Vladimir Romanov's Ownership of Heart of Midlothian F.C. - Background and Takeover

Background and Takeover

Hearts, like many other Scottish Premier League clubs, ran into severe financial difficulties during the early part of the 2000s. An assessment by PWC in the autumn of 2003 found that Hearts, along with four other SPL clubs, were technically insolvent. Dundee and Livingston subsequently went into administration, while Hibs and Dunfermline both took drastic measures to balance their finances, cutting their player budgets severely and selling assets. Hearts also cut their player budget and, more significantly, proposed to sell Tynecastle to eradicate the club's debt. The fans protested against the latter course of action, forming a group called Save Our Hearts.

Hearts made a deal with the Scottish Rugby Union to use Murrayfield Stadium in order that they could sell Tynecastle. Originally this was meant to happen during the summer of 2004, but was then delayed for a season. During this period, Hearts were a public limited company. Ownership of the club was very fractured, with no individual shareholder owning more than 20% of the club. This meant that minority shareholders, including supporters' groups and the McGrail brothers, could realistically hope to acquire other minority stakes in order to block the proposals to sell Tynecastle. In August 2004, Hearts made a deal to sell Tynecastle to Cala Homes (a housing developer), but the deal had an escape clause which meant that Hearts could withdraw from the deal before 31 January 2005 if a viable alternative could be found.

Vladimir Romanov had shown interest in investing in Scottish football for some time because he wanted to see whether Lithuanian footballers could prosper abroad. Scottish football clubs were particularly ripe for takeover due to their weak finances and corporate structures. He made approaches to Dundee United, Dundee and Dunfermline, but these were all rejected. He opened negotiations with the board of directors to invest in Hearts during August 2004. Romanov offered the prospect of the club staying at a redeveloped Tynecastle, which was very attractive to Hearts supporters. Board chairman George Foulkes pleaded that the shareholders should not scare Romanov away by demanding too much for their shares.

Chief executive Chris Robinson, who had been the chief proponent of the necessity of selling Tynecastle, agreed at the end of September 2004 to sell his 19.6% stake to Romanov. Romanov called an extraordinary general meeting in January 2005 so that the club could pass a motion to exercise the escape clause in the deal with Cala Homes. The backing of Leslie Deans and the McGrail brothers meant that the motion was passed with over 70% support. The sale of Robinson's shares was completed on 2 February 2005 after Romanov made financial guarantees that the club could continue to trade without selling Tynecastle. This sale increased Romanov's stake to 29.9%, giving him effective control of the club. Romanov's takeover was welcomed by a fans representative.