Hearts have announced another Debt-for Equity swap plan, to be formally approved at an EGM in November, which would remove £10m from the total debt of the club. There`s no doubt this should be viewed as positive news – apart form anything, it will reduce the amount of interest which is charged to Hearts on the sum outstanding, by about £0.5m. The controlling shareholding of UBIG therefore increases from 93% to 98%.
This move comes 2 years after the first scheme, which wiped £12m off the debt. Despite that reduction – and the £ 16m in recent transfer income- the last set of accounts (covering the year up to July 2009) showed the debt at a shade under £36m. Clearly the club were losing colossal sums of money each year – supported by loans from UKIO/UBIG.
The next set of accounts will cover the period up to July 2010, and it is likely that they will show yet another operating loss. I`d predict it to be around £3m, which would make a total debt of £39m. Although Hearts wage bill is reducing substantially, I think it will be 2012 before we see evidence that the club is living within its means – and by that time the total debt will probably have risen above £ 30m once again.
UEFA have impending regulations which place a duty on clubs to show a degree of financial “sanity” before they are allowed entry to the European competitions, so Hearts move will have been prompted by this also.
The prospect of funding a rebuild of the Main Stand is staggering against the backdrop of such a huge debt. There`s simply no way a normal UK commercial bank or private equity company would embark on something like that – so we have to be thankful that our owners don`t see things that way. Despite 2 years of mad meddling from Romanov after the Cup win, we owe our very existence to UBIG – come hell or high water.
The recent departure of Football Director Aleksandr Metlitski should also be welcomed. For a start, it reduces the wage bill – but more importantly, it suggests that Vladimir now sees the Jefferies/Brown/Locke team as being loyal, trustworthy and capable enough to perform all the football duties themselves. It is likely that Metlitski was instrumental in assessing the folly of Csaba Laszlo`s idea to bring in Steven McLean and Izale McLeod as the answer to his team`s lack of goals – rather than alter his own tactics – resulting in JJ being appointed to replace the likeable Hungarian. Let’s hope the apparent mutual trust between Vladimir and JJ continues for a long, long time !!
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I think it certainly helps that we have a management team in place who genuinely do love the club. Not meaning the current players, but the club as a whole – and are pragmatic enough to not make silly demands for short-term gain at the expense of the wider issues. A good example of this is the Zaliukas affair. The public behaviour of JJ and co. has been exemplary, at no time have they painted the bad picture or complained out of frustration – unlike certain of our predecessors. The club simply cannot be held to ransom over wage demands in our current financial situation, and this latest bit of financial swindling (I say swindling because, let’s face it, nobody really understands what’s going on here unless you have a degree in accountancy) just illustrates the point. I also believe that JJ considers this his last, & dream job – so there is simply no question of disloyalty… good news for those of us who want to see a Hearts manager being allowed to manage!
Good points there, SJ – yes I fully agree our current situation (JJ and Romanov’s recent form) is a huge reason for optimism. A degree of sanity may have broken out at Tynecastle at long last !!
sush! dont tempt fate… So to the outside reader (me incl.) this appears to be the owners of hearts, buying more of the club they already own, for £10million, which will reduce the smount of debt the club owes to, er those owners. I did something similar recently when i offered myself a pound for this lovely pound coin I had! We owe UBIG and Vlad a lot, but until i get that masters degree in theoretical accountancy i will not know how much! :o)