Thursday, July 13, 2006

Gazprom buys 51 percent of Zenit FC

Former owners of St. Petersburg's Zenit Football Club, Vladimir Kogan and David Traktovenko, have made a profit of USD36.247 million in selling their club to Russian energy giant Gazprom. For the first time in the history of Russian soccer, we know the exact price of a club. Experts consider it fair, with prices of Russian players currently on the high side.

At the weekend Gazprom revealed the sum it had paid to gain a controlling stake in Zenit, one of the Russia's most popular soccer clubs. According to a Gazprombank IFRS report, the gas monopoly purchased a 51 percent stake in Zenit for USD36.247 million. The bank's press-service was not available for comment on Sunday.

David Traktovenko, former co-owner of banking house Sankt-Petersburg and Zenit chairman, refused to discuss the deal, quoting a clause in the contract forbidding the release of this information.

Most experts polled by Vedomosti say that the price Gazprom has paid is fair. German Tkachenko, president of ProSports Management and ex-president of Krylya Sovetov Samara, said that half the sports facilities of the St. Petersburg club, plus its players, who are professional by Russian standards, and its strong brand, are fully worth USD36 million. "Understandably, purchasing a club is a ticket to further spending, because Russian soccer is no money earner. But the ticket can be capitalized and resold to a higher bidder later on," he said.

The cost of players on the Russian soccer market is unrealistically high, said Maxim Belitsky, sport director of Sportima agency, and so the price Gazprom paid for half of Zenit can be considered adequate.

But an expert who asked to remain anonymous said that the gas monopoly had paid through the nose. Gazprom paid so much for the sporting brand, because only Zenit's training facilities and contracts with some soccer names are among the worthwhile items on its books. "Abramovich paid something like USD48 million for a controlling stake in Chelsea, and repaid about USD185 million in club debts. But Chelsea had on the physical balance some real estate in London's center, including a hotel. And the possible commercial benefits and sports successes of the London and St. Petersburg clubs are like apples and oranges," said the expert.

Earlier, deals to sell Russian clubs have never been made public. Spartak fans, for example, who wanted to know how much LUKoil vice-president Leonid Fedun forked out to acquire the club, had to make do with approximate expert estimates. Analysts and soccer market players estimated the Moscow club "at USD70 million."

Tkachenko said that before Krylya Sovetov was sold, he had put the full value of the club at about USD25 million. He did not name the size of the deal, however. For Torpedo Moscow, businessman Alexander Mamut offered USD31 million. Michael Sterling, director of sports market agency Global Sponsors, said that Russian clubs are generally difficult to put a price on - the soccer market is undeveloped, and market criteria are absent. He said Gazprom did aim to pay a market price for Zenit, because the company's top managers supporting the club were most likely moved by personal or image-building motives.

Russian soccer is now emerging from the shadows it had been in throughout the 1990s and early 2000s, said Tkachenko. Large companies such as Gazprom and LUKoil have entered the country's soccer market, he said, and the size of these concerns makes them do business by Western standards, and disclose the price of major purchases.

Vedomosti, RIAN

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