Sochi’s Olympic boss Dmitry Chernyshenko will face the hardest challenge in the KHL’s history in his first year as president. (Photo: Sergey Kuznetsov / RIA Novosti)
Russia’s financial crisis is in full throttle as the ruble fell below 65 to one dollar (as opposed to 33 one year ago), while Russia’s main export, oil, has fallen below 60 dollars per barrel for the first time since May 2009.
The changes in the economy will affect Russian hockey.
It’s been reported that several KHL clubs have been struggling financially and have delayed salary payments. Interestingly, non-Russian KHL clubs seem to have been hit harder by financial changes to this point. In interviews managers admit that the changing financial landscape has driven their decisions.
At least one team, Atlant Mytyschi, is officially questionable to participate next season. They now have to seek new sponsors after businessman Anton Zingarevich has announced that he will not finance the club after this season.
Dinamo Riga waived four veteran players on Tuesday, most notably Marcel Hossa, Marian’s brother, who was one of the KHL’s best players in the league’s first years. None of them are stars now, but all or almost all are serviceable players. The KHL doesn’t disclose financial information on individual contracts, but you’d have to think they were a bit too hefty for the cash-strapped Latvian club.
Slovan Bratislava, another foreign club, has been rumored to have serious difficulties as well. The reports said that the club hasn’t paid its players since the season commenced.
While it’s impossible to predict what the future holds for Russian economy and the KHL, it’s likely that both oil and ruble will eventually bounce back (to some extent). The damage the KHL will suffer depends on when that happens.
It’s impossible to imagine that big clubs like CSKA Moscow, SKA St. Petersburg, Dynamo Moscow, Avangard Omsk will face the same fate as Atlant. The people and corporations behind those teams have pockets that are just too deep. Of course, they’ll have to watch their finances more closely now, but the situation isn’t critical for the marquee teams of the KHL. It’s the smaller teams, the Atlants of the league, that are in danger. But there may actually be a positive in that.
Twenty one of 28 KHL clubs are Russian. With the import limit set at five, it means that the KHL clubs employ more than 400 Russian players. That number is too high, causing a significant shortage of players “with the right passport.” Many players who do not belong in the KHL play regularly just because somebody has to fill those slots, while players who are actually good enough to be in the league routinely get drastically overpaid, even though there are North American and European players of the same level available for half the price.
If KHL contraction becomes a reality, and the likes of Atlant, Metallurg Novokuznetsk, Yugra Khanty-Mansiysk, and other clubs of the bottom tier leave the league, demand for Russian players will fall significantly. The financially safe clubs would pick the best players from those clubs. Players hungry for a big contract might have to temper their expectations and players who were just filling slots might be gone. In the long term, it may actually be good for the league as payrolls league-wide drop and the league becomes more competitive.
That’s the best-case scenario at least.
The worst-case scenario is easy to imagine: the crisis goes on for long enough to eliminate the smaller clubs, all the foreign ones except for Dinamo Minsk (financed entirely by Belarusian corporations) and Jokerit Helsinki (SKA’s alter ego). It’d turn the league into an 8-9 club tournament. That might make for interesting TV, but it probably wouldn’t be a balanced league.
That scenario would require years and years of financial struggles before it occurs.
Whether the league reaps the benefits of financial cleansing depends on new league president Dmitry Chernyshenko and newly named FHR vice president Roman Rotenberg. The nephew of Dynamo’s boss, Rotenberg is a member of KHL’s executive board as well as the vice president of SKA’s marketing and business development and a part owner of Arena Events Oy, The Finnish corporation that owns Helsinki’s Hartwall Arena as well as a stake in Jokerit. Rotenberg has proven to be arguably Russia’s best hockey manager as far as the economic side is concerned, and his influence in the federation, league and its flagship clubs may prove crucial.
It’s likely that we won’t see any big signings from the KHL for at least a couple years, but beyond that, the KHL may be better off after trimming the fat.
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