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Russian Clubs Face Budget Squeeze, Spending Cuts As Ruble Continues To Slide

As the Russian ruble's exchange rate tumbles against the U.S. dollar and Euro, and the country's economy goes into crisis mode, athletes and sports clubs are facing tighter budgets and spending cutbacks. With revenue and sponsor contracts budgeted in rubles, payments negotiated in major foreign currencies suddenly became twice as expensive. The ruble has fallen from just more than 30 rubles to the dollar to about 65 rubles to the dollar in just a few months. "We will have to cut back on training sessions abroad," Mikhail Butov, president of the All-Russian athletic federation, told SBD Global. "Until recently, we were able to afford foreign training for quite a large number of athletes, but it is no longer the case." According to Butov, some tournaments featuring foreign athletes are also likely to fall prey to the economic crisis as they involve covering transportation costs, player pay and cash prizes negotiated in U.S. dollars or Euros.

FALLING VALUE: Meanwhile, football clubs are also set to be hit hard as, in addition to training and travel expenses in foreign currencies, contracts with most players, foreign and Russian alike, are negotiated in foreign currencies as well, stretching their budgets to the limit. In a bid to find a solution, the Russian football professional league and all of its 16 squads signed a memorandum suggesting that exchange rates for players' salaries be frozen at 45 rubles to the dollar, and 55 rubles to the Euro, about 20 rubles lower than the current rates. Players and their agents have not responded to the initiative, but Vladimir Leonchenko, president of the Professional Union of Footballers And Coaches (PSFT), welcomed it. Leonchenko said, "We understand the economic situation and view the Premier League's idea of fixing the exchange rates of the dollar and euro as a starting point in a dialog of a broader scope of issues."

NO END IN SIGHT: However, Leonchenko added, the sharp devaluation of the ruble could still potentially lead to bankruptcies of clubs and delayed salary payments. Leonchenko: "Clubs went bankrupt even in better economic conditions, like [second-tier squad] Alania, and Premier League clubs Amkar and Rostov just recently had problems with paying players' salaries on time." Still, some in the industry believe that the crisis may not only lead to trouble, but also create new opportunities. Butov said, "The situation in the sports industry is not much different from that in other sectors of the economy. Those who are able to find extra sources of revenues will be winners in this situation."
Vladimir Kozlov is a writer in Moscow.

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