TIGHTEN YOUR BELT VLAD

HEARTS owner Vladimir Romanov has been told to cut his spending as Tynecastle debt levels get set to hit £50million.

Record Sport revealed yesterday that Hearts are £28.4m in debt to the year ending July 31 2006 after posting losses of £5.2m during Romanov's first full year in control of the club.

Scotland's leading football finance expert has warned the Lithuanian tycoon his current business model is unsustainable after the club's debt grew beyond the worth of the land on which Tynecastle stands for the first time.

However, Romanov has moved to assure fans he is in for the long haul, even as he prepares to add another £20m to his club's bottom line.

Hearts plan to embark on an ambitious redevelopment programme for Tynecastle, if the council gives the go-ahead, which will nudge the debt towards the staggering £50m figure.

Analyst David Glen, of leading accountancy firm PricewaterhouseCoopers, has warned Romanov it's time to stop running his club like Chelsea chief Roman Abramovich, especially as £10m is now being paid out in salaries each year, the same as Hearts' record turnover.

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Glen said: "The figures are not surprising given the amount of money Hearts are paying out in wages. The bottom line is that any business can't keep operating with this structure as it's not sustainable in the long term.

"It's the same scenario, albeit in a mini version, of how Chelsea operate with Roman Abramovich.

"Hearts are going against the conventional business model as every pound of their income is being spent on salaries. Most clubs across the board can sustain paying wages at 60 per cent of their turnover but to run at 100 per cent isn't sustainable year on year.

"Hearts have two ways of managing the debt. They can increase income even further or cut the wage bill to a more sustainable level.

"It may be that Romanov is looking to tackle the debt by selling some of the assets. Paul Hartley has already moved to Celtic for £1.1m and Craig Gordonmay be next to leave for amounts quoted around the £4m-5m mark.

"This year's figures look particularly painful and the danger comes if Romanov decides that enough is enough and then leaves the club in a weak financial position."

But Romanov insists he is not walking away and that debt levels are in line with his expectations. Most of Hearts' debt has been transferred to the Ubig group, in which Romanov is a major shareholder, and at a lower rate of interest than asked by previous bankers HBoS.

Romanov's spokesman Charlie Mann said: "The main shareholder wants to develop the club, not earn interest from it.He has no intention to call for the repayment of debt, therefore the club is in no serious financial trouble."

Romanov has pointed to the positives in the financial report, to be presented to shareholders at the agm on February 27. He believes the rise in turnover to record levels of £10.2m prove there is potential that can be realised still further in a bigger stadium with plans, in the first instance, to redevelop the Main Stand at Tynecastle to increase capacity to 26,000.

Mann said: "Income streams generated from increased capacity after redevelopment, including ticket sales, sponsorship and commercial revenues, will help boost the profitability of the club.

"The current levels of debt are manageable and will be reduced as the club progresses and moves forward. This is a long-term project and it will be a success. Romanov has said he'll see it through and he will."

Taken from the Daily Record