Why has the Russian football advance stalled?

The odd eye-catching European result aside, the march of Russian football has been stopped in its tracks. Paul Little investigates the reasons.

Back in the mid 2000s, Zenit St Petersburg and CSKA Moscow won the UEFA Cup, heralding, some thought, a Russian onslaught on the top table of European football.

Despite the continued backing of some serious financial muscle, that hasn't quite materialised. So what happened?

I talked to Toke Theilade, blogger on Russian football with www.russianfootballnews.com, to get a picture of the game there, to find out why the Russian football advance stalled and to examine the barriers that must be overcome if dreams of serious competiveness at the highest level are ever to be achieved. We also discussed the impact of sanctions related to the separatist war in Ukraine on the Russian game.

Russian clubs have some serious backers and owners. Which are the richest Russian clubs and who owns them?

Theilade: Russia’s richest club by far is Zenit St. Petersburg, which is owned by the state controlled energy company Gazprom. Dinamo Moscow is also owned by a state controlled company, VTB Bank, which has given them the financial security to bring in big foreign names like Valbuena, Buttner and Samba. These two clubs are by far the richest at the moment.

Lokomotiv Moscow are, as the name implies, owned by the state railroad service, while CSKA and Spartak Moscow are both privately owned. Rubin Kazan and Anzhi both used to be very rich but both cut their budgets last year.

But the rich owners are only one side of the Russian football story. Most Russian clubs don’t have rich owners and struggle financially because of their inability to generate serious commercial income. In fact, many smaller clubs are financed by the state. When times were good and the oil money was rolling in, these clubs operated comfortably. But times have changed, and as a consequence, the financial state of many such clubs is very fragile.

What are the problems facing Russian football? And how serious a problem are UEFA’s Financial Fair Play (FFP) rules for Russian owners? 

Theilade: FFP is a huge problem for Russian football, because of the limits placed on spending. Last season Zenit, Anzhi and Rubin Kazan were all punished for breaching the FFP rules, spending more on transfers than they were allowed based on revenues generated.

The major problem with FFP is that Russian clubs have a very low income compared to their Western counterparts. The average attendance in Russia is very low (just over 11,000 in 2013/14). Moreover, the money generated by the Russian Premier League’s TV deal is negligible in European terms.

A former president of Lokomotiv Moscow once told Lazio's President what the Russian clubs earned from TV. When Lazio's President heard the answer, he said "I didn't ask about the daily income but the annual!"

In most leagues the income from TV is about one third of the budget, probably even more in the English Premier League, but in Russia, the TV income is not even 10%.

And largely as a consequence, many Russian clubs struggle to find the kinds of commercial deals enjoyed by clubs in Western Europe because of their lack of box office appeal.

And yet the owners of the bigger clubs have financial clout – we’ve seen it in action in recent seasons at Zenit with the signings of Hulk and Witsel, for example. But in tying spending and wages to revenue generation, the FFP rules have rendered such owners largely impotent.

Can the richer clubs grow and become more competitive despite FFP? What options have they got?

Theilade: It will be really difficult. Obviously, developing their youth systems to get more homegrown players through would help with the problems posed by FFP. It would help strengthen the league as a whole, especially given restrictions on the number of foreign players allowed at each club – Russian clubs are only allowed seven non-Russian nationals on the pitch at the same time, at present.

There are a number of good Russian youngsters coming through, however, but impatience to succeed and be competitive means that the biggest clubs rarely give them the chance to make a breakthrough.

Zenit’s 21-year-old midfielder Pavel Mogilevets is a case in point. He played the second half of last season on loan at Rubin Kazan and went to the World Cup in Fabio Capello’s squad on the back of his impressive performances. But since returning to St Petersburg, he’s rarely featured in the first team this season.

Hemmed in by FFP and other structural problems, Russian club owners have been looking at other options. Before the violence in eastern Ukraine, the big owners like Gazprom were looking at establishing a combined Russian-Ukrainian league to try and increase interest in terms of attendances, TV deals and sponsorship. The fact that the idea got well beyond the planning phase serves to underline how few if any people, even some who might be considered to be in Vladimir Putin’s inner circle, foresaw the outbreak of a civil war on Russia’s border. The plan is obviously hard to picture now – but could it have happened?

Theilade: No, I don’t think so. UEFA have only approved of a league like that once before; a combined women’s league in Belgium and the Netherlands. Even then, FIFA president Sepp Blatter was dead set against it. Gazprom is, however, one of the biggest sponsors of both UEFA and FIFA, as well as the proposed joint league, and with the backing of the big clubs in Russian and Ukraine, it was never impossible.

However, it is easy to glorify this tournament, especially now that it did not happen, but I don’t believe it would have been a success. The clubs supported the idea, according to Valery Gazzaev, spokesperson for the proposed league, who insisted it could have helped the clubs cope better with the demands of FFP because of the sizable prize money to be paid by Gazprom and the increased income from TV rights.

But it was never made clear where the increased TV money would come from, and I don’t think there would have been a serious market outside of Russia for broadcast rights. Neither do I think the new league would have increased the average attendance at games largely because of the huge travel distances involved and the related expenses for travelling fans and because of the general lack of support among the fans in both countries for the idea.

Moreover, and perhaps most critically, the football associations in both countries weren’t prepared to lose their precious Champions League and Europa League spots and hence were unlikely to give it their backing.

Ultimately, there were some nostalgic and financial reasons to try to create this league, but there were too many uncertainties, and I think football in both countries would have been better off without it.

Ultimately, events on the ground rendered the plan for a cross-border league redundant. Moreover, those events and the Western view that Russia has been fomenting strife in the region have seen sanctions imposed on the Russian economy and on key individuals within the upper echelons of its business and political elite. These sanctions, plus the dip in oil prices worldwide, have had a direct impact on Russian football. In fact, some of the figures targeted by the sanctions – within Putin’s inner circle – are heavily involved in the country’s biggest clubs. Can you tell us a little about the impact?

Theilade: Dynamo Moscow’s president, Boris Rotenberg, is one key figure in the Russian game who has been targeted by US and EU sanctions. Part of Putin’s inner circle, Rotenberg practiced judo with the President when they were young. Rotenberg and a number of Putin’s “judo friends” benefitted hugely from the former KGB man’s rise to power.

Terek Grozny and Chechnya’s President Ramzan Kadyrov has also been sanctioned because of his support of the annexation of Crimea. Kadyrov is thought to have funded a private army that has been helping the pro-Russian rebels in Ukraine.

A critical impact of the sanctions has been the loss in value of the Russian ruble, which has been a disaster for the clubs. The clubs pay their players in foreign currency, normally US dollars or euro. But with the ruble crisis, this approach has become very expensive with clubs having to use more rubles to buy the currency they need to pay the salaries. To alleviate the resultant problems, the Russian Premier League clubs have recently made a proposal to the players, asking them to accept an artificial exchange rate, and essentially accept a pay cut. In fact, Moscow giants Spartak and CSKA are currently negotiating a fixed ruble price with their players, while a number of players at Kuban Krasnodar have already accepted such a deal. Unsurprisingly, however, a number of foreign stars have started looking elsewhere to earn a crust.

A final question: has the impact of sanctions on the business interests of owners served to underline one of the key reasons for the introduction of  FFP, that is, clubs should not be so beholden or reliant on one person?

Theilade: Interesting question! In a perfect world, no clubs would be reliant on one person or one company’s wealth. In Russia, which is far from perfect, clubs can’t find sponsors who are willing to pay enough to sign the stars they want, hence the club owners have to foot the bills. Leonid Fedun, Spartak Moscow’s owner, has said he has spent around $1 billion on the club since he bought it in 2004!

The problem with super rich owners it not purely a Russian one, but the problem is magnified in Russia where the commercial income from merchandise, TV, ticket sales etc. is relatively small, as we discussed earlier.

Taking a broader view, I don’t think the FFP is doing football much good, allowing clubs like Barcelona and Real Madrid, who have massive debt, to spend as they please but preventing clubs like Zenit and Shakthar Donetsk in Ukraine, who can actually afford to spend without debt, doing likewise because of their low income.

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@TokeTheilade