Zenit will become profitable

Maxim Mitrofanov, FC Zenit CEO, talked about how the transfer campaign went for the club, and lamented the low level of income of clubs in the Russian Football Premier League from the sale of television rights.

– Maxim, Zenit’s transfer campaigns of 2006 and 2010 have been quite different from one another. Does that mean that the club’s ambitions have increased a lot?

– Zenit is simply growing as a club. Today our opportunities to attract footballers give us greater chances to get truly high-quality players. Nevertheless, I agree that even in comparison with 2006 or 2007 there is a certain difference. The difference come in the tasks were trying to accomplish. Before we had to fill holes in almost all lines on the field. We did that, and achieved results. Zenit got results on a European scale. This winter Luciano Spalletti came to Zenit. Spalletti offered to solve an even more difficult problem for the club: Zenit needs not only strong players, but rather players which suit this team, who suit us in terms of their playing style and psychologically. So we made our selection on a high level this winter. A number of players left the club this winter under favorable conditions. Semshov went to Dynamo Moscow. There were two special acquisitions this past winter – Kerzhakov and Lazović. Then Kerzhakov definitely needed a partner. That’s why we acquired Alexander Bukharov this summer. We also talked about strengthening our central defense. This position in one of the most dangerous, since almost all the responsibility for the goals allowed lies on the central defenders. That’s why we bought Bruno Alves. Yes, he’s an expensive player, but we were able to make the transfer at advantageous conditions for us. Zenit also bought Luković: Spalletti knows him well from the Italian Serie A, and the player had no problem adapting to our team.

– The transfer fee paid for Alves was 22 mln euro. How much did Zenit spend altogether on this summer’s transfer campaign?

– Yes, Zenit paid 22 mln euros for Alves, but don’t forget that the sum will be distributed over three years, and that we took a commercial loan out of the bank for the transaction. Zenit paid 9 mln euros in 2010. As for the total sum, Zenit stayed within its transfer budget approved by the club’s board of directors at the beginning of the year. We haven’t revealed concrete numbers for the other transfers we made. As soon as all clubs start to do that, then we’ll start revealing the sums of the transactions we make.

– Barcelona didn’t buy Alves last summer due to the high cost of 30 mln euros. How did Zenit manage to take 8 mln off that sum?

– We knew that Porto made an offer to Bruno to prolong his contract for 5 years. They wanted him to finish his career in Porto. But Bruno himself wanted to change his situation: Alves wanted to work with coach Spalletti for the same salary that he made in Porto. Maybe it’s not modest to say so, but a lot of the players who left Zenit, upon going to other European clubs, noted that the level of organization in Zenit often gives a good example to top clubs. I think Alves took this factor into account too.

– As far as I heard, Zenit often uses the services of consulting companies.

– Zenit does use the help of consultants, and the most obvious examples of that are in the commercial sphere. Zenit is the most successful commercial football club in Russia. And that’s not because we’re the only football club in a city with 5 million people. It’s just that we don’t stand in place, we’re constantly developing our own commercial projects. I’m talking about income aside from sponsorship from Gazprom group companies, and without incomes from transfers. I mean ticket sales, souvenir sales, advertising, television rights, and special commercial projects. Our club president recently revealed that the club earned about $60 mln dollars from its own commercial activity in 2009. The whole remaining Russian Premier League made the same amount for this period. Zenit has only 20% of all advertising opportunities though, while the rest of the league has 80%. We use the services of consulting firms when making recommendations which we give to our the architects building our new stadium. We invited leading European consultants to give their expert opinion of our design. We have big hopes for the new stadium! We plan to make 80 mln euros per year when we open the new stadium with 68,000 seats. In order to do that we need to have excellent organization of all processes at the new arena. Our main goal is to design the stadium in such a way that our fans will be comfortable there. Many of our fans need a certain level of service. And the task of our club is to provide this service while not forgetting to earn money on these services, so that we have the financial resources for further development of the club. IMG and Wembley Consulting Group made an expert analysis of our stadium project, pointed out some problem areas, and made a lot of changes to it from the point of view of our commercial activity and our fans’ comfort.

– In what other areas, besides the stadium, does Zenit use the help of consultants?

– We used consultants to develop our marketing concept – the concept for selling the Zenit brand, and analysis of the Russian television market, which we made on our own initiative and passed along to the Russian Football Premier League. European experience shows that only successful implementation of an effective model for the television rights market will allow Russian football to be a profitable business project.

– You talked about television rights. Can you break down the $60 mln per year that Zenit earns?

– It’s not right as compared to international practice, but there is no Russian market for commercial television rights in essence. Zenit makes about $2 mln per year from the sale of television rights. We get this income from the Russian Football Premier League. The other top clubs have the same income. Clubs that are in the bottom of the standings made from $700,000 to $1 mln per year from television rights. Those are ridiculously low figures. Russian clubs spend many times more to make their football product than television can earn from showing football. But it should be the opposite. In order to understand what the European model for television rights can bring, just look at how much Zenit gets from taking part in the Champions League and Europa League. For example, when Zenit won the UEFA Cup and the television rights belonged to clubs up until the semifinal, we earned about 5 mln euros from selling these rights. Depending on the season we earn from $15 to $20 mln on ticket sales. We earn another $10–12 mln on merchandise. And another $15–20 mln on advertising: Nike, MTS, and others. And then income from our participation in European cups. This money is transferred to us by UEFA when it sells our commercial pool. This makes about another $10–11 mln. Obviously there are some deviations here, but that’s how we get $60 mln in income.