08

Feature

Russian football clubs are increasingly well-funded, but have not yet learnt to live by the rules of market economics.

ILYA ZUBKO

SPECIAL TO RN

These days, £11m would just about buy the left leg of a decent striker at Manches- ter United, Barcelona or Ju- ventus. But that’s what mak- ing it to the quarter fi nals of the Uefa Champions League was worth to Moscow’s CSKA football team. It also meant CSKA had earned a sum comparable to the an- nual budget of an average Russian club. If that comes as a surprise, it helps underline the see-saw nature of Russian football’s fi nances in recent years. Most clubs simply live off spon- sorship money and are fund- ed either by regional govern- ments or big corporations such as Gazprom, Lukoil, Rosneft or Russian Railways. Revenue streams which are crucial in the West, such as broadcasting rights, season tickets and replica shirt li- censing deals, still provide only tiny amounts of cash in Russia. A few years ago, Russian football clubs were showered with sponsorship money, driving teams into a frenzied shopping spree to buy top players in Europe and South America for tens of millions of pounds. Many analysts warned that this approach, with clubs spending twice what they could possibly hope to earn, would get them nowhere. The analysts were right and Russian football is being forced to think again about what is a realistic fi - nancial outlook. At the onset of the global fi - nancial squeeze, the annual salaries of £2-£3m enjoyed by leading players wildly ex- ceeded real earnings, even at the bigger clubs. However, the first “crisis” season of 2009 did not see serious at- tempts to shake up their business model. Most clubs cut their budgets by about 10pc, while some even re- fused to revise their spend- ing. One mid-table club, Tomsk, somehow succeeded in squandering its annual budg- et during the fi rst four months

RUSSIA NOW WWW.RBTH.RU

SECTION SPONSORED BY ROSSIYSKAYA GAZETA, RUSSIA

DISTRIBUTED WITH THE DAILY TELEGRAPH TUESDAY_JUNE 01_2010

BOOKMARKS

www.guushiddink.nl Guus Hiddink Foundation www.fifa.com/associations/association=rus/index.html Russia at Fifa www.russia2018-2022.com/en.aspx 2018 Russia World Cup bid www.art-kvartal.com/news_eng.html Art Kvartal gallery

Sport Millions of roubles are poured into football every year but the business has yet to turn a profit

Strife in the beautiful game

While enjoying a strong fan base locally, Russian football clubs have yet to adopt to market realities

Samara was about to go bust – until super- sub Putin stepped in again and told locals to open their wallets

and staggered to the brink of bankruptcy. Luckily, the sole Siberian club playing in the premier league received help from the government. A letter crying for help reached prime minister Vladimir Putin who sum- moned business heavy- weights from Tomsk and “strongly suggested” that they should try and support the struggling team. The club suddenly won the hearts of seven sponsors. A similar rescue operation helped keep afl oat a famous club in Samara this spring. Not so long ago, Krilia Sove- tov (Soviet Wings) had a rep- utation for packing in the largest crowds (up to 30,000) in eastern Europe. But the team’s bosses took out loans by the truckload, and before the 2009 season the bill was approaching £70m.

Despite vociferous fans’ dem- onstrations and media draw- ing attention to the situation, Samara was about to go bust and kiss its dreams of tro- phies goodbye – until super- sub Putin stepped in again and persuaded local spon- sors to open their wallets. Nevertheless, the club’s budg- et had to be reduced by two- thirds in order to pay off its huge debts. When another crisis victim, FC Moskva, lined up for help, the authorities chose not to get involved. A month before the start of the 2010 season, Norilsk Nickel, the general sponsor and de facto owner of the successful Moscow club, withdrew its support. For reasons that remain un- clear, they did not even at- tempt to sell the club to other investors and simply dis- banded the team. This was the first time in Russian football that a qual- ifying team had walked away from the national champi- onship at the eleventh hour. Its place was taken by Alania Vladikavkaz, which fi nished third in the fi rst division last year.

Dutch auction for national coach

Russia said goodbye to Gu- us Hiddink without much re- gret. The failure of the national team to qualify for the 2010 World Cup marred all of his previous achievements. On top of that, both fans and experts felt it was unfair that the Dutch coach, who actu- ally withdrew from the job in November, would neverthe- less continue to pocket a hefty salary for another six months. During that time, his sole re- sponsibility was to prepare for a friendly with Hungary, which was of questionable value and which Russia failed to win any- way – not exactly a job worth €3.5m, half of Hiddink’s annu- al salary. In mid-April, the once-popu-

However, FC Moskva’s dra- matic exit shocked many fans and experts into realising that something fundamental needed to change in the world of Russian football. According to analysts at Rus-

Art With limited commercial demand at home, dealers look abroad for sales

Russian galleries set up shop in the West

Frustrated by an underdeveloped and stagnant contemporary art market at home, a small but growing number of Russian art galleries are finding opportunity by opening up branches in Europe and the United States.

JOHN VAROLI

SPECIAL TO RN

Since March, two Moscow galleries have opened in the West, and at least two more are pondering expansion. Late last year, a new gallery dedicated solely to Russian contemporary art opened in New York. As these Russian galleries strive to realise their ambi- tions, it’s clear that the in- ternational art market will never be the same. At the very

least, international collectors will have greater exposure to Russian contemporary art. But if the Russian galleries can hold their own on for- eign shores, and begin to suc- cessfully work with non-Rus- sian artists, then they might be able to emerge as major players on the international contemporary art market and begin to infl uence collectors’ tastes. On March 15, Moscow gal- lery Art Kvartal became the fi rst from Russia to open a space outside of the country, choosing Phoenix, Arizona, because of its vibrant gallery scene. Art Kvartal was soon followed by Regina, when the Moscow gallery opened a two-fl oor space in London’s Fitzrovia on April 30. “I need a gallery in the USA

because about 70pc of my buyers in Moscow are for- eigners, mostly expats,” said Alexander Sharov, owner of Art Kvartal. “Few rich Rus- sians buy contemporary art, and most prefer to buy an- tiques or luxury items – cars and yachts – because for them it’s not easy to under- stand the lasting value in contemporary art, and that it will increase in value as the years go by.” Founded in 2005, Art Kvar- tal specialises in Russian and Ukrainian painters and in- terior designers whose styles range from realism and ex- pressionism to the avant- garde. These include Alexan- der Zhernoklyuev, Alexei Alpatov, Maxim Bashev, and Andrei Syagalov. Many of the art works are large format,

and sell for between $5,000 and $70,000. “Russia is more than oil and gas exports, and fine art could become an important and lucrative export,” said Sharov, a Moscow business- man who made his money with his paper trading com- pany. “I see that foreign col- lectors, and I mean those peo- ple who really know art, have a strong appreciation for Russian art.” Regina Gallery’s new Lon- don space “will develop ac- tivities to present the most exciting international art as well as focusing on estab- lished and emerging art from Russia and Ukraine”, said Vladimir Ovcharenko, the gallery’s owner. “There are several reasons why we opened a gallery in

Contemporary artist Alexander Zhernoklyuev and his work at Moscow’s Manezh hall

More and more of our clients from Russia and Ukraine are often in London, even living there

London,” said Ovcharenko. “We have a fantastic group of Russian artists who we want to show more often to the international audience. Second, more of our clients from Russia and Ukraine are often in London, even living there, and we need to be where they are, otherwise, they might fi nd other galler- ies to work with.”

The opening coincided with Regina’s 20th birthday, and in those two decades it has become one of Russia’s most important contemporary art galleries. It is one of the few to take part in the leading interna- tional art fairs such as Frieze in London, Art Basel Miami Beach and The Armory Show in New York.

lar national coach raised a fuss over his salary arrears, which had been building up since January. The Russian Football Union responded that it want- ed to terminate his contract immediately; nobody could understand why they had not done so months earlier, when Hiddink signed a contract with the Football Federation of Tur- key. Dick Advocaat was officially announced as Hiddink’s suc- cessor on May 17. Nobody ever doubted he would step in, as Russian Football Union presi- dent Sergey Fursenko has ad- mired Hiddink’s fellow country- man for a long time. It seems the Dutch element is here to stay in Russian football.

sian business magazine Fi- nance: “The year 2010 could prove to be an evolutionary turning point. The previous season could not refl ect the impact of the global crisis within such a short period.

“In fact, 2010 is the fi rst year when seasonal budgets re- fl ect the real potential of the football market.” There is some evidence that a reality check is starting to take place. The recession has reined in the gargantuan ap- petites of football clubs. None of them has become any rich- er over the past year and no- body is trying to set multi- million-dollar transfer records any more. Notably, last winter did not see any deals exceeding £5.5m – a clear sign that the managers have learnt to count every rouble. Yet even these reduced cir- cumstances are based on un- realistic assumptions. Zenit St Petersburg is Russia’s richest club and spends £70m a year, with 80pc of the funds coming from its owner, the giant Gazprom. Zenit itself covers only 20pc of its total spending. On a smaller scale, Lokomo- tiv Moscow, sponsored by Russian Railways, earns a lit- tle over £20m, or just under half of its total budget, which is not bad by Russian stand- ards. Lokomotiv has the ben- efi t of owning a modern sta- dium and does generate sizeable revenue from cor- porate box deals. Yet most football clubs, in- cluding Zenit and Lokomo- tiv, do not disclose details of their budgets. The Russian sports commu- nity has traditionally been reticent on matters of earn- ing and spending. Senior ex- ecutives mention only rough estimates and some guard even this meagre information jealously. Last year, Moscow-based Dy- namo ventured to publish a report on its £45m budget, but since no other clubs fol- lowed suit, it didn’t bother this year. In the 2010 season, only CSKA disclosed its fi - nancial data, probably be- cause it could boast a sur- plus. Having landed a number of fat sponsorship contracts, the club expects to make a profi t of $168,000 – a drop in the ocean compared to its total budget of £116.5m. But for many Russian teams, this kind of financial per- formance – backed by lucra- tive appearances in the Champions League – remain the stuff of dreams.

World Cup wobbles

CONTINUED FROM PAGE 1

The announcement came as Russia and other countries bidding to host the World Cup prepared to submit their bid books to Fifa. Shuvalov, who chairs the committee overseeing the Russian bid, said Russia had every right to host the World Cup because of its vast ex- perience in holding interna- tional sports competitions, including football. Shuvalov declined to spec- ify the amount of money to be spent on developing the infrastructure, as well as the proposed budget of the com- petition, but Alexei Sorok- in, chief executive of the Russian Football Union, said the assigned money “would satisfy Fifa”. Sports, tourism and youth politics minister Vitaly Mutko said the budget for the project “would be com- parable to the budget Ger- many spent on hosting the World Cup”. Analysts said Russia might actually need more money than Germany for its World Cup.

“Germany had a more de- veloped infrastructure when it won the right to host the World Cup. Germany didn’t have to do such a big amount of work,” said Andrei Ro- zhkov, an infrastructure an- alyst at Metropol. Russia plans to build 16 sta- diums in 13 cities, includ- ing Moscow, St Petersburg, Kaliningrad, Rostov-on- Don, Sochi, Samara and Nizhny Novgorod. Construc- tion costs for a single sta- dium range from $70m to $300m, Rozhkov said. Infrastructure projects for the tournament will mostly be funded by private inves- tors, Shuvalov said. Prime minister Vladimir Putin said last year that hosting the World Cup was “a nationwide task” for the country. But Russia will de- velop transport and sports infrastructure even if it loses its bid, Shuvalov said. “We must do that anyway, because we must make our country better,” he added. Mutko said that hosting the 2014 Winter Olympics in Sochi, “strengthened Rus- sia’s position” in the com- petition.

Olympic construction is cur- rently estimated to be cost- ing about $12bn, but pre- paring a World Cup would probably be cheaper, be- cause there will be no need for such a large-scale recon- struction of infrastructure, Rozhkov said. Russia’s lack of hotels and stadiums may play to its ad- vantage, because Fifa is in- terested in developing foot- ball infrastructure worldwide, and the other bidders already have such infrastructure developed, Shuvalov said. Also in the running for the 2018 or 2022 World Cup are England, the United States, Australia and two joint bids from Spain-Portugal and Netherlands-Belgium. The 2018 tournament is tipped to take place in Europe, while Japan, Qatar and South Korea are aiming solely at the 2022 tourna- ment. The most serious rivals for Russia are England and the

The budget would be similar to what Germany spent on hosting the World Cup

Russia will develop transport and sports infrastructure even if it loses its bid, Shuvalov said

Spain-Portugal tandem, Mutko said. Fifa’s commis- sion, which will evaluate Russia’s bid to host the World Cup, will arrive in Russia on August 16. It plans to visit some of the cities mentioned in the bid, in- cluding Moscow, St Peters- burg, Kazan and Nizhny Novgorod. Fifa’s executive committee will select the hosts of the 2018 and 2022 competitions in ballot vote in Zurich on December 2.

This article was compiled

from reports appearing in

The Moscow Times and The Moscow News.

“Opening a gallery space outside of Russia is defi nite- ly the new trend among am- bitious Moscow galleries, who feel restrained by the limitations at home – the small pool of regular buyers, few innovative and dynamic artists, and the lack of an in- frastructure to help galleries thrive,” said Marina Gon- charenko, owner of GMG Gallery in Moscow. Heritage Gallery of Moscow is also considering opening a space in London, but at the moment would not comment on its plans. Heritage focus- es on Russian emigré artists of the early to mid-20th cen- tury and contemporary Rus- sian art. “At the moment we’re not committed to a certain time- table, but opening a gallery space in either London or New York is certainly part of our development plan over the next few years,” said Goncharenko. “Russian art galleries still have not become important players on the international art market, and few make it to major art fairs. So open- ing a space abroad is very important for one’s develop- ment and image.”

“A little growth would go a long way to earning Russia little more love...”

“It’s about the atmophere of an oasis of recreation with delicious drinks, snacks, comfortable seats, wi-fi...”

“My strategy has been to find the funnier side of life in Russia, and it works for me.”

Catch the vibes

of Moscow

www.rbth.ru/blogs

To advertise in this

supplement

contact

Julia Golikova

golikova@rg.ru

ph. +7 (495) 775 3114

VITALY BELOUSOV_ITAR-TASS

VALERY SHARIFULIN_ITAR-TASS Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8