Paulo Sergio quits Hearts after failing to agree deal By STUART BATHGATE Published on Friday 8 June 2012 01:49 HEARTS and Paulo Sergio parted company last night after failing to agree a new contract. The Portuguese manager led the Tynecastle club to Scottish Cup triumph last month in what proved to be the final game of his nine months in charge. Paulo Sergio has left Hearts after failing to agree terms on new contract Sergio "deeply regretted" breakdown of talks First-team coach Gary Locke will remain at the club as search for new manager begins The 44-year-old and Hearts had been in talks about a new deal since shortly after that 5-1 victory over Hibernian on 19 May, and Sergio had gone home to think over his options. The more time went on without agreement, however, the more likely it appeared that Hearts would be looking for a new manager for next season, and last night a statement on the club's website confirmed that talks had come to an unsuccessful conclusion. "Paulo Sergio declined the offer of a new contract," a Hearts spokesperson said on the website. We wanted to keep Paulo Sergio at Hearts and made what we believed was our best offer in the circumstances. The same terms will be available to other candidates willing to lead Hearts to new victories. We would like to put on record our appreciation of all his efforts, and those of Alberto Cabral and Sergio Cruz, in bringing the Scottish Cup back to Tynecastle. The search is already under way to find a new manager and we hope to make an announcement as soon as possible. Sergio's compatriots Cabral and Cruz came with him to Tynecastle as assistants when he replaced Jim Jefferies last August, and have also left. First-team coach Gary Locke, however, remains at the club and "will be part of the new coaching set-up," according to Hearts. Sergio said a brief farewell to the club, its players and supporters on the website. "I deeply regret I will not continue my work at Hearts," he said. I appreciate the road the club is now going down and respect what our board is doing. But I cannot accept the offer the club has made me. I want to say many thanks to everybody who worked with us, including our board, and special thanks to our supporters. I wish the very best to this great football club and I am now just one more Hearts supporter. I would also like to say thank you to all the players, who will be friends for life. And as for my future? Only God knows. As speculation over his future grew during the latter months of the season, Sergio insisted that his own personal terms were not his primary concern. The size of the gap between the salary Hearts were offering and the one he thought reasonable proved to be unbridgeable, but two other factors are understood to have led to the breakdown of talks: the future of Cabral and Cruz, and the budget which will be available to the manager next season - "the road the club is going down," as Sergio put it. All three Portuguese coaches had continued to be paid by their former employers Sporting Lisbon last season, an agreement which has now expired. Hearts benefited from that arrangement by acquiring the services of the trio for less than what otherwise would have been the going rate, but when it came to offering new deals the club decided they could not afford the scale of increase which would be needed to compensate for the loss of wages from Sporting. Having made their offer and been informed by Sergio's representatives that it did not match their client's wishes, the club decided against seeking the new funding which would have been required to make a significantly improved offer. They let Sergio know that, and when he did not immediately respond by accepting what proved to be Hearts" first and final offer, it became increasingly clear to staff at the club that they had seen the last of the popular manager. If Sergio had agreed that he only needed one of his two fellow-Portuguese assistants to work with him next season, more money might have been available to him from within the existing budget. But he remained loyal to Cruz and Cabral, and if the suggestion was ever directly put to him that he could return as manager by ditching one of them, it was swiftly dismissed. Hearts are convinced that, in the tougher economic conditions they are in, they made the best offer they could sensibly fund. Since owner Vladimir Romanov announced late last year that he was open to offers for his controlling interest, the size of the playing squad has been gradually cut. Sergio was aware that, had he stayed on to manage a team which had lost some of its key players, he faced an uphill struggle to build on the achievements of the season just ended. As it is, he has ended his brief reign on the best possible note, with a historic victory which will ensure he remains an enduring hero to the Hearts support.