Edinburgh Hotel space - kinda Hearts related

[PTBCAL]

Noticed a letter in last nights Evening Hobo. Might put a different slant to the posters on here who claim that there are enough hotels already in Edinburgh and that the proposed hotel at Tynecastle would be a white elephant.

 

More hotels are vital for a healthy tourism industry

 

We are taking this opportunity to voice our support for proposed plans to redevelop 41-43 Craigmillar Park as a hotel ? which has been recommended for approval by the council ? and will go before councillors tomorrow.

 

The tourism industry is of key importance to the future development of Edinburgh's economy and the proposed hotel is an important development that will support tourism in the Capital and make a valuable contribution to the strategic goal of increasing the economic benefits brought by tourism to Edinburgh and to Scotland.

 

It will also go some way to supporting the national ambition of increasing annual revenue (in real terms) from tourism by 50 per cent within ten years, and underlines the need for additional bed spaces if Edinburgh is to realise its growth ambition for tourism, one of the city's key economic sectors.

 

The strategic aim for an additional 4000 hotel bedrooms has been identified in the Edinburgh and Lothians Accommodation Audit, and we are still well short of achieving this target, especially in the 3-4 star end of the market. This high quality hotel development will go some way towards achieving that aim.

 

In the current difficult economic environment the proposals for this hotel development represent a significant investment of around ?10 million in Edinburgh's hospitality sector, providing employment opportunities for those seeking jobs in the industry and opportunities during the development stage for a currently under-pressure construction sector.

 

Iain Herbert, chief executive, Scottish Tourism Forum;

Graham Birse, deputy chief executive, Edinburgh Chamber of Commerce;

Bob Cotton, chief executive, British Hospitality Association

[Coco]

I'm not sure what posters you mean, though there are some who work in the hotel industry I think.

 

I don't know the nitty gritty of hotels in Edinburgh, but with most global economies in slowdown, real incomes pressure in the UK, pressure on corporate spending on jollies and conferences, disappearing 'cheap airlines' and the vast increase in numbers of hotels in Edinburgh of the past few years I wonder whether further continued linear growth is likely in the future. There are all sorts of people making all sorts of predictions on all sorts of things ... they are only sometimes close to being right.

 

Just as an aside, on the face of it it would seem that all the people in the article would depend on cheerleading on a growing hotel sector for their employment.

 

My concerns about the Tynecastle development are about the funding availability and cost, the demand for the office space and UBIG's lack of track record on building its model projects. There would always be demand for hotel beds at some price - there are worse locations for hotels than Tynecastle. But it is hard to see the development making enough money to pay for the new stand. And if it doesn't or UBIG doesn't pay for the stand - then no money for new players for a long time.

[Jammy T]

Edinburgh will nearly always need more hotel space

 

I think there have been recent reports that it also needs around 80,000 more homes over the next decade

 

If builders built them now though, they'd likely go bust before they were sold.

 

Its just about the timing in my eyes.

 

It wouldnt make much sense to aim to have a load of retail and hotel space rushed through to be open in 2 years. It would make more sense that this space be ready in around 5 years.

 

That said, it may be possible that the construction programme be done in phases.

 

Phase 1 being the stand / hotel, phase 2 being the retail space.

 

It will be interesting to see how this pans out, but as I've always said I wouldnt criticise Romanov for stating that a delay in starting this build had to be factored in because of the economy.

[Coco]

Have now read the rumour on the other thread suggesting that Hearts won't bear the debt on the stand redevelopment as external investors are going to cover it.

 

That would be good news. But would expect that those external investors would expect a return on their investment.

[Jammy T]

Have now read the rumour on the other thread suggesting that Hearts won't bear the debt on the stand redevelopment as external investors are going to cover it.

 

That would be good news. But would expect that those external investors would expect a return on their investment.

 

But is it not the case that we have been presented with the spin that the debt we have isnt really ours, it is a group debt?

 

I'm not worried about the debt. Whether it is ?20m or ?80m the end result of us defaulting is the same (both levels render us essentially "bust"), and we have told not to worry about it in any event.

[Drylaw Hearts]

I still maintain that IF, and it is a big IF, this development goes happen to go ahead that UBIG will own Tynecastle (including whatever else is in this project) and we will be debt free and pay rent to VR and his crew.

 

Heart of Midlothian Football Club would be put up for sale on completion.

[topcat]

I still maintain that IF, and it is a big IF, this development goes happen to go ahead that UBIG will own Tynecastle (including whatever else is in this project) and we will be debt free and pay rent to VR and his crew.

 

Heart of Midlothian Football Club would be put up for sale on completion.

 

I don't normally do this but

 

SOURCE?

[JamboAl]

I still maintain that IF, and it is a big IF, this development goes happen to go ahead that UBIG will own Tynecastle (including whatever else is in this project) and we will be debt free and pay rent to VR and his crew.

 

Heart of Midlothian Football Club would be put up for sale on completion.[/QUOTE]

 

But UBIG already own HMFC and can put us up for sale any time.

Would you have preferred the Robinson scenario?

[PTBCAL]

I still maintain that IF, and it is a big IF, this development goes happen to go ahead that UBIG will own Tynecastle (including whatever else is in this project) and we will be debt free and pay rent to VR and his crew.

 

Heart of Midlothian Football Club would be put up for sale on completion.

 

That is how I see it except not the bit about being put up for sale.

 

UBIG own the redevelopment and receive all income from this. New HMFC LTD (as an example) own the stadium and Hearts pay a rent and receive a agreed % from gate receipts and marchandising etc...

 

Don't have aproblem with this scenario.

[blairdin]

I still maintain that IF, and it is a big IF, this development goes happen to go ahead that UBIG will own Tynecastle (including whatever else is in this project) and we will be debt free and pay rent to VR and his crew.

 

Heart of Midlothian Football Club would be put up for sale on completion.

 

Is that scenario such a bad thing? I don't think so.

 

Hearts are sold to new owners. Likely the new owners would be tied into a long term lease agreement to base the club at Tynecastle, hence UBIG get a return on their investment in us.

 

Hearts, under new owners, start in the black and continue to budget their playing staff within their means. No more ridiculous debt.

 

I think our share of Riccarton is more important to the club than Tynecastle and this is somethine we should insist the club retain if we are split from the ground.

[PTBCAL]

Have now read the rumour on the other thread suggesting that Hearts won't bear the debt on the stand redevelopment as external investors are going to cover it.

That would be good news. But would expect that those external investors would expect a return on their investment.

 

Coco - what thread is this?

[Coco]

Coco - what thread is this?

 

Bizarrely enough - on 'Csaba wants more from the reserves' thread

[PTBCAL]

Bizarrely enough - on 'Csaba wants more from the reserves' thread

 

Cheers.

 

Can't imagine how I missed it.

[Glamorgan Jambo]

I think there will be plenty of demand for a hotel at Tynecastle, with the proviso of it being aimed at the correct part of the market. I read somewhere that mid range budget hotels (e.g. Premier Inns) are the most profitable types of hotel out there... they appeal to a crossover of business travellers on a budget and individuals/families and are pretty much full all the time. My only concern is a combination of the grandiose ambitions of UBIG and their chequered history on delivering on any of their projects (stadium developments, Ukio Bancas branch, RBS building fiasco in St Andrew square etc). Hopefully attracting the right partners to the development will see things go according to our wishes.

[Drylaw Hearts]

I don't normally do this but

 

SOURCE?

 

No source - more of a hunch.

 

 

[Drylaw Hearts]

 

Heart of Midlothian Football Club would be put up for sale on completion.[/

 

But UBIG already own HMFC and can put us up for sale any time.

Would you have preferred the Robinson scenario?

 

I'm fully aware UBIG own Hearts !!

 

UBIG could not find a buyer for Hearts in it's present state.

 

For the record :

 

No I would not have prefered the CPR scenario.

 

I will delighted if this pans out the way I think it will.

 

If it means getting rid of VR and leasing Tynecastle - I'm all for it.

[Coco]

FT today in an article headlined Moscow facing lending crisis:

 

"There are real estate developers who can't finish projects. They can't get money from anyone, state banks included ... no one was ready for the lack of cash to manifest itself so quickly ... nobody has any money".

 

Funding for real estate developments is disappearing very quickly across the world. The above quote is about domestic Russian investments, but there have been suggestions in the past that investment in Tynecastle could come from that 'direction'. It would be a real coup for UBIG to get the finance for the development in the current conditions in property investment.

[Geoff Kilpatrick]

If DH's scenario pans out, then we will truly be a bigger version of h**s, with their myriad of holding companies surrounding that club.

 

Anyway, I'm still not sure about this hotel space issue in Edinburgh. Apart from three major events each year (Six Nations, Festival and Hogmanay) is Edinburgh really that short of hotel space?

[PTBCAL]

If DH's scenario pans out, then we will truly be a bigger version of h**s, with their myriad of holding companies surrounding that club.

 

Anyway, I'm still not sure about this hotel space issue in Edinburgh. Apart from three major events each year (Six Nations, Festival and Hogmanay) is Edinburgh really that short of hotel space?

 

Geoff - my original note seems to suggest it does.

[Jammy T]

Geoff - my original note seems to suggest it does.

 

Although it is a 10 year estimated requirement, not an immediate one.

 

eg Edinburgh doesnt immediately need 4000 more hotel rooms immediately, if it got those the market would be oversupplied and there would be a heck of a lot of empty rooms

 

I am not sure why there is so much resistance to the fact that the economic climate over the next 2 or 3 years means:

 

1. financing major projects such is this is very much more difficult and expensive (if not impossible) and even then if the financial hurdle is jumped,

2. obtaining occupants of commercially related property forming part of these projects will be difficult if not impossible in the short term

[Ally Alexander]

Good possibility that UBIG will own the Hotel/office complex outright rather than through the club. In return the club's debt wil be reduced further if not wiped out. However, for Hearts to surmount any challenge to the OF, even with the increased capacity, they need non-football related revenues and this would mean obtaining income from non-playing day hospitality and the hiring out of the stadium for concerts, etc. Probably still not sufficient.

 

Also, interesting article in a recent Scotland on Sunday's business section which stated that despite the economic download Edinburgh required more office space!

[redm]

FT today in an article headlined Moscow facing lending crisis:

 

"There are real estate developers who can't finish projects. They can't get money from anyone, state banks included ... no one was ready for the lack of cash to manifest itself so quickly ... nobody has any money".

 

Funding for real estate developments is disappearing very quickly across the world. The above quote is about domestic Russian investments, but there have been suggestions in the past that investment in Tynecastle could come from that 'direction'. It would be a real coup for UBIG to get the finance for the development in the current conditions in property investment.

 

Yes, but there's a difference between funding construction/development and in funding construction companies. I don't doubt that many developers would find it very hard to get any sort of investment at the moment, they're on the stickiest of sticky wickets and many are falling by the wayside. Investing in companies who don't rely on construction projects or the property market for their profit is a different ball game though. Property investment of the type that we'd be looking at is a long term commitment and the parties involved would (hopefully!) be around long enough to see out the interim period where there's no cash rolling in....

 

I guess it'll be as much about the sustainability of UBIG and Heart of Midlothian Football Club as it is about anything else.

[Spellczech]

I still maintain that IF, and it is a big IF, this development goes happen to go ahead that UBIG will own Tynecastle (including whatever else is in this project) and we will be debt free and pay rent to VR and his crew.

Heart of Midlothian Football Club would be put up for sale on completion.

 

Keep talking "if"s as I don't think you have a logical mind...where did the reasoning for that second paragraph come from? And why is there not an if, but, or maybe anywhere near it?

[PTBCAL]

Although it is a 10 year estimated requirement, not an immediate one.

 

eg Edinburgh doesnt immediately need 4000 more hotel rooms immediately, if it got those the market would be oversupplied and there would be a heck of a lot of empty rooms

 

I am not sure why there is so much resistance to the fact that the economic climate over the next 2 or 3 years means:

 

1. financing major projects such is this is very much more difficult and expensive (if not impossible) and even then if the financial hurdle is jumped,

2. obtaining occupants of commercially related property forming part of these projects will be difficult if not impossible in the short term

 

I work for a large Employer in Edinburgh (5th largest I think - high st name). who also build and own property around the world as part of their property portfolio.

 

We are currently building a office development in Edinburgh and are hoping to start 2 more in Scotland before the years out - these are big projects. The reason (according to one of the Senior Investment managers) is that it's actually better to build in a recession as costs are generally lower due to increase competion and that materials prices come down as suppliers also need to drum up business etc...).

 

The hotel will take approx 3-4 years to complete so hopefully we will be out of the current crisis that we are experiencing.

 

We

[Spellczech]

I work for a large Employer in Edinburgh (5th largest I think - high st name). who also build and own property around the world as part of their property portfolio.

 

We are currently building a office development in Edinburgh and are hoping to start 2 more in Scotland before the years out - these are big projects. The reason (according to one of the Senior Investment managers) is that it's actually better to build in a recession as costs are generally lower due to increase competion and that materials prices come down as suppliers also need to drum up business etc...).

 

The hotel will take approx 3-4 years to complete so hopefully we will be out of the current crisis that we are experiencing.

 

We

 

A building project from the building company's perspective is not at risk from a recession unless there is no income coming in or sale after it is completed. Indeed as you say the costs can actually be reduced. However, borrowing to build might not be a good idea as you pay interest on your loan during the building phase. Having said that if you are a bank(or investment vehicle of a bank) and have money to invest then you've got to put it somewhere, and bricks and mortar are usually as good as anywhere, especially if you already own the land...

[Jammy T]

I work for a large Employer in Edinburgh (5th largest I think - high st name). who also build and own property around the world as part of their property portfolio.

 

We are currently building a office development in Edinburgh and are hoping to start 2 more in Scotland before the years out - these are big projects. The reason (according to one of the Senior Investment managers) is that it's actually better to build in a recession as costs are generally lower due to increase competion and that materials prices come down as suppliers also need to drum up business etc...).

 

The hotel will take approx 3-4 years to complete so hopefully we will be out of the current crisis that we are experiencing.

 

We

 

I guess it depends on the project

 

I work for engineers, and construction inflation for one project that has been delayed is increasing by ?250k per month

 

There will be a large element of engineering in the construction of a football stand I'd imagine.

 

Financing is the main issue though.

 

If there is some third party with the money and inclination to finance this project immediately and that third party carry the risk of an empty hotel and retail space, then this thing might just get built...

 

They'd need a real sweetner though - surely?

 

Ownership of everything, including Hearts land valued at ?20m or so??

 

But how does that marry with a ?50m plus investment

 

As is always the devil will be in the detail - which we wont get, which we will then all argue about.....

[PTBCAL]

A building project from the building company's perspective is not at risk from a recession unless there is no income coming in or sale after it is completed. Indeed as you say the costs can actually be reduced. However, borrowing to build might not be a good idea as you pay interest on your loan during the building phase. Having said that if you are a bank(or investment vehicle of a bank) and have money to invest then you've got to put it somewhere, and bricks and mortar are usually as good as anywhere, especially if you already own the land...

 

Ahem.

[Orkneyjambo]

Speaking as somebody who often tries to book into hotels in Edinburgh, I can vouch for the fact that it is extremely difficult to get a room at nearly any time of year. There's always something on that takes up the rooms, so any more capacity, particularly if it was at Tynecastle would be warmly welcomed by me

[bill duff]

I'm always looking for rooms for my golfers coming over, usually in the summer months though and most of the time find it hard to suit their needs.

[jamboinglasgow]

Good possibility that UBIG will own the Hotel/office complex outright rather than through the club. In return the club's debt wil be reduced further if not wiped out. However, for Hearts to surmount any challenge to the OF, even with the increased capacity, they need non-football related revenues and this would mean obtaining income from non-playing day hospitality and the hiring out of the stadium for concerts, etc. Probably still not sufficient.

 

Also, interesting article in a recent Scotland on Sunday's business section which stated that despite the economic download Edinburgh required more office space!

 

I'm pretty sure that the new stand and hotel is just the first part of what Romanov has plans for tynecastle. Remember vlad has bought/in the process of buying tynecastle school land. The main stand and the hotel dont actully go on any of that land. The next stage would be to redevelop the Roseburn stand, that would extend out into the school land, but also I have heard word that Vlad wants to turn the school land into a shopping area or even possibly more offices. Then after that it is the wheatfield stand (though all this could be 10 years away before being completed.) If the external funding has been sorted and planning permission is coming soon then its good news, the construction companies can concentrate on the building while hearts concentrate on the football.

[Coco]

I'm pretty sure that the new stand and hotel is just the first part of what Romanov has plans for tynecastle. Remember vlad has bought/in the process of buying tynecastle school land. The main stand and the hotel dont actully go on any of that land. The next stage would be to redevelop the Roseburn stand, that would extend out into the school land, but also I have heard word that Vlad wants to turn the school land into a shopping area or even possibly more offices. Then after that it is the wheatfield stand (though all this could be 10 years away before being completed.) If the external funding has been sorted and planning permission is coming soon then its good news, the construction companies can concentrate on the building while hearts concentrate on the football.

 

Yes, there are lots of plans to build a town the size of Falkirk in Leith/Granton/Newhaven too. We will see how much actually happens.

[Jammy T]

Ahem.

 

The exacerbation of the credit and liquidity problem at the moment in a nutshell

 

Banks with money are retaining the cash to ease their own liquidity problems. Banks are some of the most vulnerable companies in the world at the moment.

[Coco]

The exacerbation of the credit and liquidity problem at the moment in a nutshell

 

Banks with money are retaining the cash to ease their own liquidity problems. Banks are some of the most vulnerable companies in the world at the moment.

 

Ukio Bankas have total loans outstanding as of end last year of ?470m. They cannot take on the financing of a ?50m development.

 

Can UBIG? We have no idea of what their finances are like. Perhaps they can raise the cash, but they don't seem to have done any significant developments elsewhere despite all the models.

 

And if it is external investors - then they are rare at the moment/coming couple of years. So well done to UBIG if they have found them, though they would take most of the 'return' from the new facilities unless they are in the charity business.

[Jammy T]

 

And if it is external investors - then they are rare at the moment/coming couple of years. So well done to UBIG if they have found them, though they would take most of the 'return' from the new facilities unless they are in the charity business.

 

Which is precisely the point

 

Any third party investor taking on the entire build costs as suggested (which I again stress will likely be a significant chunk higher than ?51m unless the project is pegged back in scale or quality - you dont quote ?51m for such a project one year then build it for the same price 2 or 3 years later) will need to get one heck of a sweetener from Vlad

 

What does he have to give?

 

Land - yes but only with a value of approx ?20m

 

Interesting stuff though IMO and worthy of debate

[Spellczech]

Ahem.

 

Not totally clued up on the wonderful world of banking but I would expect that similar to insurance companies, banks have to hold investments of a certain % in property.

[jamboinglasgow]

Yes, there are lots of plans to build a town the size of Falkirk in Leith/Granton/Newhaven too. We will see how much actually happens.

 

I do agree with you that it may not happen, but at least there is the plan where it is possible. I think Vlads doing it very sensibly. He could of just planned to turn hearts into a 40,000 seat stadium at one go but if it is done in stages, then you can build the next if you feel that an increse in crowds would support it. I do think there is the potential to certainly go up to 30,000 at tynecastle and get that filled, unsure about 40,000. That is one tenth the population of edinburgh. But then again Celtic get one tenth of the population of Glasgow and add to that the 50,000 for Ibrox, it could be possible.

[Jammy T]

Not totally clued up on the wonderful world of banking but I would expect that similar to insurance companies, banks have to hold investments of a certain % in property.

 

Interestingly an insurance company essentially owned by the richest man in the world (Warren Buffet) has just recently stopped insuring banks over sums guaranteed by the American government.

 

As sure a sign as anything that there are a whole new traunch of bank failures about to hit the market place

 

There may be generic percentage targets of investment but I think pre-prescribed investment levels will be subject to change when the entire world financing system is grinding to a halt.

 

The safest place for a banks money at present is in its own accounts

[Coco]

Not totally clued up on the wonderful world of banking but I would expect that similar to insurance companies, banks have to hold investments of a certain % in property.

 

I don't think so.

 

Banks 'assets'* are for the most part loans. Might be loans in the sort we all know - to companies or to individuals in mortgages. Or in loans in the form of investment in securities owed by companies or Governments. They might end up with land holdings if the loans secured on them go sour of course and might invest in land in order to get other fee parts of a development deal. But no % allocation to property is required.

 

*Of course banks might own their Head offices/branches/computer centres etc.

[redm]

The exacerbation of the credit and liquidity problem at the moment in a nutshell

 

Banks with money are retaining the cash to ease their own liquidity problems. Banks are some of the most vulnerable companies in the world at the moment.

It's fortunate that we're more likely to be relying upon UBIG than UKIO for such things then.

[Jammy T]

It's fortunate that we're more likely to be relying upon UBIG than UKIO for such things then.

 

Do they have ?51m plus sitting in a bank account?

[redm]

I don't think so.

 

Banks 'assets'* are for the most part loans. Might be loans in the sort we all know - to companies or to individuals in mortgages. Or in loans in the form of investment in securities owed by companies or Governments. They might end up with land holdings if the loans secured on them go sour of course and might invest in land in order to get other fee parts of a development deal. But no % allocation to property is required.

 

*Of course banks might own their Head offices/branches/computer centres etc.

 

Some banks have absolutely monumental land holdings, albeit some are directly owned and others more indirect via investment portfolios. But they do own gadzillions of acres of the stuff.

[Coco]

Some banks have absolutely monumental land holdings, albeit some are directly owned and others more indirect via investment portfolios. But they do own gadzillions of acres of the stuff.

 

That's what I said!

[PTBCAL]

Not totally clued up on the wonderful world of banking but I would expect that similar to insurance companies, banks have to hold investments of a certain % in property.

 

I was hinting that you hit the nail on the head re who I work for.

 

Bank/AssuranceCo/Tidy Bird in mourning.

[Drylaw Hearts]

Keep talking "if"s as I don't think you have a logical mind...where did the reasoning for that second paragraph come from? And why is there not an if, but, or maybe anywhere near it?

 

Firstly.....

 

I do have a logical mind.

 

Just like most guys.

 

 

Secondly.....

 

My reasoning for the 2nd part of my post is that VR came to Scotland with the sole intention of 'showcasing' Lithuanian talent and shifting them on at a profit.

 

This is clearly not working for him.

 

The monies available at the Club, for all sorts of things, has been cut back and IMO this is part of VR/UBIG slowly working towards the exit door.

 

We are never going to be able to challenge the OF over a sustained period and if you combine this with the inibility to sell the FBK Kaunas guys - what reason does he have for being here ?

 

None.

[davieholt]

Let's just hope that uncle Sam nationalising Freedy Mac and Fannie May will allow the banks a breathing space to ease their liquidity problems. Dunno what UKIO's indirect exposure to US subprime is but these measures must help.

 

Once confidence in interbank lending returns and (US) domestic property prices start to level out, the heat will be turned down and we can get on with the rest of our lives - until the next economic shock

[Jammy T]

Firstly.....

 

I do have a logical mind.

 

Just like most guys.

 

 

Secondly.....

 

My reasoning for the 2nd part of my post is that VR came to Scotland with the sole intention of 'showcasing' Lithuanian talent and shifting them on at a profit.

 

This is clearly not working for him.

 

The monies available at the Club, for all sorts of things, has been cut back and IMO this is part of VR/UBIG slowly working towards the exit door.

 

We are never going to be able to challenge the OF over a sustained period and if you combine this with the inibility to sell the FBK Kaunas guys - what reason does he have for being here ?

 

None.

 

Initial primary purpose was likely showcasing, but

 

I dont think he could believe his luck when he found out he could essentially control / own prime development land zoned for regeneration 1 mile from the West End of Edinburgh by switching an overdraft to his own UKIO bank's account and handing over whatever it was ?3.5m to get shares (which he later got reimbursement of by the transfer to UBIG)

 

So, this venture is FREE to Vlad so far. He has neither spent or lost anything personally.

 

Next stage - sell business assets at profits to work down the debt. Again the debt is being repayed without cost to him

 

He now has plans for commercial property to be attached to our stadium. This is the potential jackpot for him, especially if his sale of assets at Hearts gives him more freedom to get a better deal to sell on Hearts the football club

 

There remains the chance things may be more sinister but lets not go there.

 

There is nothing hugely wrong with any of the above hypothesis from a business perspective

 

But it is wrong to suggest that Vlad is some sort of superhero because he has parted with his hard earned cash and its his money etc etc.

 

And I think it is wrong to suggest that his main aim is the ultimate success of Hearts.

 

His main aim is to maximise profit however he can.

 

And again, there is nothing wrong with that from a business sense - but our football club is essentially the facilitator in all of this.

 

We are being used, and I am not sure if it has benefitted us yet.

 

So as I have said elsewhere, with Vlad's eye on other things we are just as well trotting along until all his plans come to fruition. We will either be bust, or be sold. We will unlikely own where we play if we are sold.

 

Then the next adventure begins.....

[Jammy T]

Let's just hope that uncle Sam nationalising Freedy Mac and Fannie May will allow the banks a breathing space to ease their liquidity problems. Dunno what UKIO's indirect exposure to US subprime is but these measures must help.

 

Once confidence in interbank lending returns and (US) domestic property prices start to level out, the heat will be turned down and we can get on with the rest of our lives - until the next economic shock

 

he he he

 

I think the fun is just about to start

 

We havent even started to deal with the fall out from Prime mortgages

 

No doubt the US economy will miraculously hang together until after 4 November.....or until Iran get hit, whatever happens first...

[Spellczech]

Interestingly an insurance company essentially owned by the richest man in the world (Warren Buffet) has just recently stopped insuring banks over sums guaranteed by the American government.

 

As sure a sign as anything that there are a whole new traunch of bank failures about to hit the market place

 

There may be generic percentage targets of investment but I think pre-prescribed investment levels will be subject to change when the entire world financing system is grinding to a halt.

 

The safest place for a banks money at present is in its own accounts

 

Perhaps, and I may be wrong but is it not the case that all these subprime mortgage backed assets that have caught out a lot of the banks in W Europe and US were precisely packaged up as property and therefore supposedly safe triple A securities? I cannot imagine UKIO went into them in any big way if at all, as they seem to be a bank that invests directly in property ie aluminium plants and even Hearts...

 

Banks simply cannot afford to sit on piles of cash - which is part of the reason why RBS went for ABN Amro. Also, there is money to be made in a downward market as well as an upward one.

[Jammy T]

Perhaps, and I may be wrong but is it not the case that all these subprime mortgage backed assets that have caught out a lot of the banks in W Europe and US were precisely packaged up as property and therefore supposedly safe triple A securities? I cannot imagine UKIO went into them in any big way if at all, as they seem to be a bank that invests directly in property ie aluminium plants and even Hearts...

 

Banks simply cannot afford to sit on piles of cash - which is part of the reason why RBS went for ABN Amro. Also, there is money to be made in a downward market as well as an upward one.

 

Oh yeah, I doubt UKIO were caught up head on in the mixed asset packages (by the way it was absolutely criminal what happened with all of that) but they will be reliant upon bigger banks for funds, so they must be affected by the fall out.

 

If not at threat to their business, certainly at threat to funding for investments.

 

And yes you are right Banks wont just hold on to cash reserves indefinitely, but you have Lehman Brothers losing a further $4bn announced today and assets being liquidised left right and centre just for them to stay afloat.

 

So cash is king at the moment - unless you can get nudges and winks from the government of where to put your money...

[Spellczech]

Firstly.....

 

I do have a logical mind.

 

Just like most guys.

 

 

Secondly.....

 

My reasoning for the 2nd part of my post is that VR came to Scotland with the sole intention of 'showcasing' Lithuanian talent and shifting them on at a profit.

 

This is clearly not working for him.

 

The monies available at the Club, for all sorts of things, has been cut back and IMO this is part of VR/UBIG slowly working towards the exit door.

 

We are never going to be able to challenge the OF over a sustained period and if you combine this with the inibility to sell the FBK Kaunas guys - what reason does he have for being here ?

 

None.

 

So far he has made a million from Velicka, and the salaries of the duds will be covered by that.

 

IMO many of the Kaunas guys were stop-gap. The real focus is on the Academy. The money that has been cut out are the big salaries to established talent, not the funding of the club at grassroots. We can challenge the OF over a sustained period but the club must grow within it's means first, not just through the largesse of a sugar-daddy. Young players are the future at Hearts. Sure we are all waiting for the new stand etc and that is the only sure sign of ambition, but what is the point of being defeatist about our prospects? If everyone took a "we cannot" view on things, we'd all still be scraping a life, hand to mouth, in caves...