Hearts' debt reaches £37m after losing another £8m

HEARTS will announce a record debt of around £37 million in the next ten days, after losing £8 million in the year to the end of July 31, 2007. The figures will be in the accounts for last year, which will be issued to shareholders along with notice that the annual general meeting is to be held in late April.

As club spokesmen are not allowed to comment on financial matters until the legal requirement to inform shareholders is met, no-one from Hearts was able to explain yesterday exactly why the debt had risen so steeply from last year's figure of £28.4 million. The wage bill, which had been around £10 million, is thought to have gone up to an extent, but other costs have to account for the bulk of the loss.

Work on planning a new main stand and office development has cost £1 million so far. Other causes of the loss are expected to include interest to creditors.

Hearts are expected to point in their forthcoming letter to shareholders that the new debt figure falls well within the £40 million borrowing limit which was agreed at last year's agm. Although the cost of the new buildings has been estimated by the club at £51 million, there is no immediate plan to raise the borrowing ceiling. That is because the club hopes to attract external investment for the project from partners such as hotel groups.

Part of the debt will be offset by the sale of goalkeeper Craig Gordon to Sunderland for £9m in August, just outside Hearts' last financial year.

George Foulkes, the former chairman of the club, said that, while certain issues remained of concern, the forthcoming figures should not provoke despair among the Hearts support. "It's cause for concern, but not for panic," he said.

"As long as (majority shareholder] Vladimir Romanov and the Ukio Bankas group are behind the club, the future is okay financially. However, it shows the expenditure needs to be brought under control.

"Receipts from the sale of players should be fully applied to the club's finances. And the sooner we get the new stand up and running, with its additional revenue-generating capacity, the sooner we'll be able to start dealing with the debt. The accounts are not transparent, and they are complicated by the arrangements with Ukio and with Kaunas, so you can't assess them in the way you usually can with a UK company."

Foulkes, an MSP and member of the House of Lords, said he thought the majority of supporters would not be unduly disturbed by the new figures, but suggested they required reassurance if they were to go on thinking their club was in safe hands. "I think the fans will see this as just one part of a continuing saga, but they do need reassurance on two issues.

"First, the New Year promise that Hearts would appoint a UK-style manager has to be fulfilled. And second, there has to be a start to the stand. We know that's not going to happen next season. But if we have a new manager for next season then work on the stand begins a year after that, we will at least have two positive developments one after the other."

A section of the Hearts support has lost faith in Romanov following a frustrating season on the pitch – one which may end with the club failing to finish in the top six of the SPL. Others, however, retain faith in the Lithuanian financier, believing that as he has a controlling influence on the club and on the Ukio group, Hearts' debt is really only money that he owes to himself.

That belief, however, only holds water for as long as Ukio can afford to sustain the Hearts debt. Foulkes warned that matters could become difficult for the club if, for instance, the bank needed to raise new funds but could not find a lender.

"With the sub-prime crisis in the USA, and Northern Rock here, one worries about banks," he added. "Also, for all that Vladimir Romanov has not had the health problems of (Gretna owner] Brooks Mileson, the Gretna story shows you cannot rely on one person."