Hearts aim to redevelop stadium as sale called off

STEPHEN HALLIDAY

GEORGE Foulkes, the Hearts chairman, believes that the club can find a way to remain at Tynecastle for the long term after they formally withdrew yesterday from the agreement to sell the ground to property developers Cala Management.

The anticipated decision was confirmed in a statement to the Stock Exchange which explained that the Hearts board had been convinced of prospective owner Vladimir Romanov’s financial capacity to allow them to stay at the stadium which has been their home since 1886.

The original contract for the £20.5 million sale, announced last August as then Hearts chief executive Chris Robinson sought to address the club’s alarming level of debt which was most recently recorded at £19.6 million, included a get-out clause which will see Cala receive £75,000 in compensation.

In another significant move, Hearts have switched their main banking facilities from Halifax Bank of Scotland to UKIO Bankas, the Lithuanian bank in which Romanov has a significant interest. While HBOS will still hold the account used by the club for their day to day business, UKIO become the main debt provider.

"It is a very exciting day for Hearts," said Foulkes last night.

"It means that, financially, we are on a sound basis and are no longer being forced or required to sell Tynecastle. The new board of directors can now sit down in an unhurried way and plan for the future of the club.

"The first option, our preferred option if it is possible, is the redevelopment of Tynecastle and I’m more optimistic that we can find a way to achieve it. If not, then we will look at our second option of finding a suitable site for a new stadium.

"We now have a bank which is giving us better terms and not putting pressure on us to sell. We are getting funding to strengthen the playing squad and we have the opportunity of sitting down and seeing how we can develop the club. It is a massive turnaround from the position we were in several months ago."

Foulkes is aware of the cynicism within the Scottish football community over the depth of Romanov’s pockets and his ability to pull Hearts away from the verge of financial meltdown while still meeting the emotional desire of their supporters to remain in Gorgie.

"That’s understandable," said Foulkes, "but we are sure about this. One of the reasons it took so long to reach this stage is that we went into it very carefully. Our lawyers examined every detail and we are satisfied with everything. We wouldn’t have cancelled the Cala deal if we had not been completely satisfied.

"It is important to get the message across that we won’t have unlimited resources. It’s not like Chelsea, we won’t be signing players from Real Madrid, but we are now able to re-sign the out-of-contract players John Robertson wishes to keep and also add to the recent new signings we have made."

While Foulkes spoke of the pressure being eased on the reshaped Hearts board, which includes Liutauras Varanavicius, president of the Lithuanian FA and chairman of UKIO Bankas, along with Romanov’s son Roman and spokesman and interim chief executive Sergeyus Fedotovas, he accepts time is still a factor in realising a final solution to the Tynecastle issue.

Initially, Romanov and the new board are supporting the findings of Lord Macaulay’s working party which concluded Hearts could stay at the ground for another five years by making improvements costing £100,000.

"The sooner we decide (what to do in the longer term), the better it is," said Foulkes. "We don’t want to keep the present situation where our income is less than our expenditure. We need to make Hearts profitable, to make the most of our commercial possibilities, and we can’t do that with Tynecastle in its present form. The Working Party’s report was very helpful in allowing us to reach this decision and the board will be accepting the basis of their recommendations as we move forward."

A spokesman for Romanov expressed the new major shareholder’s pleasure at yesterday’s announcement and insisted it was further proof of his ability to deliver on his pledges to the club and its supporters.

"It is another significant part in the jigsaw," said Romanov’s spokesman, "and further testament to Mr Romanov making good his promises.

"He has done everything he said he would do and is determined to make Hearts successful."

Hearts statement to the Stock Exchange read: "The board of Hearts announces that it has exercised its right to withdraw from the agreement for the sale of Tynecastle Stadium to Cala Management Limited, in accordance with the terms of the missives constituting the agreement for sale.

"The withdrawal follows the extraordinary general meeting of the company on 10 January 2005 which voted by a significant majority in favour of cancellation of the agreement for sale.

"Following the shareholder vote, the board of Hearts has now received the comfort it has been seeking as to the financial position of the company going forward, allowing it to determine to withdraw from the agreement.

"More particularly, the withdrawal follows agreement between The Bank of Scotland and UKIO Bankas, whereby UKIO Bankas has become the principal banker to Hearts. The exercise of the right of withdrawal triggers Cala’s entitlement to reimbursement of its reasonably incurred costs in connection with the sale agreement, as described in the circular to shareholders dated 19 August 2004."

Aside from making a long-term decision on Tynecastle, one of Romanov’s priorities now will be to address the situation with media group SMG, who hold a 19.9 per cent stake in the club and are due a first instalment of £1.125 million next year of the £4.5 million they are owed by Hearts.

An SMG spokesman said last night: "Our position is unchanged. Our concern has always been Hearts’ working capital and their position to repay their debt."

• New Hearts owner Vladimir Romanov has offered to subsidise travel costs for Hearts fans who will be heading to the Tennent’s Scottish Cup replay against Kilmarnock next week.

Hearts will send a cheque for £150 to supporters’ clubs on receipt of official invoices for their buses to Kilmarnock, which is likely to cover around 50 per cent of the overall costs.

"This is an excellent gesture from the club," said John Borthwick, secretary of the Federation of Hearts Supporters’ Clubs.

Taken from the Scotsman