Heartbroken

Heart of Midlothian have become the tenth senior Scottish football club to experience an insolvency event since the turn of the century.  This is significant when you have to be in your 50s, at least, to remember the last such event in the 20th century, Third Lanark, in 1967.  Since 2000, the roll-call reads: Morton, Clydebank, Airdrieonians, Motherwell, Dundee (twice), Livingston (twice), Gretna, Rangers, Dunfermline, and now Hearts – or almost a quarter of senior Scottish clubs.  Anyone who thinks our game isn’t in crisis isn’t paying attention.

Two of those clubs are no longer senior clubs, but at least they still exist at some level, unlike Third Lanark, who disappeared completely.  Could the same thing happen to Hearts?

Hearts are believed to owe £25 million to their former Lithuanian owners - £15 million to their bankers, Ukio Bankas, and £10 million to their parent company, UBIG (Ukio Bankas Investment Group).  The actual total debt could be much more, even before taking accout of other liabilities, as both these entities are no longer trading, and their administrators/liquidators will play a key role in the future of Hearts.

The timing of this is especially difficult for the Hearts administrator, as close season is a period when there is little income.  The administrator has said they need to sell 3000 season tickets in the next two weeks, just to meet immediate commitments, and redundancies have begun for both players and other staff.  One of the problems is Hearts no longer own Tynecastle – Ukio Bankas hold it as security for their debt.  Another is their players have little re-sale value, although it is the small hope of player sales that has prevented them all being made redundant already.

It looks like it will be hard for Hearts to attract a buyer and achieve a Creditors Voluntary Agreement, both of which they need within a few weeks, if they are to continue in the SPL.  It looks a distinct possibility that they will be liquidated, and according to precedents expelled from the SPL, raising the questions of whether a new incarnation of the club could be admitted to the ranks of senior Scottish football, and if so at what level?  It is also a distinct possibility that they have played their last game at Tynecastle.

The knock-on effect of the loss of the second biggest travelling support in the SPL may impact further on other clubs, especially those already in financial difficulties, such as Kilmarnock, Aberdeen and Dundee United. For second tier clubs such as Accies, it opens up further opportunities for access to the top flight.  If Hearts drop out, Morton may find themselves in next year’s SPL.  From next season, 2nd to 4th in the second tier will have play-offs with the 11th place club in the SPL, but at the current rate, there could be another vacancy every season.

This is not to indulge in schadenfreude at the expense of other clubs’ misfortunes, but to acknowledge that many of the old certainties no longer apply.  With incomes falling, no league sponsor, and uncertainty over the terms of the SKY TV deal, it is unlikely we have seen the last insolvency, and few (if any) clubs have a secure future.  If ever there was a time for a combination of financial prudence and marketing innovation, this is it.