A deduction that will lead to the biggest loss of all

ANALYSIS Scottish Premier League board meeting on Monday could determine the Tynecastle club’s fate and throw Scottish football into another summer of turmoil
Saturday 18 May 2013

HEARTS expect to be told on Monday whether they will be relegated to the first division next season or else remain in the Clydesdale Bank Premier League but start 2013-14 with a massive points deduction.

The issue will not necessarily be resolved straight away, because Hearts are certain to appeal if they are condemned to immediate relegation as a consequence of their parent company, UBIG, being declared bankrupt. Dundee, bottom of the table and resigned to relegation before this potential reprieve, would similarly make representations to the SPL if Hearts are spared at their expense.

The SPL's fixtures will be published on June 11 but right now there is uncertainty, for the second consecutive summer, over the composition of Scotland's top division. An immediate relegation of Hearts would rob Sky Sports and BT Vision of the second biggest derby in Scottish football, the Edinburgh fixture against Hibs, just a year after Old Firm league fixtures were erased from the calendar.

Hearts' fate – and Dundee's – rests on the outcome of legal detective work being done by the SPL into the insolvency process in Lithuania. The executive staff doing the day-to-day running of UBIG declared the company insolvent on Thursday and by the SPL rules any club whose ownership is insolvent is automatically deducted one-third of its previous season's points total. That would amount to 18 points for Hearts because they finished on 52 points last season (the points penalty is rounded up), which would knock them four points below Dundee and send them down.

The new, tougher SPL rules for insolvency were introduced last May when Hearts were among those who agreed to tougher punishments being introduced. Ironically, had the previous penalty – a 10-point deduction – still applied Hearts would have been safe this season. They would still be three points ahead of Dundee with a vastly superior goal difference going into the final round of fixtures today.

The SPL board was scheduled to meet at Hampden on Monday and now the future of Hearts will be prominent on the agenda. Before it can reach a decision the board will have to confirm whether or not UBIG has actually been declared insolvent by a Lithuanian court (rather than simply declaring itself so) and, if so, exactly when that confirmation was applied. If any court declared UBIG insolvent on Thursday, or does so at any point before the end of the SPL season tomorrow afternoon, Hearts would face the immediate points penalty and relegation. If any court decision is reached later than that, any points penalty would apply for the start of next season, Hearts would remain safe and it would be Dundee who go down. The SPL's lawyers, Harper Macleod, are dealing with the case here while professional legal advisors in Lithuania will notify the SPL of UBIG's legal status.

Figures within the SPL are comfortable that the governing body's own rulebook is unambiguous on the procedure for dealing with insolvency events but it will be crucial that the board reaches a decision only after having complete clarity from Lithuania on UBIG's solvency.

There may be some grounds for Hearts to appeal any punishment if the club argues that it has effectively acted independently of UBIG for around 14 months, during which it received no funding or significant support. Hearts have, since then, become self-sustaining albeit with frequent financial injections from their supporters. UBIG owns 79% of Hearts shares and the club also owes it just under £10m, as well as the £15m it owes to Ukio Bankas.

If UBIG's insolvency is confirmed Hearts will be docked either 18 points immediately and therefore relegated or – as things stand – 15 points at the start of next season (which could increase to 16 points if they win at Aberdeen today). Ironically, it would be in their interests not to win at Pittodrie and therefore reduce next season's potential penalty by a point.

Incredibly, Dundee were a late addition to the SPL this season after spending several weeks preparing for a campaign in the first division until Rangers' liquidation resulted in an additional SPL place being created. Now, with the season ending today, they finish it in a renewed state of uncertainty and doubt.

In addition to the SPL board meeting on Monday there also will be a gathering of all 12 clubs to vote on the package of league reforms currently being considered, including a merger of the SPL and Scottish League to form a Scottish Professional Football League, the introduction of play-offs and a fairer model for financial distribution. That would soften the financial blow for Hearts if they were to be the ones going down, but it would still be a grievous humiliation to a club which has been in Scotland's top division since 1983.

Taken from the Herald