Amkar Perm & the perils of regional government ownership

One of the sad truths of Russian football is financial instability, and every couple of weeks, stories of insolvency and huge debts spring up seemingly out of nowhere. In the last six weeks, we have already highlighted crises at Luch-Energiya Vladivostok and Rubin Kazan, and now, it is the turn of Amkar Perm.

Despite establishing themselves as a stable mid-table club in the Premier League since promotion in 2004, finishing in European spots just once in 2008 and in the relegation playoffs three times in 2006, 2009 and 2010. Krasno-chernie has become one of the epitome’s of the bottom half; they rarely score and concede even less in a defensive system. Gadzhi Gadzhiev is the oldest manager in the league and second-most experienced after Yuri Semin, but the rug has been pulled from under those on the pitch, as like Luch-Energiya Vladivostok, the side are regionally owned.

READ MORE: Luch-Energiya Vladivostok’s Crisis Deepens

General director, Igor Rezvokhin, has stated that the Perm side may not be able to complete the current season in the Premier League, stating;

Now the question is whether Amkar will even be able to finish this season. We do not know if we will be able to start playing after the winter break. There is no funding for the team until the end of the season. No money. Selling players and acting on the money received from their sale only delays the death. On January 11, the team leaves for vacation. If before that time we do not find money, then there will be no fees. The team will not fly anywhere.

We need to understand if a team is needed. If no one needs the team, then this is the answer. We did our best to meet with the leadership of the region. To date, there is no understanding. Amkar simply can not in such a state start the second part of the season.

Essentially, Amkar’s regional government, the Permsky Krai, have ceased funding the club. Unlike in England, where all sides have been privatised from the Premier League all the way down to non-league, many Russian sides are still nationalised and owned by regional governments. 57% of the whole Premier League are still directly or indirectly owned by the Russian government, in fact, only seven sides are privately owned; Anzhi Makhachkala, CSKA Moscow, Dinamo Moscow, FC Krasnodar, Rubin Kazan, Spartak Moscow and FC Tosno.

The rest are either directly owned by regional governments, state republics, or companies owned by the state; such as Gazprom-owned Zenit. Rubin were previously owned by the Republic of Tatarstan, but at the start of the current season were sold to the republic’s biggest private company, Tatar-American Investment and Finance (TAIF). But not even this privatisation has saved the club from crisis.

READ MORE: Missing salaries and results: the poor state of Rubin Kazan

In Russia, regional governments allocate their fiscal budget at the start of the year, as opposed to in April in the United Kingdom, for example. Therefore, the budgets are secured from January-December, and either a poor fiscal year, change of government or reduction of tax in the region can result in huge ramifications for any regionally-owned club.

 

Permsky Krai economy

Amkar is wholly owned by the Permsky Krai, their own regional government. No mid-term elections have taken place during 2017 and the area has just undergone a stable, relatively successful fiscal year. The Analytical Credit and Rating Agency (ACRA) announced the following earlier this month;

The industrialized regional economy is based on oil production and refining, chemical industry and manufacture of various types of equipment. The per capita GDP and per capita incomes are at the level of 91% and 99% of the average Russian indicators, respectively.

Furthermore, in the period from 2011 to 2017, the highest budget deficit of RUB 11.2 billion, or 14.8% of tax and non-tax revenues, took place in 2013, and it was financed by the financial reserves of the krai. As a result, until January 01, 2014, the direct debt was insignificant (less than RUB 0.5 billion).

In 2017, the krai has fully repaid its bank debts (by October 01, 2017, the debt decreased by RUB 12.6 billion, and the net debt equalled to RUB 9.78 billion).

Therefore, the region is fiscally stable and healthy. ACRA has actually predicted a growth in both GDP and GRP from 2017-19, but did warn against;

Shrinking operating balance; A substantial increase in debt load and debt servicing costs.

Despite the fiscal stability, accruing large debts in the future could be dangerous for the region. But where do Amkar come into this?

 

Amkar’s fiscal instability

Head coach Gadzhi Gahzhiev himself has recently admitted; “I do not know whether Amkar will continue to function or not”. The club is seriously in debt, the players, until recently, had not been paid for three-four months, but arrears have now been reduced to “just” a single month. However, this is nothing new. In previous years, players went as far as six months without payment, as claimed by former-midfielder Georgi Peev;

It used to happen that the debts reached six months. I keep in touch with the players, especially since I am Petar Zanev’s agent. The management claims that the situation is difficult. The director, in a conversation with me, said that the club had not yet come across such a difficult situation. But he was not at Amkar when the team almost fell apart. That situation was more difficult.

We always played and fought, despite the fact that we do not get paid. If you have a character, then your heads will not go down. Then there were people who helped the club. If the team now disintegrates, then it will be a tragedy for the region. Leaving Perm without football is terrible. It’s not Moscow or Piter, where there’s a lot of variety. Amkar brings a lot of emotions to Perm.

Therefore, if matters have been much worse in the past, why does the situation seem beyond repair now?

They are not only in debt to the playing staff, but the coaches and employees throughout the club. The club cannot even afford to fund its academy anymore nor send players to youth tournaments. Amkar academy coach, Konstantin Paramonov himself released the brevity of the situation;

It is not just the senior side that suffers but the whole school is suffering too. We are completely dependent on Amkar’s budget. If the club is in a dire state, then we are even worse. Our salaries are small. Previously, they paid day in and day out. Now there was a delay of 4 days for each staff member.

But this isn’t necessarily enough to cause the club to liquidate. But support is being revoked by the local government. Therefore, the club cannot guarantee its short-term future.

At the beginning of 2017, Oleg Glizin became the Minister of Sports of Permsky Krai. Last week, he announced why the funding would be cut and was clear that the club must become self-sufficient, in order for the ministry to fund amateur sports;

We must clearly define what is more important for us – modern sports grounds and halls for residents or millionths of the legionnaires’ fees, or the maintenance of sports functionaries and managers at the expense of taxpayers. For me, the choice here is obvious – in favour of simple lovers of physical education and a healthy lifestyle. This year more than 381 million rubles have been allocated from the budget of the Permsky krai to finance professional clubs. All funds for the clubs are listed. Next year, 362 million rubles are planned. This is a significant amount, and it will be allocated strictly by law.

Unfortunately, there is naught the club can do. This is merey the chief peril of relying solely upon the funding of regional government, and if the new apparatchiks in place do not want to fund a club bleeding money, then they will simply cut funding – just as Glizin has done.

Amkar general director Igor Rezvokhin replied in kind;

There are a lot of arguments in favour of the fact that in our country big sport without the help of the state simply will not survive. You can not throw the baby out of the bath water. Recently, even Sergei Galitsky – the creator of the country’s best private football club – said in an interview that the role of the state in the life of big sport should still be palpable. In other regions, this is understood and opportunities are found to help sports clubs. Everywhere this happens in different ways, but this attitude of local authorities, as now in Perm to Amkar, is almost nowhere.

Minister of Sports Glizin says that everyone was warned in advance, but it is not so. Back in July we were confirmed with the preservation of financing for the next year, otherwise we would not renew contracts with the leaders of the team and with coaches who had a lot of other proposals. And in general – it is impossible to take overnight and unilaterally decide that now we will play by other rules. First, we need to create some transitional period, in which we clearly define when and how the clubs will leave from all-round assistance to the administration of the region.

It seems the two are now at somewhat of an impasse, and it is unclear where the future for Amkar holds. As it stands, they will likely be liquified if funds are not accrued by 11th January 2018, and thus will forfeit the remainder of the 2017/18 RPL. In this event, the ten clubs set to face Amkar would be granted automatic victories, and subsequently three points each.

 

Resolution in sight?

Amkar President, Gennadi Shilov, is set to meet with Maksim Reshetnikov, the governor of the Perm region in the coming days, and hopefully, a resolution can be found. It is, unfortunately, another shameful episode in Russian football that the future of a team, fanatically supported by is fans, is determined not by matters on the pitch, but bickering behind the scenes. It seems that the club has only survived 2017 due to the revenue generated by the twin sales of Georgi Dzhikiya and Aleksandr Selikhov at the start of the fiscal year, likely proving to Glizin of the potential profitability of the club.

In the short-term, if Amkar can sell on some of their prize assets such as Brian Iwodu or Artur Nigmatullin, it may keep them solvent until the summer at the very least, but long-term their future looks bleak for as long as they remain owned by their regional government.

This, more than any other, highlights the drastic need for privatisation in Russia – no longer is the model of nationalisation sustainable in the modern footballing world, as one of the longest legacies of Soviet football haunts Russian football’s future.

Author: James Nickels

Born and raised in South Shields, the direct mid-point between Sunderland and Newcastle in North-East England during an era of sustained success and European football for the Magpies, while the Black Cats floundered in the lower divisions, so naturally I decided to support Sunderland. I’ve developed an interest in Russian football over the last decade or so, but it piqued while studying for my Masters’ Degree in Russian and Soviet History, and I’ve been hooked by Spartak Moscow ever since. Considers Eduard Streltsov the best of his generation, and a fond proponent of his repatriation.

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