Russian soccer clubs' finances battered by Ukraine crisis fallout, plummeting currency

Published February 05, 2015

Russian soccer teams are facing a severe financial squeeze, with the Ukraine conflict and plummeting ruble leaving clubs short of money but with soaring wage bills.

The ruble has fallen by more than a third this year against the euro, the currency of choice for the contracts of top soccer players in Russia. That means that in ruble terms, players' wages have shot up.

The conflict in Ukraine is having troubling effects on Russian soccer. It has led to U.S. and European Union sanctions that forced the ruble to record lows in international currency markets, while political instability has also damaged the businesses of at least one major Russian soccer figure and strained government budgets, which many clubs rely on.

The club FC Rostov of the Russian Premier League is in southwest Russia. In terms of geography and financial turbulence, it is affected by the Ukraine crisis more than any team in the league. The club won the Russian Cup last season but is now in the relegation zone.

Rostov players haven't been paid for July, August, September and October, and some could leave on free transfers during the winter if they remain unpaid, a person with knowledge of the situation told The Associated Press.

The person, who spoke on condition of anonymity because he wasn't authorized to talk publicly about it, added: "A lot of the money that should have been diverted to the football club, because it's (the government) that funds the football club, is funding refugees in Rostov, and that's why it's got as bad as it is."

As many as 1 million refugees from the conflict have crossed the border into Russia, according to Russian government estimates. Rostov, about 60 miles from the border, is a major transit point.

At least nine of Russia's 16 top-tier clubs receive some or all of their funds from regional governments, while another three are owned by state-controlled companies, such as the gas firm Gazprom, which backs the Champions League club Zenit St. Petersburg. Traditionally, some state-backed teams have been well funded.

Oil billionaire Leonid Fedun is the owner of Spartak Moscow and one of the few major private investors in Russian soccer. He has warned of a wave of problems for government-dependent teams, especially those such as Rostov.

"Expenditures have gone up by 50 percent but incomes have remained the same," Fedun told local media on Sunday. "By my reckoning, five Russian Premier League teams are encountering serious difficulties. By that, I mean teams financed from a (government) budget."

Wage rises also could affect other major sports in Russia such as hockey and basketball, he suggested.

"A very difficult period is beginning for most of Russia's sports teams," he said. "The days of plenty are over. As it is, only the football players are experiencing the good times."

Also experiencing problems is Fedun's longtime rival, Evgeny Giner, president of reigning champion CSKA, who has business connections with Ukraine. Last week, he warned fans not to expect big purchases in the winter transfer window.

"There's less money available and, as a result, less freedom to buy," he told the Tass news agency. "Basically, business in Ukraine is standing still and that obviously isn't pleasing."

CSKA's ownership structure is notoriously opaque, and it is not even clear how much of the club Giner owns, let alone how much of its funding he provides. Giner's own finances are similarly murky, although Ukrainian media have reported he is a major investor in a company that operates power plants across Ukraine, including in Crimea, the peninsula annexed by Russia in March.

As news of CSKA's money shortages spread, British media linked star striker Seydou Doumbia with a move away from the club, but his agent Jean-Bernard Beytrison has said the Ivorian will stay where he is in the winter transfer window.

One figure likely to be watching Russian soccer's financial struggles is national coach Fabio Capello, who has not been paid since June amid cash shortages at the Russian Football Union, the sport's governing body in the country. It declined to comment on any aspect of Capello's contract.

The problems date back several years, with the organization perennially searching for sponsors. The issue has intensified this year, with the RFU reportedly having to resort to bank loans to pay some staff.

Capello signed a four-year contract extension in January that has been estimated at $11 million a year. As with players' contracts at Russian clubs, Capello's deal is widely believed to be in a foreign currency, meaning it has potentially soared in value in ruble terms.

URL

https://www.foxnews.com/sports/russian-soccer-clubs-finances-battered-by-ukraine-crisis-fallout-plummeting-currency