Hearts: we will spend but need fans to help

Hearts are planning again to go cap in hand to supporters to help plug a £2.5m shortfall for next season but Sergejus Fedotovas, the club director, says Gary Locke has been assured he will have one of the largest budgets in the top flight in an attempt to put the team back on the European stage.

Fedotovas, the right-hand man of Vladimir Romanov, was questioned by the club's shareholders at yesterday's annual meeting at Tynecastle. The Lithuanian also assured fans that the board are trying to broker a deal with the administrator of Romanov's bank, Ukio Bankas, who hold a £6.8m floating charge over the stadium, while £15m of Hearts' £25m debt is lodged with the company. However, it was news of the funding gap that the stakeholders were trying to digest yesterday.

Only six months after supporters came up with £1.08m through a share issue that effectively saved the club, Hearts hope to raise £1.5m through a membership scheme. They plan to amass the remaining £1m through player sales.

Fedotovas addressed supporters yesterday amid talk of an American property tycoon and a Scandinavian consortium firming up potential bids. He said: "When we put forward our projections, we based them on historical data from previous years and current circumstances. With that information in mind, we are looking to fulfil the funding needs of the club for next season.

"There are two items we have put into the forecast for next season and they are players and the membership scheme. The player sales revenue is based on historical data and the existing potential at the club and it amounts to around £1m. The membership scheme that will bring more additional value to supporters is estimated at around £1.5m of additional revenue. From the season that has just past, the club was able to make £2m from player sales and I believe the club has the potential to sell close to a similar amount. We are working to finalise the proposal of membership, which will give additional value to supporters."

However, one prominent supporter believes the club could struggle to raise that figure from supporters. At a time when prospective new owners, the Foundation of Hearts, are asking fans to pledge monthly donations through their supporters-run organisation, Hearts want their loyal following to continue to back them financially.

Bill Alves, chairman of the Hearts Shareholders Association, said: "It sounds very much like the Foundation's membership scheme. I would need to see more details but I have doubts whether they would be able to raise that amount."

Despite their intention to ask fans to bail them out, Fedotovas insists manager Locke will still receive a handsome budget. "We still believe it will be one of the top budgets in the SPL next season and we're really hopeful we can use this money to produce a team that can improve significantly the results of last season and return the club to a glorious position in the league and hopefully to Europe again."

Hearts also owe parent company UBIG, which controls 79% of shares, £10m and that struggling company's financial status could force the club into administration. UBIG asked authorities in Lithuania to declare it insolvent last week.

The investment company asked the Lithuanian government to be considered as insolvent last week but bankruptcy proceedings have yet to begin.

Fedotovas added: "The understanding of the board is that UBIG are considering whether it goes into bankruptcy proceedings or whether it will recall it's state of alert. Based on that, of course, there may be implications for Hearts in terms of existing [SPL] rules.

If our parent company begins bankruptcy proceedings, we would suffer a points deduction and that would have a significant impact on our club."If it [insolvency] happens before next season, we start our season with minus 15 points. If the change of ownership happens before an insolvency event, nothing will happen."

"We're working to establish this position and working with potential bidders, creditors and interested parties to try to eliminate the potential risk. If the club goes into administration, I believe all the shares will disappear, the shares will be cancelled by the administration process. Our primary responsibility as a board is to work in best interests of the club and we're looking to preserve the club and it's history and move forward."

The worst-case scenario for Hearts is if the administrators of Ukio Bankas call in their debts. "We are in discussion with Ukio Bankas, we were in discussions with the previous administrators and we're looking to take this forward with the current administrators. We have had discussion and in my view they are positive,The administrator is positive about considering some sort of mutual agreement in resolving the situation rather than a hostile move to call up the debt," said Fedotovas.

Shareholders in the room overwhelmingly voted against the re-election of absent chairman Roman Romanov, Vladimir's son, but UBIG's position as the majority shareholder is set to ensure he remains on the board.

Taken from the Herald