Hearts Attack 

MARTIN HANNAN 

IT WAS almost a throwaway remark made in the heat of a fiery debate in front of impassioned supporters, but the mere mention of the word "administration" could have serious repercussions for Hearts’ beleaguered chief executive, Chris Robinson.

Edinburgh property magnate Robert McGrail who owns 10 per cent of Hearts and is a leader in the fight to keep the club at Tynecastle, confirmed yesterday that he will report Robinson to the Financial Services Authority over his remarks. His intention is to have Robinson forced to stand down as a director and chief executive.

Leslie Deans, the Edinburgh lawyer and former Hearts’ chairman who, like Robinson, owns around 20 per cent of the club, said he would also consider making a complaint.

McGrail also wants a full investigation into the conduct of the chief executive, and revealed that he has previously "reported Robinson to the City" over his concerns at the way Robinson was running the plc.

Though neither McGrail nor Deans would confirm it, they are understood to be preparing questions for a forthcoming club EGM which will target Robinson’s income from Hearts - he has taken around £1m out of the club and earns a six-figure salary plus expenses and company car.

It is Manchester United writ small - powerful shareholders asking awkward questions of a plc’s officials, but unlike John Magnier and JP McManus at Old Trafford, the target of the shareholders’ wrath is not a revered manager but a chief executive opposed by many fans.

Robinson’s widely reported remarks on administration came at a meeting of 250 Hearts supporters in the Orwell Lodge Hotel in Edinburgh last Tuesday night.

In the middle of an impassioned debate about the future of Hearts, Robinson, who is also a director of the club, said: "If we bow to the pressure of staying at Tynecastle, you would have no team to watch, as the club would have to consider issues such as going into administration. Any administrator would sell Tynecastle. This board has had no viable alternative put to them."

Though administration is known to have been discussed in the boardroom, it was the first time in public that the chief executive had stated his view that Hearts might go into administration if the move to Murrayfield did not happen. The club faces a deadline of July 31 for repaying £767,000 to Scottish Media Group, and Robinson has said Tynecastle must be sold by then.

Heart of Midlothian is a public limited company listed on the main market of the Stock Exchange, and its directors and chief officers are therefore subject to strict rules about what can be said about the future financial performance of the plc.

These rules are known as Listings Rules and are enforced by the Financial Services Authority, and if a breach of the rules is serious, the FSA has powers to remove the club from the stock exchange lists and take action against individuals, up to and including criminal charges for serious offences such as insider dealing - there is no suggestion of a serious breach in Robinson’s case.

McGrail and Deans yesterday both spoke of their anger at his statements. 

"I was very surprised that he used the word administration in public," said McGrail, who last week asked Robinson to "name his price" for his shares.

"As a shareholder, I was even more taken aback by his admission that there was no contingency plan for the Hearts board to fall back on. I have raised the issue of his conduct with the City authorities in the past, but they have been disinclined to take action. But to openly state that administration is being considered is going much further than the rules allow, in my opinion.

"Having taken advice on the matter, I can confirm that I will be submitting a formal complaint to the regulatory authorities on Monday morning."

The relationship between Leslie Deans and Robinson, the two men who together bought control of Hearts from Wallace Mercer, has apparently deteriorated to an all-time low.

"I wouldn’t go in the same room alone with him," said Deans, who recently offered a £10m investment in Hearts if Robinson severed his connections with the club.

"I was shocked by his statements," said Deans, "and I am considering the position, though if I make a complaint he will just say I’m getting at him again.

"My understanding of the rules is quite clear. If he considered that the club’s financial position was going to deteriorate to the extent of administration, he should first of all have informed the Stock Exchange, then the shareholders, and then the club’s customers, its supporters. It is yet another attempt by him to intimidate the shareholders and supporters into accepting his plan to move to Murrayfield."

What makes Robinson’s position more difficult is that all British football clubs listed on the Stock Exchange were warned last August by the FSA’s director of listing, Ken Rushton, about public pronouncements on their financial condition.

Rushton stated: "It is important for listed football clubs to take measures that ensure they remain in compliance with their obligations under the Listing Rules."

The relevant rules are sections 9.1 and 9.2 which state that a company must notify a Regulatory Information Service of the Stock Exchange "without delay" of any major new developments in its sphere of activity which are not public knowledge and which may affect its share price.

Such developments include "a change in the company’s financial condition, the performance of its business, or in the company’s expectation as to its performance".

This latest round in the war of words between McGrail, Deans and supporters’ organisations on one side and Robinson on the other has intensified just as it becomes clear there is genuine demand for Tynecastle as a prime site for housing development.

A bid of £12m has already been turned down by Hearts, and Cala Homes have already indicated their interest, though the Miller Group is said not to want to be involved. One developer named in Edinburgh yesterday as a likely bidder was Applecross Properties, who were embroiled in controversy over the development of part of Meggetland. Former Lord Provost Eric Milligan supported their Meggetland bid and is arguably the city’s most famous Hearts supporter. He is known to be close to the club’s board.

McGrail maintains the sale of Tynecastle would be unnecessary if he could buy out Robinson, but accused the chief executive of being "greedy" in his demands.

Robinson and Deans bought control of the club from Wallace Mercer for an initial £500,000 each plus a similar sum paid by both men later in the transaction. Mercer himself had bought in to Hearts in the early 1980s when the club faced its "worst crisis ever" with debts of £300,000 - they now stand at £17.6m.

At the beginning of the 2002-2003 season, the shares were worth 63p, and when SMG invested in the club in 1999, they were priced at 111p. Last week the shares were trading at just 17p, valuing Robinson’s stake at just over £430,000.

According to McGrail, when he first offered Robinson 60p per share, the chief executive demanded £1.10p per share - equivalent to around £4m today - though Robinson in turn has steadfastly maintained that McGrail has "not delivered what he promised" and has rejected the latest overtures.

"I am not surprised that he tries to disparage me," said McGrail, "because he himself doesn’t have the wealth to sort out the problems at Tynecastle, and now I want the whole issue of the way he has run the company to be examined."

McGrail also maintains that Edinburgh Council are more sympathetic to his plans for Tynecastle than has previously been reported.

Despite press reports that SMG sees the move to Murrayfield as a fait accompli, the company’s director of corporate affairs, Calum Spreng, confirmed yesterday that the company was willing to listen to alternative proposals.

Nor are Robinson’s plans to move to Murrayfield a "done deal" according to the SRU. While emphasising that they would welcome Hearts and the income their rental would generate for the depleted coffers at Murrayfield, SRU sources say that the rental for the stadium will be set at a realistic rate, understood to be a six-figure sum per average fixture.

Crucially, though, Lothian and Borders Police have not yet been consulted on the move, and sources say it is unlikely to go through on a nod and a wink. They also added that it would be "significantly more expensive" to police Hearts games at Murrayfield than at Tynecastle. This directly contradicts Robinson’s assertion that policing costs would decline after such a move.

Licensing problems such as the sale of alcohol in corporate areas are also understood to be a potential problem, and despite hints to the contrary are extremely unlikely to be resolved before the end of the season.

As ever, Robinson has mounted a robust defence of his position. He stated that the club was advised by council planners two years ago that redeveloping Tynecastle would be impossible on planning grounds, and confirmed that he will tell the SPL’s board later this month that, subject to shareholder approval at the EGM, Hearts will play at Murrayfield next season.

Robinson dismissed the issue of his remarks about administration, saying: "There’s no basis for a complaint against me. It is well-known that if we don’t move to Murrayfield then we have to consider whether we can consider trading in our current position."

Admitting that the club had to make the move to Murrayfield "more palatable" to the support, Robinson emphasised that the club was "not viable" at Tynecastle where it would face further losses of £2.5m next season and that the key issue was to stop the debts rising.

Asked if he would sell his shares and quit Tynecastle at some stage in the face of constant abuse from supporters, Robinson replied: "I am not a masochist. No-one likes abuse but there is a job to be done and I will do it." 

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