The future of Russian football as well as its politics appears set to increase their influence on the world.
It would appear that the world of football is about to be altered by rules being introduced by UEFA. This week has seen the start of tighter regulations on clubs' finances. The message is clear, live within your means or sanctions will be implemented. However, although Financial Fair Play (FFP) is supposed to create a level playing field, it may be just allowing more clubs to use foreign investment to bypass the FFP rules. This is a worrying precedent.
Financial Fair Play
This week UEFA have sought to enforce Financial Fair Play and have thus withheld money for taking part in European competition. Sides like Malaga, Sporting Lisbon, Dinamo Bucharest and Rapid Bucharest of Romania, Turkey's Fenerbahce and Serbia's Partizan Belgrade have all been found to have “important” overdue payments to other teams, employees or social and tax authorities.
Michel Platini said the measures have been introduced to stop clubs from spending their way into oblivion and forcing them to live within their means. When looking at the problems that overspending have had on sides like Dortmund, Leeds United and Portsmouth in recent years, then Platini’s approach is a positive one.
However, there is a deeper issue to Financial Fair Play; by forcing clubs to live “within their means” European competitions like the Champions League will see an increased division between those that have and those that have not.
Uefa seek to keep clubs ambition yet stress that one must be careful to not risk too much and lose everything. Thus, FFP will improve the finances of many sides, yet it will also take away competition and increase the already mammoth gap between the elite and the rest in European competition.
When looking at the clubs which have been accused of failing the new financial rules (which require clubs to spend no more than what they turnover each season). FFP is Uefa's ideal intended to create a more "level playing field" for sides across Europe. The ignorance, naivity or clear lack of this being implemented is startling. These rules will actually restrict sides with little money to ever challenge the mighty of Europe.
Many have wondered how and why sides like Man City, Man Utd, PSG, Barcelona, Madrid and Chelsea have not been hit by these FFP sanctions. Well it all comes down to the flaw in FFP and why these major clubs will continue to spend huge sums while others can spend little. In the past couple of seasons there have been some notable “sponsorship” deals with some of the world’s top clubs.
These deals have allowed sides to stay competitive and spend big while not being guilty of FFP. Barcelona signed a £25m a year deal with the Qatar Foundation, Man Utd signed a £40m deal with DHL, Man City are funded by Abu Dhabi and a "sponsorship" deal with Eithad could bring in any sum required. The same applies for PSG and their new owners. Even Liverpool have sought to get round FFP by using Warrior as their kit sponsor in a deal worth £25m a season.
The truth is that the top sides will find ways to get past these regulations. Major companies want to use top sides to advertise their goods and services and the future for many sides will be increased sponsorship deals in order to increase revenue.
The only option for smaller sides is to hope to be bought by a billionaire owner, yet it is not as easy as that. Ask Malaga what happens with "foreign" owners, you will not meet many Blackburn Rovers fans who will be raving about their new owners and even Aston Villa have been promised much and delivered little by their US owner.
The only way to become part of the elite?
The only way for clubs therefore to “challenge” the elite of Europe is to be invested in by a very rich Sheikh or a large Russian natural resource company.
In the past decade we have seen clubs like Chelsea, Man City, PSG and Malaga all come under the ownership of multi billionaires. Prior to that money has influenced the fortunes of clubs like AC Milan under Berlusconi and Man Utd made their money from global marketing, whose value in the market was the reason for the Glazers purchase of the club.
Football clubs are attractive to the rich and to business men who are looking for a hobby or more importantly looking for added exposure.
Man City’s owners are seeking to use their influence on Man City to invest in the City of Manchester. Their investment in the club is therefore a way for them to have a presence in a large European city. The same can be said of PSG’s owners who are seeking to invest and grow their brand in Paris. The intentions of Arab investors appears to be centred around getting a foot in the door to Europe.
Using football clubs as entry to Europe?
It is not just the Middle East who are looking to get into Europe. When Roman Abramovich bought Chelsea in the summer of 2003 he was doing so under the instruction from Russia’s President Vladamir Putin. Putin had informed those who had benefited from the collapse of the Soviet Union that they must “invest” in Russia’s future. Many were instructed that if they did not “help” Russia then they would be accused of theft and jailed.
Thus Abramovich’s role at Chelsea has been to improve the perception of Russia and Russian business across Europe. His role in acquiring the World Cup in 2018 was also on the instruction of Putin and thus Abramovich has “paid his dues” back to the country which gave him so much.
The same is the case with Anzhi Makhachkala who are based in the impoverished republic of Dagestan. Putin had informed the billionaire Suleyman Kerimov to invest in the Dagestan area to improve the quality of life for its residents. Sport was seen as a means to improve the standards and perception of the area.
Putin therefore sought to use the men who had profited from Russia's resources to improve the country and importantly approve and support Putin's government.
In the past couple of seasons Anzhi have spent huge sums to attract some top players. Yuri Zhirkov arrived from Chelsea, Chris Samba came from Blackburn and in a deal worth £20m Samuel Eto’o was signed from Inter. The deal made Eto’o the worlds’ highest paid player, with him picking up almost £13m a year.
With the arrival of former Russian coach Guus Hiddink Anzhi is seeking to achieve success in this years Europa League. Kerimov has aimed to invest $200 million in the clubs infrastructure in order to meet UEFA requirements.
The intention of the club, its owners and Putin is to bring success to Russia and portray the country in a brighter light.
The ambition of Zenit & their owners
Perhaps the most impressive show of intent from a Russian club came on the final day of the Russian transfer window this summer when Zenit St Petersberg spent £64m on Hulk and Axel Witsel from Porto and Benfica respectively. It was a show of intent from the club and notably their investors, Gazprom. With Russia hosting the World Cup in 2018, all focus is on building relations, improving the countries perception and making Russia a dominant player in European football.
Gazprom bought Zenit in 2005, and that decision may have been influenced by the fact that Vladimir Putin and Dmitry Medvedev were born in Leningrad. "As I grew up in St Petersburg, I love Zenit," Medvedev has said on more than one occasion, and that is quite natural.
In the past several years Zenit have emerged on the European stage; a Uefa Cup win in 2008 announced to the world that Russian football was on the rise. In the 2008 European Championship Zenit’s star Andrei Arshavin was majestic on their route to the semi finals. That year alerted Europe to the quality Russia was producing.
Last season Zenit reached the Champions League knockout stages for the first time and they will fancy their chances of being in the Champions League still come February as they have Milan, Malaga and Anderlecht in their group this year.
Perhaps Zenit are still a few players short to win the competition, yet the intention of the club and its owners is to make them into a force to challenge Europe’s elite in the coming years.
A growing influence and splurge of intent
Before the splurge this summer Zenit had been very quiet in the transfer window, they had only purchased one “significant” player as the manager Spaletti stated in Domenico Criscito. Bruno Alves arrived from Porto for £18m in 2010 yet his performances have not justified the price.
Zenit have always being promising major investment and big name signings yet before this window is was merely polticial rhetoric. Yet not the “government team” are spending and spending big. Zenit’s intentions are to win the Champions League by 2014.
Although Hulk and Witsel indicate ambition, it is hard to believe that these players will make Zenit serious challengers. The big spenders of the transfer window were the Arab backed PSG and in the past four years it is Man City who have had to spend over £500m to become one of Europe’s elite. Therefore it seems highly unlikely that Russian clubs can attract the quality and quantity of players required to be serious Champions League challengers.
However, that being said there is without doubt going to be more big money signings made by Russia’s big clubs in the coming years. With the 2018 World Cup coming up money is being thrown at infrastructure and wages to bring the best to Russia and make its clubs and league one of the best in the world.
Even changing the schedule of the season to fit in with Europe was a brave decision considering the winter months (when the season was usually off) will be bitterly cold. It won’t be as pleasant for Hulk and Witsel as the Portuguese climate yet the Russians understand that big wages tends to be the decision maker for many players.
Gazprom's net widens across Europe
Ultimately it appears that the intention of Zenit’s owners Gazprom, who are the biggest extractor of natural gas in the world is to increase their influence across Europe. Although classed as a private company there is no denying that Russia’s government controls the gas firm.
Gazprom and thus Putin's government appears set on investing and sponsoring football clubs across Europe. Already Gazprom has invested £100m in Schalke in Germany since it “sponsored” them in 2006. it is believed that Gasprom’s deal with the club was heavily political in order to buy friendship with Germany. The company recently prolonged its deal Schalke until 2017, continuing it's position in German affairs.
This summer there have been reports that Gasprom intend to invest in another German club, Bayern Munich. The sides discussed the details of possible cooperation which may result in a significant financial investment into last seasons Champions League finalists.
Uli Hoeness, Bayern's President said that “We had a very pleasant conversation over lunch with Alexey Miller. The head of Gazprom arrived for to negotiations on gas with the government of Bavaria. He also contacted us and we arranged a meeting. Both sides were completely open with each other and agreed that we have a great interest in cooperation. We plan to hold more talks like this in the future.”
For those who don’t know after Chelsea’s success in the Champions League this past season, Gazprom also became a sponsor to the club in a deal worth around £100m. It is therefore not surprising that Chelsea were able to fund such lavish spending this summer on players like Hazard and Oscar. The “sponsorship” deal aallows Chelsea to avoid the issues of FFP. It was Gazprom too who Abramovich sold his company Sibneft to in 2005 for £8.4 billion.
The gradual investment and "aid" to some of Europe's top sides is surely worrying for many. With any form of "sponsorship" one intends to get something back. As Gazprom are an extension of Putin's government, what is their intention? It is merely to improve Gazprom's standing and reputation or is there something more?
Gazprom belongs to the so-called national champions; a concept advocated Putin, in which large companies in strategic sectors are expected not only to seek profit, but also to advance Russia's national interests.
Gasprom have even sought to “help” Red Star Belgrade, Serbia’s biggest team who have fallen on financial woe in recent times. According to Serbian media, Red Star will receive an annual allocation of €3 million from the world's largest gas company.
"Red Star is without a doubt the most popular team in the country, which has a large army of fans in other countries of the former Yugoslavia. They’ve won some of the most prestigious trophies, including the Champions Cup and Intercontinental Cup. But most importantly, Red Star has more than four million fans in the Balkans alone," Gazpromneft CEO Aleksandr Dyukov told Sport-Express.
And this season as Gazprom were announced as the sixth “official” partner of the Champions League. Without doubt it would appear that their influence on Europe is growing, both in terms of investing in the growth of teams they are sponsoring and their growing political influence with some of Europe’s big countries.
The three-year Champions League deal will see Gazprom “cement their involvement with Europe's most prestigious club football competition through exclusive services and products," the UEFA website says. The deal with UEFA is seen as another step of promoting itself worldwide.
Worries about Gazprom
Although Gazprom are intending to grow their influence across Europe, many Russians are concerned that "their" money is going into football and not the people. Zenit are still the one true love of people from the former Russian capital, but the club is becoming more and more hated elsewhere. They are seen as the "government team", a club trying to buy success with people's money.
The EU has revealed it had launched the probe over concerns that Gazprom was hindering competition in Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland and Slovakia. The investigation is focused on Gazprom's use of long-term contracts to lock in prices that are tied to that of oil; a policy that often leaves its supplies far more expensive than those available on the open market.
Gazprom controls assets in banking, insurance, media, construction and agriculture. In 2008, Gazprom's activities made up 10% of the Russian GDP. Gazprom is Russia's largest company and produces about 15 percent of the world's natural gas. It accounts for more than a quarter of Europe's consumption.
European critics claim that this state-dominated corporation is all about politics and thus the intention to invest in sport appears another of Putin's games to influence European policy.
With the Russian world cup six years away, Russia's government is seeking to increase its influence across Europe. In the coming years expect to see more big names heading East with very large fees and astronomical wages. This season expect to see more of Gazprom's logo. Already it has been seen at Stamford Bridge and next week it will be advertised heavily in the Champions League coverage.
And what about FFP? Well it is a fallacy that FFP will influence any of the big sides. And those clubs like Man City, PSG and now Zenit who are attempting to move into the elite will not be affected by threats of sanctions in which billionaires can bypass the rules.
A worry for football as well European politics is that as the Euro suffers and gas prices rise, Gazprom and Putin’s Russia are strategically using football and their "investments" to lay strong foundations across Europe. The future of Russian football as well as its politics appears set to increase their influence on the world.
Football fans may enjoy using their money to see their sides improve, yet one wonders what price will come from this Russian investment?