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Volume 7 No. 149
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Russian Austerity Plan Bars Power Companies From Sponsoring Sports Clubs

The Russian government is preparing an austerity program under which power companies will be banned from sponsoring sports clubs. The measure puts in question the future of several sponsorship deals, including Rosseti’s contract with CSKA, currently the front runners in the football premier league. The austerity plan, stipulating a ban on sponsorship and charity for power companies, many of which receive subsidies from the state budget, was publicized earlier this week and is expected to be finalized in the first quarter of '16. "Given the poor state of the budget and difficult conditions in the [power] industry, this kind of development looks quite likely," Piotr Dashkevich, an analyst at the investment company UFS, told SBD Global. "I think it would only be beneficial for the [power] sector as sponsorship of sports clubs by companies that constantly need cash from the budget looks like a very dubious decision."

FLIPPING THE SWITCH: Among Russian power companies, Rosseti has the biggest sponsorship deal. The company struck a five-year,  4.2B rubles deal ($140M at the time) with flagship football squad CSKA Moscow in the spring of '13. In May '14, Rosseti announced that the value of the deal would be revised toward reduction, but the new figure was not revealed. CSKA said that so far, Rosseti's obligations under the sponsorship contract have been implemented in full. Over the last year and a half, the overall economic downturn in the country prompted the government to look closer at sports sponsorship or ownership deals by major state-run or state-subsidized companies. Last October, the federal anti-monopoly service said that railway operator Russian Railways should get rid of its sports assets, including football club Lokomotiv. However, the company has made no move so far.
Vladimir Kozlov is a writer in Moscow.