Fall of the Anzhi House

Author’s remark: This is an article written on Sports.ru by user Wolverine in August 2013 for his own blog. This is NOT an RFN original and it was just translated by me to help the reader understand the situation at Anzhi better. The author’s opinion may be different from the translator’s. All the information in this article is from August 10, 2013.

The football gods decided to fill the RPL offseason very smartly, not only with a national team match, easy European fixtures and the start to the European leagues, but also with a whole republic-wide football disaster. Along with the usual jokes and taunts addressed to the (already) poor Dagestani club, there were commentaries pretending to be proper analysis. (sports.ru editor) Dmitry Navosha considered that Suleyman Kerimov just lost all his money and decided to make a football margin call.

All those comments lack one thing: understanding. The understanding that it doesn’t happen in a normal European country where a businessman tangled in his business has to sell his property – yachts, villas, football clubs – to get out of debt and spending a couple of years of his life on nerves. Это Россия, блядь.

What exactly does the Anzhi owner do, how did he earn his billions and how did his wealth influence football in Dagestan – no one has asked those questions and even Kerimov’s strange and funny relations with sport clubs were forgotten in 2011.

Suleyman Kerimov, Dagestan University Economic Faculty alum and relative to a local Communist Party leader, earned his first serious money in Dagestan, at the local Eltav (Эльтав) business. Then he moved to Moscow, working in a bank whose clients were mostly Dagestanis.

In 2000 he bought an oil trader Nafta-Moskva (Нафта-Москва), which was struggling after the 1998 crisis, for just 50 million dollars. Later he sold Nafta-Moskva’s property for approximately 400 million. From 2001 to 2004 Kerimov was, saying it strictly, a raider in Moscow. Ingosstrakh (Ингосстрах), Ingosstrakh-Soyuz (future Soyuz (Союз) bank) and many others were taken from smaller owners and profitably sold to new ones.

But all of this was too small for Kerimov. He had enough money, but was he going to do that work for his whole life? He needed a better scheme. And he found it. Don’t try to do this at home in your own countries – unless you want to be imprisoned – from 2004 to 2006 Kerimov took debts at government-owned banks (Vnesheconombank, Sberbank) and bought shares in other government-owned companies – Gazprom and even Sberbank itself. It was the time of the liberalization of the shares markets. A lot of people profited from that. Sberbank shares were leveraged at Sberbank, on the money received from the leverage new shares were bought, which boosted the company’s share prices (and the shares leveraged), which gave Kerimov the money to buy more and more shares again and again… yes, that’s close to the definition of perpetuum mobile.

Gazprom’s capitalization grew by three times during that period, Sberbank’s – almost 12 times. Having 3.2 billion dollars in debt, Kerimov was the owner of shares worth 15 billion dollars (which kept growing).

However, then, in 2006, as some of his friends and co-workers say, he made a mistake which has not been made by another billionaire before or after – he decided to take over Europe and the West. He had $20 billion, a working scheme and the support of government-owned banks in case of financial trouble.

Roman Abramovich, and any other Russian billionaire – Dmitry Rybolovlev, Mikhail Gutseriev, Oleg Deripaska – know business too well to try and make a financial empire in the West. They earn money in Russia and spend it in the West.

Kerimov decided that the world was already his. Although he was warned. Very seriously.

On November 25, 2006, on the Promenade des Anglais in Nice, there was a car crash. A Ferrari Enzo, driven by Kerimov, crashed into a tree. Tina Kandelaki (a Russian TV personality) was OK, but Kerimov had 70% of his body burned. Since then he wears a special silicon costume and still appears in public with gloves on and fully clothed. But he was still going to take over the West.

He sold all his Russian property for $26 billion. After paying the debts he still had $20 billion, invested in a bunch of Western companies – including British Petroleum, Deutsche Telekom, Boeing and Barclays – in 2007. The Russian scheme of taking the debt in a bank and then buying its shares did not work, so he took the debts in Barclays to buy Fortis shares.

The period of his biggest activity was in the first half of 2008. Bank shares were getting cheaper, but Kerimov thought that it was just a temporary trend, and kept buying instead of selling, expecting the prices to grow.

And then the 2008 crisis happened. Bank share prices and companies owned by Kerimov went down by as much as 60% and all he could do was watch as his $20 billion becoming nothing in, literally, days.

Although, most likely, he was fooled by his own consultants, who made him buy Fortis shares for 750 million in July-August 2008, when a year later he could hardly sell them for 50 million.

In just a year, Suleyman Kerimov had become an averagely rich man, from an insanely rich one. All his property was worth roughly $200 million. From $20 billion. He didn’t even have the money to pay Nafta-Moskva’s staff wages. So what he did was return to Russia, where Dmitry Medvedev had just become president. Many Dagestani businessmen, whose names won’t tell you anything, became insanely rich during Medvedev’s reign.

The VTB bank (yes, that VTB)

gave Kerimov 5 billion in credit to buy Uralkali (yes, that Uralkali)

from current Monaco owner Dmitry Rybolovlev. Before that, he acquired some more shares (some even for free), so currently his property was valued at $7-10 billion mark. This spring he was negotiating with Leonid Fedun (yes, that Leonid Fedun)

on the shares at Petrokommerz Bank. It looks like he’ll need some VTB money to do that.

Kerimov has been investing in sports for a long time, using the same scheme, so what happened to Anzhi was actually predictable. Some examples:

2004-2005 – Dagestan Boxing Federation. The partnership stopped suddenly without any explanations. Kerimov says most of the money was stolen.

2006-2008 – Sultan Ibragimov. Lost his fight to Vladimir Klitschko and got his financing cut.

2007-2008 – The Russian Wrestling Federation. There were colossal bonuses after the Beijing Olympics and then quiet, calmly cutting off money supply. There are talks that most of the money was stolen (ed. note - While Kerimov did cut back significantly after Beijing, he continues to provide major financial support to the Russian Wrestling Federation).

2011-2013 – FC Anzhi. $235 million spent on transfers only. In summer 2013, Kerimov gets out of the project.

But there’s a difference. You can’t get out of football as fast as you can get out of boxing or wrestling.

So, what did actually happen to Uralkali?

Potash markets are owned by two groups – Canadian/Americans and the Uralkali/Belaruskali cartel. This cartel agreement helped Kerimov (along with Belarusian partners) triple potash prices, from $140 to $420. And it worked. But the system was not stable enough for use by idiots. One of them - a dictator with a redneck mentality - hint -

saw that the prices were high, but the production numbers were not growing and ordered to sell them cheaper, for everybody to earn more money and increase the GDP numbers. This happened in December 2012. Kerimov tried to explain to him the profits of a cartel, but in the end Uralkali had to announce its withdrawal from working with Belaruskali in summer 2013. So that caused everything (ed. note - And the imprisonment of Uralkali top manager Vladislav Baumgertner in Belarus for 2 months; he’s been extradited to Moscow and is currently under house arrest for the same case).

In 2011, I thought that Anzhi was Kerimov’s new attempt to conquer the West – make the club successful and people will forget about your failures. But it was just another typical sports crush for the businessman.

Moreover, Kerimov acquired Anzhi from the former Dagestani president and the new one doesn’t need a club from Makhachkala based somewhere between Moscow and Kratovo. You can ask why did Kerimov not get out of the club in February, when the new president was appointed? He’s most likely been waiting for the new one to act. The arrest of the former Makhachkala mayor, the dismissal of the Dagestani parliament – those are actions.

Kerimov has always been rude in business, and even more so in sports. What I think did happen:

Kerimov called German Tkachenko (sporting director) and Konstantin Remchukov (general director) and announced his withdrawal from the project and that he wouldn’t finance the club anymore. For their mumbling about “you can’t just leave the project in a second” he probably said something like “you spent 200 million on the players, feel free to sell them, you won’t see a pittance from me.” Basically, Anzhi goes into the same state Dynamo was in between Alexey Fedorychev (who owned the club in mid-00’s) and the VTB, when for two years the team’s two-year budget consisted of the money received from selling Danny and Semshov to Zenit. So that’s your 50-70 million budget mark – they decided to sell the team and spend that money.

Unfortunately, 200 million is an arbitrary number. Anzhi will only start getting paid for Kokorin’s transfer in the next year; Traore’s deal includes Kuban getting 50%; Eto’O, Boussufa and Carcela-Gonzalez’s contracts expire in 2014; they got rid of Denisov. Those guys were half of the team’s total cost.

Of course, there are speculations about “Kerimov’s not going out, he’s just changing the strategy”, the academy, local players and stuff. It’s a football omen – if there is talk of the academy, then there are problems. The official announcement of Kerimov’s withdrawal would make players rush from Anzhi.

Just look at the commentary from Anzhi management. Konstantin Remchukov talks about owner’s physical and mental health. Who would say that about the person he’s going to work with? Of course, Kerimov can’t watch his team play; he quietly cries about the result before going to sleep. People from the Caucasus, you know.

Although Remchukov is a businessman himself, and other Anzhi staff just decided to say nothing.

But what could be expected from the people, whom Kerimov gave his millions to spend on football? He didn’t appoint anyone from Nafta-Moskva or even Uralkali. He just hired the biggest Russian football agents. Sometimes it looked like Anzhi was the most impudent thing in football, and, particularly, when it came to transfers. It wasn’t the big RPL project or Kerimov’s reputation card, but a cover for cutting and swindling money from all over the world. How else can you explain the deals on injury-susceptible players? Tardelli, Jucilei, Joao Carlos, Zhirkov… all those players were playing, and sometimes playing well at their clubs, but most of the time they were suffering from injuries. Zhirkov spent more time in Chelsea’s infirmaries than training, and then there’s the 15 million paid for him. Anzhi was given useless players from all over the world. Kerimov signed the cheques, and Tkachenko counted the difference between the actual price and the cheque. Then the players got injured and… here’s another sort of a perpetuum mobile.

The sell-out at Anzhi will be managed by a “professional fan” Konstantin Remchukov, whose work in Kratovo was “getting rid, you know, of the hate between, for example, Moscow fans, ermmm… and Caucasus fans.” It’s up to you how much has he done to get rid of the hate for these past 8 months. I think in the last week Kerimov’s done way more.

Oh, and even more. Remchukov organized a “100 beautiful Muscovites” competition, which was won by (surprise!) Varvara Remchukova.

So what do we have after all? Kerimov is a man with a strange biography, a man who has lost everything but was reborn; he’s not the biggest one, but he’s in the “team”.

Kerimov invested $450 million in Anzhi to have fun, not to listen to Eto’o’s complaints. By the way, Eto’o flies to the club base in a helicopter (ed. note - Eto’o did not actually use a helicopter - some Anzhi teammates once arrived at practice in a helicopter, but were told not to do it again) and lives in a penthouse in the center of Moscow, which costs Kerimov 20,000 euro a month. He’s not condemned to Anzhi, why would he do something that’s no fun? So, that’s it, Anzhi goes back to Makhachkala. The feast is over.

All the officials are currently doing is making the process quiet. Remchukov doesn’t need panicking, or he won’t get 150-200 million out of the squad. Kerimov doesn’t care anymore, as he doesn’t care about anyone’s opinion. Except for one man. That’s not Eto’o.

Everything bought on Kerimov’s money will be sold, that money will form the club’s budget, if it isn’t stolen. Next year, the club will be given back on the balance of the Dagestani Republic. The circle will close.