In the third part of his series ‘Russian football in crisis’, Alan Moore discusses the financial instability which looms over club football. Parts one and two here.
“The greater the crisis, the greater the opportunity to make money.” – Dr. Ante Cicin-Sain (former Governor Croatian National Bank and Ambassador to Ireland and the UK) in conversation with David McWilliams.
I was re-assured today by my former colleague that the biggest investor in Russia remains Cyprus. The biggest source of Foreign Direct Investment (FDI) in the biggest country on earth is an island nation that, just a short few years ago, pulled off one of the biggest financial heists in history. A little country with split ethnic loyalties, whose football clubs are still praised by hipsters and dreaming media, and held up as role models for League of Ireland outfits, had major Russian companies shelling out to ensure their money wasn’t thrown into a debt black hole and their tax dodging details revealed.
For a while it seemed like Russian companies might be held to account, though two years later, last December, VVP announced an amnesty on returning money to Russia. Send back your cash, no questions asked. He spoke as the rouble was in freefall, going from 45rbs = €1 to a shocking low of 85rbs. Companies fired staff, projects stopped, cars, fridges, microwaves, computers, fixtures and fittings flew off the shelves and showroom floors as the nation coolly decided to buy what they could while the prices were good. Apple suspended sales of the new iPhone as the currency exchange meant it was not economically viable. Everyone with wages in roubles and planning holidays outside the country dashed to convert their perceived junk into “hard currency”. It was a palpable panic that gripped all who live in this great country.
Three Slovakians play with my local hockey team – Buran Voronezh – and live in the same building as me. They receive decent salaries, in roubles, and transfer home the bulk each month. As with me, they found their ability to send home good lumps ruined with our salaries almost halved in euro terms (now -75% of original value) from when we signed our contracts. I met two of them last week in the courtyard and they were miserable, they weren’t alone. Foreign players, or ‘legionnaires’ as they’re known locally, have been looking to escape Russia at a rate higher than ever before. All clubs are affected, even the wealthiest and most spend friendly.
15 foreign players have been released or loaned so far, with stars like Axel Witsel and Hulk trying to escape. Hockey, Basketball and Volleyball have seen trickles turn to floods as wages go unpaid and coupled with rouble devaluation it is costing some to stay here. At present four Premier clubs have unpaid players for more than three months – Amkar Perm, Torpedo Moscow, Arsenal Tula and Kuban Krasnodar. One Premier club, Rostov, has players unpaid for more than six months. In Division 2 legendary club Rotor Volgograd are almost fully out of business and aside from the removal of the Crimean clubs, there are no fewer than 14 clubs with players waiting for payment since September 2014.
Adidas have already reduced their sponsorship for the Russian Union and Premier League and, with foreign automobile companies pulling back from new car sales, companies like Toyota and Kia are exercising contract loopholes to reduce sponsorship. Far more crushing for clubs is that city and regional governments have cut funding for major and minor sports teams for 2015-6, and the shortfall is massive.
Bankruptcy is close for at least three clubs in the FNL and two in the Premier, with only goodwill keeping the clubs afloat. Unsustainable models which are common in Russian sports have not changed, nor is there a will to change. Removing the argument of distance, the lack of marketing and promotions even at the highest level are main causes for the malaise that affects the game here. Empty stands, poor management, poor understanding of modern sports business and most importantly the absence of corporate/community structure in almost all clubs, ever more radical models for change. None of which will save the game from apocalypse.
Talking heads in the sports media demand foreign player restrictions, a great idea if it was based in reality. Worse again is the ‘foreigner tax’ which is to be approved in February, supposedly this money, taken from clubs, will benefit young players in the country, exactly how, has not been even outlined. The quality of player development even in the top clubs remains dreadful. Even Spartak-2, who are topping one of the weakest collections of “professional” teams, are leading Division 2 West by virtue of playing sides with half the side bought off or unpaid. The talent pool is dry as there is no need for young players to be ambitious, even if the facade seems different.
One idea floated, by Union Secretary General Anatoli Vorobyev, last September was to have all National Team players bought out from their contracts and banded together as “Team Russia” in the Premier League. Yet 2 months later the same man admitted that the Union couldn’t pay the National Team coach, the man who would be in charge of “Team Russia”, as they had no money. This was before the current crisis exploded.
So what next for football in Russia? FC Krasnodar’s owner Sergey Galitsky told fans – forget your social media selfies with “Save Rotor” scribbled on paper, send your money to the club. Such pragmatism, as we know from experience, is fine in word, but as a former colleague of mine told a Board of Directors meeting – “Gather up all your money, dig a hole in the ground, throw the money in, pour in some petrol, and burn it all.”
Saving clubs in Russia is akin to this. It will not come to pass that clubs will grab this advantage and develop new, workable models that will return the game to the people and make it a really worthwhile pursuit. Instead kindergardens, hospitals and jobs will be targeted as cost savers so that the ego’s and bank balances of a few will grow, at the expense of football.
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