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Russian football struggles as ruble plummets

November 11, 2014

Russian football clubs are facing a severe financial squeeze as the Ukraine conflict and a plummeting ruble leave 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 top footballers’ contracts in Russia, meaning that in ruble terms, players’ wages have shot up.

The conflict in Ukraine is having troubling effects on Russian football. 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 football figure, and strained the government budgets which many clubs rely on.

Hailing from south-western Russia, FC Rostov is the closest Premier League team to the Ukraine crisis, in terms of geography and financial turbulence. The club won the Russian Cup last season but is now in the relegation zone.

Rostov players “haven’t been paid for four months - July, August, September, October,” a source with knowledge of the situation, speaking on condition of anonymity because he wasn’t authorized to talk publicly about it, told the Associated Press. “I believe the club have already advised that they’ll pay in the middle of November, which will be nearly five months. It’s not good enough.”

The source 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.”

Some players could leave the club on free transfers in the winter if they remain unpaid, the source said.

As many as one million refugees from the conflict have crossed the border into Russia, according to Russian government estimates. Rostov, around 100 kilometers (60 miles) from the border, is a major transit point.

At least nine of Russia’s 16 top-flight clubs receive some or all of their funds from regional governments, while another three are owned by state-controlled companies, such as gas firm Gazprom, which backs Champions League side Zenit St. Petersburg. Historically, some state-backed teams have been very well funded, with Zenit’s lavish transfer spending earning it a fine from UEFA last season under Financial Fair Play rules.

Oil billionaire Leonid Fedun, who as owner of Spartak Moscow is one of the few major private investors in Russian football, has warned of a wave of problems for government-dependent teams, especially those like 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 could also affect other major sports in Russia such as ice 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, and last week 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 which 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 football’s financial struggles with interest is national coach Fabio Capello, who has not been paid since June amid cash shortages at the Russian Football Union.

Those problems date back several years, with the organization perennially searching for sponsors, but have intensified this year as the RFU has reportedly had to resort to bank loans to pay some staff.

Capello signed a four-year contract extension in January which 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 at a time when the RFU is struggling to pay.

The RFU declined to comment on any aspect of Capello’s contract.

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