Hearts: Gloom descends as administration beckons

KATE PICKLES AND DAWN MORRISON
Published on 18/06/2013 12:00

TYNECASTLE cut a bleak picture as an overwhelming sense of inevitability meant there was no defiant singing or waving of banners.

More members of the media than supporters flocked to the ground after news broke that Hearts would enter administration. In the surrounding pubs, smatterings of dejected Jambos drowned their sorrows while others contemplated a "fresh start".

Former captain and now pundit Michael Stewart summed up the mood when he said the almost unavoidable move had made it a "very difficult day for everyone connected with the club".

But he added: "Hopefully it is the start of the club getting back on its feet. I am sure there are some staff nervous about what is going to happen from here on in.

"With the problems the club has had for so long, it is inevitable there are going to be some casualties.

"But a club of this magnitude is always going to have interest to get it back on a solid footing.

"There's a lot of goodwill to Hearts, – nobody in the wider Scottish football public wants to see another big club in Scotland go to the wall."

He said the team was already at the "bare bones" and did not expect much money to be made from selling players.

"Though, inevitably, like some of the non-paying staff, there will be some players that have to find their futures elsewhere," he admitted.

Diehard Ronnie Lockyer, 31, felt he had to come to Tynecastle. The plumber, a season ticket holder from Balerno, said he hoped he had now heard the worst of the bad news

He said: "I'm just praying it doesn't go like Rangers. I can take the points reduction, even relegation, but to be no more would be like losing a member of your family. You can change your car, your house and your girlfriend – but you never change your club."

Paul Fraser, 32, of Broomhouse, a season ticket holder with four-year-old son Cole, called on fellow fans to do more. He said: "Only 4000 fans pledged to the Foundation of Hearts. Where are those who lined the streets for the parade when we won the cup?"

Fans in traditional Hearts pubs said there had been little surprise in yesterday's announcement, but many welcomed what they considered an end to months of uncertainty.

Mike Wilkes, 42, a tiler from Gorgie, said he believed the club was doing the right thing going into administration.

"I think it's the only way forward," he said. "They can't keep coming to the fans and asking them for cash. We don't know where we stand or what the club is doing.

"I don't think we'll fold because the Scottish league can't afford to lose another massive club. It wouldn't just be us to lose revenue, it would be Hibs, Dundee, everyone."

Distillery worker John Lonnie, 52, of Gorgie, was less forgiving, blaming Vladimir Romanov for "selling Hearts down the river".

"I have been a Hearts supporter since the 60s and I never expected this to happen," he said. "Hearts are the third biggest team in Scotland in terms of support and it's a sad day when this happens."

Graeme Kerr, 32, of Slateford, was trying to look for the "silver lining."

"It opens up the door to possible investors at a lower price," he said. "A lot of fans are trying to put a positive spin on it."

Dave Buchan, 52, a construction manager from Gorgie, sounded a rallying cry to fans. "I made a decision when I heard the news that I'd be there next season. They need our support more than ever and true Hearts fans need to come out."

Former Hearts chairman George Foulkes said the decision had come earlier than expected, but hoped talks could now progress over securing the club's future.

"It's really bad news from the point of view of the club, the fans and particularly the staff and the players," he said.

"But it was beginning to look inevitable given the circumstances. Hopefully it will make the way forward a bit clearer.

"But first of all the situation need to be clarified in Lithuania with regards to UBIG, because any potential investors need to know that they can get ownership of the club and the stadium unfettered as quickly as possible.

"Ian Murray and myself have already had a couple of meetings with the Lithuanian ambassador and we will be having another one. I think the Lithuanian government will be keen to see this matter resolved as soon as possible.

"It's important for the Foundation and other potential investors to move more quickly for new ownership."

'All the jobs of staff at the ground will now be at risk'

Ken Pattullo, football financial expert and partner at corporate restructuring firm Begbies Traynor, answers the key questions about how administration will affect Hearts.

What does administration mean for Hearts?

It means anyone owed money by Hearts cannot take any legal action to recover it. It is a legal freeze in procedure, allowing the administrator to take whatever action he can to try to sell off the club without the threat of legal action preventing that.

What will happen next?

An administrator will presumably be appointed within 24 hours. Ukio Bankas and UBIG are both creditors. Whatever claims they have can no longer be enforced as long as the administration order is in place. That means whatever security Ukio Bankas or UBIG might have over Tynecastle Stadium cannot be called up. What the administrator will try and do is sell off the whole club in the same way as the administration of Rangers attempted to do, albeit unsuccessfully. The administrator will try and arrange a company voluntary arrangement [CVA]. What is required is the agreement of 75 per cent of the creditors. In effect, that means Ukio Bankas and UBIG because they represent between them more than 75 per cent of the creditors.

What does this mean for the club's staff and players?

All the jobs of staff at the ground will now be at risk. The administrator will need to sit down and address how many staff are absolutely essential to the ongoing running of the club, bearing in mind that we're in the middle of the off season and there are no football games being played. The administrator will have to make some sort of cutbacks, whether that's on the players side or in terms of non-playing staff, to return the club to profitability. Inevitably, the cutbacks will mean some job losses.

What does it mean for the club for next season?

Hearts will start with a 15-point penalty. Those are the Scottish Premier League's rules.

What happens to the club's debt?

The CVA will mean both Ukio Bankas and UBIG will have to agree to accept a certain proportion of their debt, whether that might be five or ten pence in the pound, or perhaps slightly more. One of them also has security over Tynceastle Stadium. That will be excluded from that process.

What if a CVA is not reached?

The club would go into liquidation, as happened to Rangers, and some sort of similar punishment will be imposed by the SPL. When Rangers went into administration the reason for doing that was as a protective measure to stop HMRC taking action. Hearts going into administration will have the same effect.

Is going into administration a good or bad thing for Hearts?

It has good and bad points. The good points are that it prevents anyone like HMRC or any other creditor taking any further action. It also allows the club, ie the business and the assets, to be sold without the liabilities hanging around its neck like a millstone. It should allow a more orderly and clean sale.

What is the worst-case scenario?

The club goes into liquidation and suffers the same fate of Rangers by being relegated to the third division. That would not be a good thing for Scottish football. You only have to look at the financial effects on the SPL and on attendances caused by Rangers being put down into division three.

Taken from the Scotsman