By Paula Murray
Fresh fears were expressed over the future of troubled Hearts FC last night after it emerged the club owner’s Lithuanian bank is in the grip of financial turmoil.
The SPL side has been embroiled in crisis all season with cash-flow problems that have seen players go unpaid and Russian businessman Vladimir Romanov try to sell the club.
Now as club officials seek new potential suitors, a full picture of the dire predicament is emerging from eastern Europe.
Accounts posted in Lithuania show Mr Romanov’s bank, Ukio Bankas, which sponsored Hearts for a number of years, has gone from making a near £17million profit in 2008 to losses of more than £9million last year.
While the third quarter results for 2011 show the losses have been reduced to just £1.24million, share prices have plunged more than 52 per cent over the same period.
Now as club officials seek new potential suitors, a full picture of the dire predicament is emerging from eastern Europe
Lithuania has been hit by a deep recession – among the world’s worst – which has resulted in one of the major banks going out of business. The Baltic nation may need as much as a €1billion EU bail-out next year to clean up the mess left by the collapsed Bankas Snoras AB, which closed earlier this month.
The finances of Hearts have come under the spotlight, after it emerged players and staff were regularly being paid late. Last week one senior player even said he had been forced to take on a part-time job in order to pay bills and ensure his family could mark Christmas.
A number of the first-team squad approached the PFA Scotland union to formally complain to the Scottish Premier League. Players were paid what was owed to them from November 29 days late, but there is still no word on whether their December wages have been honoured.
Mr Romanov, who is Russian but has lived much of his life in Lithuania, took over Hearts in 2005 and bankrolled them to Scottish Cup success in 2006.
Five years on and the 64-year-old, who owns the famous K-19 Widowmaker submarine and won Lithuania’s version of Strictly Come Dancing in 2007, has decided to put the club, currently more than £30million in debt, up for sale for £50million.
Yet very little is known about his actual wealth with many analysts saying there is mystery surrounding his business dealings. Based in the city of Kaunas, he is chairman of the private investment group UBIG and also 53.1 per cent shareholder of Ukio Bankas.
Two weeks ago leading ratings agency, Standard & Poor’s, gave Ukio Bankas a “stable” outlook, but a senior financial journalist in Vilnius said it was impossible to know how well, or badly, it was performing.
She told the Sunday Express: “His companies are not listed so there is no need to post results.
“Lithuania was hit by severe recession in 2009, and recovery has been slow. Anyone with a large interest in banking and construction, like Mr Romanov, will have felt the effects although I doubt we will find out just how severe.”
Two years ago the tycoon still featured in the top four of Lithuania’s rich list but has been excluded from the wealthy club since then because, according to Lithuania Tribune magazine, it was “difficult if not impossible” to calculate the worth of his assets.
The year before the Sunday Times Rich List had estimated his wealth at some £200million.
After months of speculation about Hearts’ finances, club officials finally admitted last week that the global credit crisis was making it difficult to operate. In an online statement on Thursday, director Sergejus Fedotovas conceded the “economic reality” facing the 137-year-old side.
He said: “A very big part of Europe is in trouble now. Very many clubs do not pay their players’ salaries for months. It is not an excuse – it is a consequence of economic reality.
“We are living in countries that cut employment and pensions, and increase taxes. Businessmen reconsider strategies.
“If we want to survive we need to adapt to a new environment and unfortunately with an element of shock. The transition to a safer situation is painful, but is inevitable.”
QC Paul McBride, who has volunteered his services to help the struggling players, insisted the situation was a “full blown crisis” that affected more than football.
He said: “The problem is, who knows with Hearts? Who knows what Romanov is playing at? We’ve no explanation why they’ve not been paid at all as I understand.
“We initially had some excuses about bank transfers and then the weeks went on and on and the excuses got more ludicrous until finally stopped altogether with him saying they are not getting paid.”
Mr McBride added: “Everyone is experiencing financial uncertainty even when they are getting their salaries, but when you’re not getting them and you’ve got children, you’ve got Christmas coming, what do you do?”
Officials at Ukio Bankas yesterday insisted the bank was moving in a positive direction.
Courtesy of the Scottish Sunday Express