It’s been a tough few months for Hearts on the financial front with the club being threatened with liquidation at one stage, Although challenges remain, the picture is brighter as the year draws to a close.
It’s been a tough few months for Hearts on the financial front with the club being threatened with liquidation at one stage, Although challenges remain, the picture is brighter as the year draws to a close.
Late payment of wages in September and October resulted in the SPL imposing a 60-day transfer embargo, preventing the club signing anyone over the age of 18 until December 23. On October 25, Hearts announced a share offer to raise funds and admitted they were short of money to see out the season. They needed to bridge a near-£2million shortfall in income. The share brochure also revealed they were being pursued for £1.75m in tax relating to players loaned from the Lithuanian club FBK Kaunas between 2005 and 2010.
Just two weeks later, the situation worsened. Her Majesty’s Revenue and Customs (HMRC) served a winding-up order on Hearts at the Court of Session in Edinburgh over £450,000 of unpaid PAYE and VAT. That prompted a statement from the board appealing to fans for “emergency backing”, with the added warning that ,without the support of fans there is, as we issue this note, a real risk that Heart of Midlothian Football Club could possibly play its last game next Saturday, 17 November against St Mirren.’ The statement added: ‘This isn’t a bluff, this isn’t scaremongering, this is reality.’
Supporters of the club rallied like never before as fundraising went into overdrive. Shares were bought, as were match tickets and merchandise, auctions were held and pubs and other businesses donated takings. It’s typical of the way fans rally round when a club has its back against the wall, but there is always the fear that such well-intentioned efforts will not succeed.
The Foundation of Hearts emerged seeking to gain control of Hearts from Vladimir Romanov and run the club on behalf of supporters. Their chairman, Alex Mackie, wants to fund Hearts via a membership scheme similar to Barcelona’s. His group offered to pay the £450,000 tax bill to fend off the winding up order in exchange for control of the club. Romanov said no.
He also rebuffed Italian businessman Angelo Massone when he offered £4.5m. Both offers were derided by directors as opportunistic and not truly reflective of the value of the club. Clearly, Romanov wants a reasonable return for his investment and will not just hand Hearts over to supporters without serious recompense.
Eventually, payment plans were agreed with HMRC for the £450,000 and the £1.75m, and the share issue ended on a positive note when it was announced over £1m had been raised.
That, allied to other fundraising efforts by groups of fans, removed the threat of liquidation. Directors are still eager for fans to back the club wherever possible as they try to make up the remaining £800,000 funding shortfall. They are also contesting the SPL’s decision to keep the transfer embargo in place indefinitely, which was taken because some Hearts players are still without bonus payments although wages were paid on time in December.
Things are looking a little brighter for Scottish football in general, although they could hard get any worse. Looking back, 2012 may be seen as the year in which the game touched rock bottom in financial terms in Scotland and a new recognition of reality took hold.