HEARTS' employees will find out today if, as promised by the club, their wages have arrived in their bank accounts. The playing staff, who are paid weekly, are expecting last week's wages as well as this week's, while backroom staff are awaiting payment of their monthly salaries, which they normally receive on the 24th of each month.
Last weekend a spokesman for the club said the players would be paid early this week, but on Tuesday the timetable was revised and today became the payment date. Having stated on Wednesday that the "processing" of the money to pay its employees had
been completed, the club remains confident that the new deadline will be met.
The delay in payment was attributed to a "technical hitch", the nature of which has not been made public. Hearts declined to comment yesterday on one report which claimed that Sergejus Fedotovas, one of the club's three directors and a close associate of Vladimir Romanov, had initially been blamed for the error. The report said that high-ranking officials of Ukio Bankas Investment Group (UBIG), Hearts' parent company, had first decided that Fedotovas was to blame, but later went back on that decision.
Whatever is eventually decided by UBIG, the group in which Hearts owner Romanov has a controlling interest, it is clear that the "hitch" has caused the club considerable embarrassment and had an adverse effect on confidence in it. In particular, the plan to build a new main stand at Tynecastle, at a cost of around £50million, is being treated with increasing scepticism.
But, while questions have been raised over the financial viability of such a scheme in the current climate for the construction industry, a leading analyst yesterday said that UBIG did at least appear strong enough at present to prop up Hearts, whose current debt is around £15m. The latest set of company accounts for UBIG show that although the privately-held Lithuanian firm did report a loss for its activities outside of the financial and investment side of its business – the sector potentially most at risk from global economic conditions – it is currently making a profit at net level.
The balance sheet for the company, which was spun out of Romanov's main banking firm Ukio Bankas some six years ago, reveals a strong level of assets to back up the firm's position. The group has stakes in mining and aluminium companies across Europe as well as interests in two other football clubs, Kaunas in Lithuania and MTZ-Ripo of Belarus. Its net profits reached around £5.7m (25.5m Lithuania litas) in the first half of the year, according to the latest publicly available accounts for the six months to the end of June.
Charles Barnett, an accountant for PKF, who specialises in the football industry, said its balance sheet showed a strong level of assets to support any debts owed to the firm. "In Hearts' last set of accounts, it said that the directors were happy with the funding capabilities of UBIG to support it – and looking at the accounts, I can see why they would say that. Looking at their balance sheet, they have strong share capital and reserves which can meet their debts."
But another Scottish analyst raised questions over the viability of putting such a large amount of money into a construction project for a football club already so heavily in debt. The construction industry has experienced a massive slowdown in recent months.
Bryan Johnston, of Bell Lawrie in Edinburgh, said: "It seems UBIG is very much deal-driven, so being able to support a club like Hearts, with plans for a new stadium, would be quite an ambitious project. They would be likely to borrow against a project like the new stadium, but in today's climate, any borrowing on construction is risky."
Marijus Kalesinskas, the managing director of the SEB asset management company in Lithuania, said that the global economic downturn was starting to hit financial institutions such as Ukio Bankas in his country, but said there had been no specific fears over the bank's liquidity. "We are around 18 months behind western Europe in terms of how the credit crunch has affected us," he said. "If things get worse, Ukio Bankas will undoubtedly feel the pressure, although it is too early to tell."
