Roman Dubov: We don’t expect Russian players or managers at Portsmouth
Many people in Russia know that Convers Group is engaged in sports projects, but few know what are these. Could you tell us?
Our engagement in sports begun in 2004 with all sorts of racing series. However, it became really deep and close only a couple of years ago. At the height of the global financial crisis we started to assess the situation and to look at various business initiatives – and we have understood that sports are strongly undervalued. They have suffered a lot from the crisis and there was an opportunity to look at this kind of business from another point of view. We saw that if we wanted to create a nice big bank, we would face a tough competition – there were a lot of players throughout the world. But in sports there aren’t so many large holdings engaged in various areas. Therefore, we decided to create a big sports holding that would include various branches – from TV and marketing rights for an entire kind of sport to particular teams. We understood that if focused in one point, the synergy of these businesses can bring an outcome.
What does your holding consist of now?
As of today we operate eleven companies and are completing the acquisition of another four. One of our main our projects is the World Rally Championship. It is a very big and quite an undervalued asset. The rally is watched by about 800 million of people annually. It’s the second most popular automobile series after Formula 1. However, if we compare financial indicators of F1 and rally, we’ll see a huge gap between them. We know where to go and what to change. When we were buying rally, we prepared a business plan for FIA president Jean Todt: how we plan to develop it, how much money we will invest, what we want to change. We do not expect to earn quickly, but we know where we will be in three years.
The same company that promotes WRC also holds an event called the TT Races. It is a motorcycle race, very popular in Britain and Europe, which takes place once a year on the Isle of Man. The race is highly profitable and very exciting. The Isle of Man has practically no speed restrictions, therefore, it’s an ideal place for races. There is also Velux 5 Oceans, the yacht races. We could not imagine how popular this business is, but in fact there’s a really firm demand for it.
The following project is PowerPlay golf. There are about 200 million active golfers in the world today. Having made a market research we’ve come to a conclusion that this number falls every year. Golf began to lose its appeal – perhaps, because it too long and boring for the youth. Therefore, we decided to invest in its shorter version. PowerPlay golf is played on nine holes, each of them has two flags instead of one – one is white and one is black. It you hit a white flag, everything will be like in ordinary golf, but if you hit the black one the points are doubled – and even trebled on the last hole. We own all rights to this sport. On May 30 we held our first tournament in England involving 12 players from the top-20 of the world’s golf. The results were astonishing: the winners were those who would have no chance in normal golf, while Paul Casey and Graeme McDowell – the winners of the US Open – were among the worst. TV companies liked this tournament very much, because the whole match lasts two hours at most and it’s very convenient to broadcast it. Moreover, the battle goes on until the last hole. In ordinary golf if Tiger Woods is four under par after the fourth hole, you may stop watching it further. We have big expectations about this sport. This year we will hold three tournaments – in Asia, USA, and Europe. There is a preliminary agreement that Tiger Woods will take part in the second tournament.
We have recently bought SportPost website – it is a social network for sports fans. There is also DBGConvers company, which makes sports star applications for mobile phones and is also engaged in social networks management. For example, it makes applications for mobile phones for David Haye or conducts Facebook and Twitter accounts of football players like Gareth Bale or Сarlton Cole.
Somehow there are no Russian projects among those listed.
In Russia, sports are not a business yet. But we understand that sooner or later it will happen. Now we are here to launch our first project in Russia. We have bought a company called Leaders, which holds events at Stamford Bridge once a year, where managers from the world of sports gather. The event will be held on October 2, but now, in June, almost all tickets are already sold out. This year we will hold a similar event in Russia together with our Russian partner. Year 2018 is near at hand, but we still don’t have enough experience of such events. Our managers will have a lot of new things to learn.
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At the end of May you have entered the football market. Why did you choose Portsmouth?
We have been keeping an eye on football clubs for a long time. There was an option with Glasgow Rangers. But for the last fourteen years the club had some disputed issues with their tax office for quite a large amount. We thought that it was quite a big risk for us. There were also a number of clubs from the English Championship and a few from the Premier League. We have set our choice on Portsmouth for many reasons: wonderful club, loyal fans, long football history, and strongly underestimated potential, in our opinion.
Choosing the club, did you only look at England?
Yes, last year we did not look at Europe – only at England. A football club cannot live far away from you. If you want to make it a business, you have to pay attention to it every day – and we have live been living in London for a long time.
There is a beautiful story about Roman Abramovich falling in love with football after watching an outstanding match between Manchester United and Real Madrid from the stands of Old Trafford. Do you and your partner Vladimir Antonov have such a story?
Vladimir is more of a ‘automobile person’, the one you can talk to about cars for 24 hours a day, and the one that will tell you when and for how long was this or that engine manufactured. I am a long-time football fan. Moreover, I have been involved in some football projects with Ukraine national team and many of its players. Ahead of the 2006 World Cup, I helped them achieve personal sponsorship contracts.
Purchasing an English club – how difficult is it? Do you only need money for that or something else as well?
It’s hard. At times buying other, more serious types of business is easier than buying a football club. It is a long process which requires endorsements from the Football League, disclosure of incomes, money laundering inspections. In our case, all that took about two and a half or three months.
English football is considered to be loss-making. Why do you need it?
It’s a misconception. Let’s begin with the fact that even Portsmouth was a profitable club last year. It may be shocking for someone, but the profit of the club relegated from the Premier League has made around £1 million. Partly it is due to the parachute payments and to the fact that since the bankruptcy the club has been under strict financial regulation from the Football League. For today the club is profitable.
When is Portsmouth going to come back to the Premier League?
I don’t think it’s an appropriate question. Our goal is to win every match.
When asked why he had bought a team in England instead of in Russia, Vladimir Antonov answered that the Russian clubs ask too much. How much is that?
It’s too much, really. Any Championship club costs way cheaper than the Russian clubs. At the same time the former are more profitable. Here we come back to the notion that Russian football can’t pay its way – at this stage it was hard for us to make a decision to buy a club in Russia.
What clubs were these?
It’s history now. Let’s turn the page.
As FC Moscow was dying, there were reports that Convers Group were ready to buy it. How close were you to cutting the deal?
Here I have to confirm the words of Igor Dmitriev [then FC Moscow president – Sports.ru] who said: ones weren’t too eager to sell, the others weren’t too eager to buy. The whole thing never came to an open conversation.
Do you know Roman Abramovich?
Perhaps, everybody knows him to some extent. How close do I know him? To some extent.
Rumor has it that if Guus Hiddink agreed to become Chelsea manager, Abramovich was ready to provide him £150 million. Villas-Boas will hardly receive less than that. How much is Portsmouth ready to spend for transfers this summer?
We do not have any budget restrictions. We have an objective for the season – to win each game. The manager and the chief executive have a vision of how to make the club competitive in the Championship. They also have a carte blanche for transfers. When we bought the club, at the end of the season the team had only eight players with valid contracts. So, we will have at least ten new signings.
Will Nwankwo Kanu stay in the team?
Yes, he will. We don’t want to terminate his contract. He is a great player. I’m sure he will benefit us a lot in the field – and outside of it he will also be very useful in communication with our youth.
How did they meet you at Portsmouth? We know how Russian tourists are usually met in Europe. What about Russian investors?
It’s no secret that it is quite hard for any businessman of Russian origin to do business in Europe. Fortunately, we have been living abroad for a long time and our third partner – the Englishman Chris Akers [former co-owner and chairman of Leeds United – Sports.ru] is well-known in the world of sports. But still all negotiations begin with taking the length of your foot, with questions about the origin of your money and your ideology. At first people are skeptical, but we try to make them change their mind.
What is your answer about the origin of your money?
We are doing business in various areas. Banking sector – we have several major banks in Latvia and Lithuania, a bank in Panama, in Ukraine, plus we have recently sold a Russian bank. We have shares in airlines and cargo carriers. And many other things – from retail trade to the supply of clothes to supermarkets. Now we practically don’t conduct any business activities in Russia. We earn all the money in Europe and Asia – and we have nothing to hide.
How do you divide your powers with Vladimir Antonov?
In sports projects we divide the time at a ratio of 80 to 20. However, we meet regularly, we discuss the work and the plans. In addition to that, we have a tradition: once a month all the managers of our sports companies gather in one place to have some ‘team building’, to talk about new ideas, and to increase their overall performance.
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Does Convers Group have any plans concerning Marussia Virgin Racing?
No, we don’t have any. We have been involved in Formula 1 with Lotus-Renault. Last year, if you remember, Snoras – one of our banks – was a sponsor of Renault. Our partnership comes to an end next year.
Is it true that Saab – now owned by Convers Group – plans to return to the WRC in 2013?
There is such an idea. The biggest problem for Saab is to create a car that would fit for the WRC. Neither 9.3, nor 9.5 do not fit. We hope that by 2013 or at least by 2014 this problem will be solved.
Does WRC have any plans to involve new constructors?
We have just signed the contract according to which Volkswagen will participate in the WRC. In addition to that we have preliminary contracts with FIAT and Toyota. It will be quite enough. But in any case we are in constant talks with manufacturers and we are glad to admit all adequate participants to the WRC.
How about Lada-Renault?
We would be glad if there was a team in Russia able to participate in the WRC. But, first of all, you need a 1.6 turbo engine, which is not manufactured by Lada-Renault. Secondly, there should be a real interest. We, as I’ve already said, would be just glad.
What plans does the WRC have for Russia?
We spoke with many manufacturers and now there is a detailed conversation with BMW Mini. We have given all the contacts to Dave Richards, head of the team. He and Oksana Kosachenko, Vitaly Petrov’s manager, hold the negotiations about having a Russian crew in Mini in the nearest future.
Vladimir Antonov once said that Russia has a lot of places, where it would be interesting to hold a stage of the World Rally. What places are these?
When we bought the WRC, one of promises we gave was to bring the World Rally to Russia by 2013 or 2014. Now we are in search of a local partner and location. Krasnodar, Sochi, St. Petersburg – there are a lot of places. That’s the strength of the WRC: you don’t need a well-equipped circuit to hold a rally. That’s why these races are so popular: rally means the same car and the same road as the ones you have.
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What plans do you have on Spartak Moscow hockey club?
The situation there is quite interesting. It was linked to one of our banks, Investbank. As the bank was sold, the club’s ownership in the course of re-structuring passed completely to the new co-owner. You should now ask Sergey Mendeleyev, chairman of Investbank, about the future of Spartak.
What memories will you keep about Russian hockey?
The good ones. Of course, Russian sports are not a business yet, but it was interesting thing to try.
Is there a chance that the KHL – a sensible league but with excessively rich clubs – can break even?
Four days ago I was in Sweden and met the representatives of AIK hockey club. It is a popular club, it has no own stadium, but still it earns about €2 million a year. And it’s not income – it’s profit. However, the budget they have would not allow them even to participate in the KHL. I’m not aware of the long-term strategy of the KHL, but the current state of affairs should change. Coming back to the English football, I’ve been to Cyprus recently where there was a meeting of all the clubs’ heads. The English Championship, League 1, and League 2 have signed an agreement on financial fair play – no club can have a loss over £2 million a year. If the loss exceeds that limit, the sanctions will follow.
Do you think they will observe it?
I’m sure. There was a big debate, we’ve been talking about it for two days. As a result, of all 24 Championship clubs 23 have voted for it. Everybody understands that the present situation in the football market should somehow be fought against. We can’t introduce a salary cap like it is in the NHL, the legislation won’t let us do it. So, we are trying to introduce some kind of other restrictions.
It turns out you won’t be able to pump your club with money in order to get it promoted to the Premier League in the first season.
But it’s the sports competition that now comes to the fore. This year things will be particularly exciting in the Championship: West Ham, Birmingham, Crystal Palace, Portsmouth. Also, we are in for the big derby between Portsmouth and Southampton. They have returned to the Championship and have a big plan for the future. Our fans already await this day.
When the Lithuanian businessman Vladimir Romanov took charge of the Hearts, the team became flooded with players from Lithuania. When shall we expect a Russian player at Portsmouth?
The staff policy is the manager’s responsibility. As far as I understand, he doesn’t intend to look in your passport. Of course, we would like a representative from such a great country to play for our club. But it’s a matter of football, not a commercial one.
And what about a Russian manager?
The Englishmen want a foreign manager to be head and shoulders above the local ones. Top head coaches from Russia are unlikely to go to the Championship, while the others aren’t ready for that yet. Moreover, in my opinion, Russian lacks interesting, young, and skilled managers.
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The most frequent question on the Russian football you have been asked in England?
There are a lot of them, but the first is ‘why’? Why are the salaries so high? Why doesn’t it yield money? Why do people still invest in it, if it doesn’t yield money? Today on the plane I was asked: why did the Russian football switch to the ‘autumn to spring’ schedule, how can you play football in a freezing cold?
Do you have the answers to those why’s?
Not to all of them.
And what about this one? ‘Why do people still invest in it, if it doesn’t yield money?’
Recently, many kinds of business is Russia have undergone transformation. Sooner or later the trend will change, sports will become business. But for now it’s just people who love it, are interested in it, and try to help it.
Still, we think the transformation will only occur after an enormous collapse. After this soap bubble bursts.
The collapse is permanent: every year one club of the [Russian] Premier League disappears. However, sports are a great social instrument. Millions of people are interested in them. One way or another, they will be supported by the authorities or individuals. In Europe – and throughout the world as well – businessmen prefer evolution to revolution. In Russia we have got used to some kind of leaps in the 1990’s, in the 2000’s. We need all or nothing. It’s the same in sports: we want to make once and for all. But I look ahead with optimism. Let’s take, the KHL, for example. With a little change, structuring, and more rational approach to some things, it has a chance to live. And to live well.
by Dmitry Navosha and Yury Dud