College in 2010 with an HNC in Practical Journalism and since then he worked for the North Edinburgh News, The Southern Reporter, the Irish News Review and The Edinburgh Reporter. In addition he has been published in the Edinburgh Evening News and the Hibernian FC Programme.
