Vlad the Mad? Part 1: Romanov's motivations

Much of this blog has, so far, focused on events at Norwich City: partly because of the dramatic changes going on there in recent weeks, and also, given my Oxford base, because of my closer proximity to them. But at this point, I'm going to turn to the other club which I'm just as passionate about: my Scottish team, Heart of Midlothian. Hearts, of course, have had a pretty high profile over the past year or so: at first, such was the breathtaking start we made to last season, it genuinely looked as though the strangehold of the Old Firm on the Scottish game could be broken at last. But then, with Hearts still top of the league, manager George Burley abruptly parted company with the club - and was soon followed by chairman George Foulkes and chief executive Phil Anderton.

As a result, the attention of fans and the media across Britain turned towards the man running the club: Hearts' Lithuanian owner, Vladimir Romanov. Romanov, it was said, had interfered with Burley picking the team and forced him out; and when Graham Rix, the new manager, lasted only a few months before himself being dismissed, it all added to the stereotype rapidly gaining ground of an Eastern European megalomaniac, intent on getting his own way at all costs. Moreover, many inevitably posed the question as to just what Romanov could hope to achieve at Hearts - a club which, while enjoying an immensely proud tradition, continues to be dwarfed and dominated in terms of fanbase and resources by the twin behemoths of Celtic and Rangers.

At times, Romanov has been depicted as an asset stripper, out to destroy the club - even when he has no discernible motive for doing so, and all the evidence points in a very different direction. It is a pity that many fans and observers have allowed their prejudices about a successful businessman from, to paraphrase Neville Chamberlain, "a faraway land of which we know little", to obscure the facts - and still more curious that the Scottish footballing press have indulged in an easy, overly simplistic caricature of his motives, rather than make a genuine attempt at piecing together the evidence. For it's all out there - in Romanov's past, in statements made by close colleagues of his, and elsewhere: and it's all just a matter of joining the dots. Part 1 of this four-part piece on his stewardship will look at his background, and the reasons for his investment in Hearts; before we go on to begin examining the various controversies of his time at the helm in Part 2.

Romanov first became involved in football in the early 1980s, by helping to sponsor FC Banga, a local Lithuanian works team. In time, by paying higher wages to attract the best established players as well as talented youngsters, Banga - which morphed into FB Kaunas around the time of the break-up of the Soviet Union - became the dominant club in Lithuania. But along with MTZ-Ripo of Minsk, another club with which Romanov (together with his increasingly successful bank, UKIO) developed close links, Kaunas found themselves hitting a glass ceiling, unable to achieve anything more than domestic hegemony in a country where basketball remains far and away the most popular sport.

So, together with the young President of the Lithuanian Football Federation, Liutauras Varanavicius, Romanov hit upon a plan. By buying a club in Scotland, he and Varanavicius could aim to showcase and develop young Lithuanian talent in a country with a far higher footballing profile: and by selling the best players on to clubs in major European leagues (which Scotland, unlike Lithuania, has close geographical proximity to), he could look to reinvest in and gradually grow the club he had bought. Moreover, UKIO's investment arm, UBIG, would look to help redevelop the stadium - just as it either already had done or was seeking to do in Romanov's home city of Vilnius and in Minsk, in order to help further MTZ-Ripo's prospects.

New, shiny, state-of-the-art football stadiums and facilities don't just enable a club to progress by attracting better players, and more fans: they also provide an opportunity for investment groups like UBIG to, in conjunction with local government, develop the surrounding areas by building flats, shops, offices, leisure facilities and so on. That is what UBIG did in Vilnius, and is also what they will be looking to do at Hearts: whether by redeveloping Tynecastle, or moving elsewhere. And Edinburgh, of course, boasts some of the highest land values in Europe.

It is true that Romanov made approaches to Dundee, Dundee United and Dunfermline before turning his attentions towards Hearts; but in any case, both the Jambos' traditions and geographical location mean they have far more potential as a club. And of course, with Lithuania having recently joined the European Union, it makes sense for UKIO to develop business links with the UK too - with Edinburgh providing a far better opportunity for doing this than any other city in Scotland. To that end, UKIO will shortly be opening its first branch in Edinburgh: it's just another step in Romanov's overall plan.

All of Romanov's existing football-related investments were consolidated into one fund before he took over at Hearts: the idea behind this being to use the assets as collateral in order to help fund further investments. I don't have an exact figure, but it's clear that Romanov's personal fortune comfortably exceeds a quarter of a billion pounds; and not difficult, therefore, to see how easy it is for him to raise further funds.

So that may help explain some of the commercial rationale: what of the footballing ones? Well, the ultimate aim is to turn Hearts into a profitable, self-financing club. Given the lack of resources in the Scottish game, not to mention the inherent disadvantages of any club outside the Old Firm (whose dominance is based as much on unique factors of history and religion as anything else), this might well seem deeply far-fetched. How can a club like Hearts seriously hope to first compete with and eventually outstrip the Old Firm without spending the kind of money it simply cannot afford? How does any club compete with others boasting three times its fanbase without chronically overstretching, and suffering the pernicious consequences it brings?

Here's how. Shortly after Romanov took over, Hearts briefly embarked on a number of signings of players previously well outside their wage bracket. The likes of Rudi Skacel, Edgaras Jankauskas, Takis Fyssas and Roman Bednar arrived at the club in order to both stimulate interest amongst the fans, and dramatically improve the team - but they are not the kind of buys which will be made on a regular basis. Such short-term investment was critical to enable the team to break through previous barriers, and compete near the top of the Scottish league - for the minimum aim each year for Hearts is to qualify for European competition. Europe brings in vastly increased gate receipts, and significant television revenue: it is an all-too-rare source of free money. Moreover, of course, it increases a club's profile, helps it attracts better players, not to mention major sponsors too: Hearts' UEFA Cup game against Schalke, for instance, was watched by more German fans than there are adult males in Scotland! Hardly surprisingly then, it's in Europe that the big money is made.

Hearts' early European exit this season, both from the Champions League qualifiers and the UEFA Cup before its lucrative group stage, was therefore inevitably seized upon by the media and rival fans as a sign that Romanov's plans were crumbling: surely, the higher earners would have to be released, and Hearts learn to accept their place in the world by living within their means? But while it was hardly an ideal outcome, and revenue the club could certainly do with had been lost, the key is that Hearts are in no danger whatsoever: Romanov's immense personal fortune means he can occasionally bail us out when inevitable setbacks occur, but there is no short-term fix being attempted - for the future will be built, and not bought. Of course, one or two higher-grade signings will occasionally be made, out of Romanov's own pocket if necessary - again, in order to stimulate interest, and keep the team near the top of the league, as well as investments to be sold on for considerable profit to bigger clubs further down the line - but the real key to Hearts' future plans is in youth development.

Hearts' extensive youth system now scours not just the whole of Europe, but Canada and Australia too. If the club is successful, it will be able to attract more and more talented young kids, with the first team effectively driving the youth academy; and moreover, if youngsters don't fit in for whatever reason at Hearts, they may be able to do so at other clubs owned or part-owned by Romanov such as Kaunas and MTZ-Ripo. We have already seen a sizeable number of players loaned to Hearts from Kaunas; it is quite likely that, in time, others will head in the opposite direction too. Ultimately, all Romanov's clubs will be able to share in an increasingly large pool of talent: with the best players at Kaunas and MTZ sold on for considerable profits to bigger, more established leagues in, say, Russia, Ukraine or the Czech Republic; and the best players at Hearts sold onto bigger clubs in, say, England, France, Belgium or Holland.

Recruiting young players is, if done correctly, not only cheap at source, but the provider of huge amounts of revenue if these players go on to become established and successful. Hearts will only be able to wrest the SPL title off the Old Firm by building the club from grassroots upwards - for success will not be bought at a loss. There is simply no point: it would store up huge trouble for the future, and be totally at odds with everything Romanov has put into practice in his business career to date.

And ultimately, of course, all the above factors go together and feed off one another. Redeveloping the stadium attracts new sponsors and business partners, enabling UBIG to expand; provides a focal point for the local community; and enables Hearts to attract better players with the promise of state-of-the-art facilities. Developing the youth academy enables Hearts to recruit more and more talented youngsters, with the aim of ultimately turning them into successful players which will both benefit the team on the park, and help the club continue to build off it by being sold on to more prominent leagues. The more successful Hearts are, the more prominent Romanov's bank becomes, and the more UBIG is able to further expand its assets and interests: it's a win-win situation. And all done at no risk to the club's future, and with its profitability being key: so unlike in the past, there's no danger of it overreaching itself either.

Quite why this has all proved beyond the collective wits of the Scottish footballing media, I cannot even begin to speculate. For although I found it somewhat complex to begin with, actually, it's pretty simple really. One can only assume that it's a whole lot easier to sell papers with stories about Mad Vlad's conspiracies and megalomania than it is to put together a rather more sane explanation of his motivations. Of course, the Scottish media have also been busy discussing Romanov's predelictions for interfering with team selections, not to mention his many rants at the press and officialdom: and it's to these events and controversies which we now turn in Part 2.