Hearts administration: Fans vow to fund charities

The full extent of Hearts' debt has now emerged. Picture: Toby Williams
The full extent of Hearts' debt has now emerged. Picture: Toby Williams
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HEARTS fans have vowed to step in to ensure that charities are not left out of pocket as a result of the Gorgie club’s financial collapse.

A creditors’ report prepared by the club’s administrator BDO shows that £28.5 million is owed overall by Hearts – millions of pounds more than had been thought with the list of firms owed money including several good causes.

Click here to see a full list fo Hearts creditors

While the majority of the cash is owed to Lithuanian creditors Ukio Bankas and UBIG, which are also in administration, the document reveals that millions more is due to hundreds of other firms based across the globe.

Among these are a host of local business in the Lothians which are between them owed almost £1m – but experts predict they will see next to none of that cash, with any money likely to go to the major creditors.

The club’s other debts range from £19,625 owed to agent Tony McGill, £1.2m to British Virgin Islands-based Milson Capital Corp to repay a loan to pay players’ wages, £430 to a Livingston kilt hire firm and more than £93,000 to the city council.

Good causes listed as creditors include Hearts’ own official charity, the Big Hearts Community Trust, which is owed £34,000, St Andrews First Aid, which Hearts should have paid £364, and the British Red Cross, which is owed £76.

Lady Haig’s Poppy Factory and McCrae’s Battalion Trust are both listed in official documents as being owed money, but both have confirmed that this is not the case.

Season ticket holder Craig Wilson, 
who has helped to raise tens of thousands of pounds to aid the club’s battle for survival in recent months, said collections for any charities out of pocket could take place at future 

“There have already been people saying that we need to make sure these charities don’t lose out,” he said. “I’m absolutely sure there will be a desire among fans to ensure that doesn’t happen.”

Former Hearts chairman George Foulkes said that he was positive that good causes would not be left short.

“I think given the way Hearts supporters have rallied to these charities’ causes there is no way they would be left in the lurch,” he said.

McCrae’s Battalion Trust, which commemorates soldiers, including several Hearts players, who died during the Battle of the Somme in 1916, is listed as being owed £100. However, the Trust’s historian Jack Alexander said that the club did not owe it money and had not done “for quite some time”.

There are currently two bidders vying to buy Hearts, with one led by fans’ group the Foundation of Hearts and the other a consortium 
including former Livingston owner Angelo Massone. Administrators, who this week said initial bids would have to be improved, remain hopeful that a Company Voluntary Agreement (CVA), which will see a deal done with creditors to have a proportion of debt repaid, can be reached. An initial creditors’ meeting will be held at Tynecastle on August 12.

If a bid is made that the administrator deems acceptable, Ukio Bankas and UBIG will effectively decide whether a CVA is accepted or not as they are owed the vast majority of Hearts’ debt.

Ukio Bankas, which is owed £15m, holds security over Tynecastle and the deal will hinge on whether its own administrator believes it would make more money by accepting the CVA or selling off Tynecastle.

The stadium’s book value is listed as £13.75m in the creditors’ document. However, its true worth is likely to be a fraction of that amount. The administrator, which took over on June 19 and has already racked up fees of almost £200,000 to be paid by Hearts, has had Tynecastle revalued although it did not reveal the new estimate.

It is hoped the state of the stagnant property market and the lack of planning permission for a new development at Tynecastle will persuade the administrator to cut its losses and accept a CVA. If not, Hearts could go into liquidation with its property sold off.

Football finance expert Neil Patey, who works for accountancy giant EY, said that the amount owed to the ailing Ukio Bankas and UBIG would mean that in the event of a CVA, it was likely that they would scoop the majority of the cash with the smaller creditors being left with little or nothing at all.

“UBIG and Ukio Bankas administrators hold all the cards and can pass or block a CVA proposal given their percentage of the debt,” he said. “Ukio Bankas is the secured creditor with security over Tynecastle, which puts it in a strong position.

“Its administrator has got to get best value for its creditors, but what’s Tynecastle worth? They’d be selling a site with a stadium that would have to be knocked down, doesn’t have planning permission and no guarantee it would get it.

“A CVA is realistic, but BDO will want a proposal that will keep Ukio Bankas happy. Unfortunately it means the likes of the pieman and the other little creditors will lose out.”

The creditors document also revealed that between June 19 and Friday last week, Hearts had made a surplus of almost £1m.

Coffers were boosted by £800,000 in season ticket sales, almost £150,000 in hospitality, £103,000 in sponsorship, mainly from Wonga, and an £83,000 profit on players. A compensation fee of £100,000 was negotiated for Lithuanian winger Arvydas Novikovas, as he came through the club’s youth academy. Almost £50,000 was received in donations.

Hearts continued to spend more than £300,000, including £212,000 on wages.

The club still owes £58,000 to employees, while 18 staff who were made redundant are expected to receive £90,000 in total as a payout. Four players have agreed to take a wage cut while 24 non-playing staff have agreed to waive any right to wages or expenses during the course of administration.

Administrators are today set to attend an SFA hearing at Hampden Park, where further sanctions in addition to the 15-point deduction in the 13-14 season and a ban on new player registrations could be imposed.

A spokesman for BDO said: “This shows that run sensibly, the club could be a viable proposition for a new owner. We are continuing to work with bidders as they refine their offers to conclude a successful CVA.”