This morning I grabbed a coffee with a friend who works with a national championship club here in Russia. In the luxurious surrounds of the McCafe near Kievskaya Station we discussed the impending doom in his club.
We’d soldiered together in 2010/11 and, then, at just 25, he was ready for greater things. I recommended him to a position with a Moscow-based club and after only four months he was brought away to a National Championship club to work his magic there. As we drank our cappuccinos he began to tell about a coming bust.
With everyone so wrapped up in heavy jackets and jumpers, the bust was not that type of bust, however it was equally as interesting (says a lot about my life I know). He was in Moscow to try speak with a multi-millionaire businessman from the region to get a short-term loan.
The club are in debt to the tune of over 100 million roubles (on the 21st of January that stood at 10.86 million euros).
The continuing descent of the rouble has meant that their Euro debts (to suppliers, consultants, agents and players – current and former) added 24% to their rouble total since they all went on holidays December 1st.
A sum total of 11 million roubles was added to their debt in seven weeks through changing currency rates alone. The bust was closer than they’d imagined.
More than 90% of their budget came from the city and regional governments, some small sponsors threw in 3-4% and the remainder they got through youth football dues, ticket and concession sales.
Before this season kicked off they were already 40 million roubles in debt, last season they overspent on foreign players and agent fees, and a five figure sum for a German consultant who arrived, was paid 50% of his fee and left after two of eighteen weeks. He is currently suing for his over 50%.
Two foreign agents are suing for fees, one foreign club also has a case pending and more than 30 ex-players are owed salary of some sort. Worse, current players are without a salary since October – and they are the lucky ones.
Players who were unable to leave last summer (more than eight) are owed salaries since December 2014. The bust is looming over them.
He said the unthinkable was bound to be realised – they’d until the end of this month to come up with some cash or the club is liquidated. “How many more are in your state?”. He answered with a question, only in our division?
More than six clubs in the division are each in excess of 50 million roubles in the red. In the Second Divisions, from gossip, lots, from actual information and papers – a dozen are in danger of going bust.
The Premier, apart from Kuban Krasnodar who cannot pay salaries of iconic Russian players like Arshavin and Pavlyuchenko, or Rostov who cannot pay anyone, or any one of five clubs who are heavily in debt (in excess of 50 million roubles each) and who are carrying big Euro/Dollar costs, lots. It has gotten worse since last year.
So what can happen? Simply put, anything. However, with the FIFA Confederations Cup in 2017 and World Cup in 2018, even the sinking oil prices cannot stop Russia taking a seat at the top table.
The country is so dependent on non-renewable resources that it can effectively go bust (as it did in the late-90’s) despite having a decent cushion in reserve.
According to some economists (non-Russian or paid for talking heads), the country is good to go until late in 2019 at the current set up. This is based on the price of oil dropping to $18 per barrel. After this, it could be Russia going bust.
Since this morning,g the news is worse for the currency and oil, and my friend is back in his car driving back to his club to deliver the news that neither the businessman, his associates nor their friends in Government are willing to give them funds.
The Governor has refused to ante up and the old boom times when they were getting massive infrastructural funds and vast amounts were siphoned off, to we all know where, are long gone.
Shinnik Yaroslavl and many more are close to going bust, it is now up to the Government as to who they will save and who will be culled.
From living on the hog a couple of years ago, now it’s boom to bust Russian football style.