Date: 7th March 2010 at 8:59pm
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Director Sergejus Fedotovas mentioned in his recent statement that the club were now focusing on a “stand only” planning application to replace the original Main Stand, instead of the previous grand idea of having a hotel and offices as well. To most of us, this simpler solution always seemed like common sense – especially in the current economic downturn. So instead of a £50m project, we might be looking at a £20m spend – still a huge undertaking for a company with an annual income of only half that amount.

So how can Hearts possibly take on this huge new debt – especially when it`s added to the huge current debt ? It seems Sergejus is confident of finding various sponsorship and financing arrangements so that UBIG / Hearts aren`t faced with the full cost up-front, with the stadium possibly being renamed to include a company or brand name. I just hope we don`t end up with the ultimate irony of visiting the Tynecastle Cala Homes Stadium !!

The Hearts website still has a page proclaiming the new-look “Tynecastle 2010”. Clearly a new stand won`t now materialise this year. Indeed, it wouldn`t surprise me if Archibald Leitch`s stand sees it`s Centenary year in 2014, before making way for a modern replacement. Let`s just hope that the planning application process is a lot slicker second time round.

Fedotovas also hinted that there could be another debt-for-equity adjustment soon, similar to the £12m movement last year. This is really a paper exercise, which increases the “value” of the company to any potential buyer, and allows the accounts to show that the assets cover the liabilities. However if UBIG is going to invest £20m in a new stadium, I think they`re going to want a proper revenue stream from it – and that could mean a rent from Hearts. In other words, we could see Hearts Football Club selling Tynecastle to UBIG and then pay a “healthy” annual rent for the use of the stadium.
If this is indeed the Romanov plan, it also opens up the possibility that UBIG might one day be willing to sell Hearts (the football club) to a new owner, while retaining ownership of the stadium. Would UBIG actually wipe out the Hearts debt by such a transaction ? It`s hard to say – but if the club was left with even just a £10m debt, it could take 20 years or more to trade their way into the “black”.

The next AGM is likely to be held in late March or early April, once the Accounts are issued for the 12 months ending 31st July 2009. The debt at July 2008 was £30m, with Christophe Berra being sold in January 2009 for £2.3m. However if you`re expecting our new debt to have come down, I`d urge you to think again. The club were “losing” around £5m per year – due mainly to excessive wages and fees plus accrued interest due to UBIG – so I`d expect the new debt to be around £33m.

Only in the following 12 months can we expect a slight reduction in the operating loss to kick in, with Neilson, Aguiar and Karipidis off the wage bill. 12 months after that, another reduction due to the departure of Nade, Goncalves and Kingston should improve things further, with the likely sale of Lee Wallace and Andrew Driver in these 2 periods helping also.

What do you think our new debt will be ? Do you foresee the new stand being built in the next few years ? and how would you feel about taking your seat in the ‘Tynecastle KFC Stadium’, no longer owned by Hearts ?

 

6 Replies to “Hearts Vital Signs – finance and stadium”

  • I must admit to getting somewhat turned off when the talk turns to debt, debt for equity etc. Partly ‘cos the numbers are just so big I can’t quite grasp them, partly ‘cos I’ve just plain given up trying to fathom out what the score is and partly ‘cos to a certain extent I’ve buried my head in the sand somewhat (if I can’t see it – it’s not happening!). In terms of a new stand I would agree that a slimline version of the pevious plan is the order of the day. Personally I would have no problem at all with major funding coming from a sponsor and if that means branding the ground then that’s fine with me – as long as “Tynecastle” remains prominent. We were all cock-a-hoop a while ago and meanwhile our neighbours in the East are quietly going about finishing their ground – a wee bit galling. Ach well, good luck to them.

  • I thing Hibs planning permission was achieved a while back, and was due to run out soon – so it’s they’ve not actually acted much faster than Hearts – although I agree with you that it’s a bit embarrassing to be “upstaged” by them (stadium and SPL position). Hopefully “normal service” will be resumed in the near future though !!

  • I’m with itsnomarooned on this. Ultimately, who the hell cares what the ‘debt’ is? I’m not an accountant. So long as UBIG are happy to shelter Hearts through the economic storm allowing the club to keep going as a concern, it’s all meaningless numbers to me. The stand must be rebuilt, it’s falling down and won’t last another 10 or even 5 years. We may even lose the ability to hold European matches at Tynecastle before that due to the matchday facilities being sub-standard. So yes, I expect it will be built in the next few years. I’ve heard the notion of UBIG buying and then renting back our stadium to us before – interesting idea, but what’s then to stop them from re-assigning the land to other purposes (like a hotel or a casino) in the future? Presumably UBIG will outlive Romanov, and whoever takes over might not be a football fan (if indeed Vlad still is). We need UBIG right now, but people like Campbell Ogilvie should be quietly looking and planning for the eventual buyout.

  • Well, the debt is not particularly relevant at this point in time, so long as UBIG own us. However, UEFA look like bringing in a rule in a few years time which disqualifies clubs with “silly” finances – so we should never lose sight of the Hearts debt situation. Also, remember that UBIG are not in this for the football as such, but rather to make money from the loyalty of football fans in a football-daft country. As for someone planning a buyout… I don’t think you’ve got much hope there, SJ – and certainly not from CO. He’s an administrator with no emotional attachment to Hearts – and he’s seen at first hand how ludicrous a proposition it is to buy a football club !!

  • I wasn’t thinking that CO would buy the club… more that some Edinburgh businessman might and would need someone (like CO) to facilitate their introduction. Potential interest can be canvassed as they look for “sponsors” for the new stand. Of course, it’s never that simple with Hearts, so we’ll see…

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