There’s no crisis at Hearts, says Vladimir Romanov

The millionaire owner of Heart of Midlothian Football Club has firmly rejected claims that the club faces financial difficulties because of problems at the Lithuanian bank that he part owns.

Vladmir Romanov said yesterday that the financial results for Hearts, due to be published next week, were “especially good” and that he was committed to staying in Scottish football. He added that work would begin soon on his long-delayed plan to build a luxury hotel in the centre of Edinburgh.

Questions about Mr Romanov’s ability to continue financing Hearts were raised after the credit rating of Ukio Bankas was reduced to near junk status. Moody’s downgraded the bank, of which Mr Romanov is the majority shareholder, after a similar move by Standard and Poor’s last month. The rating reflected the agency’s fear that Ukio Bankas would suffer severe losses in the recession, which is hitting the home market in Lithuania especially badly. The bank, which also sponsors Hearts, has said that it will pay no dividends this year, a blow to Mr Romanov’s income.

Remigijus Jurgelaitis, Mr Romanov's spokesman, said: “The decision not to pay dividends is not related to the club sponsorship matters. Mr Romanov has never financed the club from his own funds.

“Furthermore, the financial results of the club will be especially good this year. There is no basis for the idea that Mr Romanov may leave Scottish football.”

Rumours about the financial security of Hearts have circulated for some time. Last year the players’ wages were twice paid late and there were reports that Mr Romanov might have to sell the club, which he acquired in 2005.

Alex Salmond, the First Minister, and a long-time Hearts supporter, added to the concerns when he told The Times last month that the club was “in unsafe hands”.

Mr Jurgelaitis underlined Mr Romanov’s continued commitment to Scotland with the announcement that Mr Romanov’s investment company, Ukio Bankas Investicimé Grupé, would in the coming months start reconstruction of the former Royal Bank of Scotland offices at 42 St Andrews Square, Edinburgh.

The building was bought for about £20 million in 2007 but a year later Mr Romanov shelved plans to turn it into a hotel and apartments. Mr Jurgelaitis said that the target opening date for the hotel was 2010 but he had no cost for the work.

The improvement in Hearts’ balance sheet is thought to be the result of player sales last year. Hearts sold Craig Gordon, who is goalkeeper for the national side, to Sunderland and forward Roman Bednar to West Bromwich Albion. These deals, plus the conversion of some debt into shares, are likely to more than halve the club’s debt to about £10 million.

The loans are channelled through UBIG, which Mr Romanov chairs. Despite UBIG’s heavy involvement in the plummeting Lithuanian property market, Mr Jurgelaitis maintained that group was healthy. “The UBIG profit was more than ¤10 million last year,” he said. “The company is planning to gain profit next year as well.”

His confidence is based on the fact that UBIG is involved in large construction schemes that are backed by the Lithuanian Government. The projects, which include a concert and sports hall, a stadium and an entertainment and business complex, are part of Lithuania’s plans to celebrate its 1,000th anniversary.

Mr Jurgelaitis said: “The real estate projects implemented by us are unique and promising even in current situation. The project being developed in Vilnius [the Lithuanian capital] has been granted the status of national importance.”

Derek Watson, chairman of the Hearts Supporters Trust, said: “Hearts supporters have a worry at the back of their minds as it is well known that all banks, particularly those on the Baltic states, are in a great deal of trouble.

“The downgrading of Ukio Bankas’ credit rating, while significant as it is, is also happening to banks in the rest of Europe, including in Scotland.

“The loan finance for Hearts is obviously from UBIG and as far as we know UBIG is still in a profitable situation.”

Taken from timesonline.co.uk