The military conflict between Ukraine and Russia is like an information black hole, sucking in all areas of news.
Sports are also included here.
From 24 February, when the Russian army began to operate, various international sports organizations, especially those with Europeans at the core of management (in fact, Europeans are very powerful in the field of sports), reacted very quickly to the Russian problem.
As Russian troops advance, the penalties imposed on the country's sports sector are escalating. At first, it only suspended the qualification of the Russian national team in some competitions; later, the "punishment" sank to the professional clubs, and then extended to the capital level with the Russian mark.
What stands out most here is chelsea boss Alkadiević Abramovich having to pay the price for Russia's military action (a logic that is really a bit strange) – he has to transfer his stake in Chelsea FC due to opposition from local fans.
Also expelled for this reason was Alisher Usmanov. The lovely-looking Russian investor of Uzbek origin was once the second shareholder of the Arsenal club and is still the main investor and commercial supporter of the Everton club.
These Russian tycoons, who were once considered strong, friendly, spending a lot of money and tough in style, have brought great satisfaction to club fans, and even fans around the world. And as Ukraine sinks into a quagmire, they become abominable accomplices of invaders or cultural spies. Those with more radical tendencies even called for the confiscation of the asset share of these two Russian investors in their club ...
In fact, Abu and Usmanov were only the finishers of the Russians' retreat from the western sports scene.
In particular, Abu, a billionaire who grew up as an orphan, is said to have a very close relationship with Russian President Vladimir Putin, and he is probably very knowledgeable about his country's attitude toward Ukraine. Abu may have anticipated becoming an undesirable person, so he began preparing to transfer his club shares 4 or 5 years ago. It's just that the price of a few billion pounds is too high (not necessarily Abu greedy, but that this great team may really be worth that much money), and there are scruples that it will not affect the normal operation of the club, and Abu does not take this as the most urgent thing to do.
Abu is a forerunner and a curtain caller for Russian capital's expansion in the global sports sector.
Between 2003 and 2013, capital with Russian attributes had a spectacular "westward expansion movement."
They started out buying up just some of Europe's second- and third-rate football clubs, then the top soccer teams, and then that buying spread to the U.S., Canada, and other sports — most notably The NBA's Nets, Russia's largest gold provider Mikhail Prokholov— and of course, as you know, the team was later resold to Alibaba's former CFO, Tsai Chongxin.
What has caused the expansion of Russian capital investing in sports around the world?
There are probably two factors.
One is the Russian economic reforms that began in 1992. Russian President Boris Yeltsin was determined to carry out a radical reform and adopted a "shock therapy" guideline.
There is a lot of content with this shock therapy, but one of the important ones is to auction many companies that were previously controlled by the state to private individuals at very cheap prices.
Among the assets that were auctioned in Russia, the most valuable were actually the shares of many mining companies, but the price of large commodities was not high at that time, and many people were not clear about it. Later, the Russians, who had a place in the 500 people in the World for Forbes, basically bought mines at that stage and then developed.
The second factor that made it possible for the Russians to expand globally came from China.
China did two great things in the late 20th century and the beginning of this century, which played a dominant role in the direction of China and the global economy.
One of these two major events is the commercialization of real estate, and the other is the accession to the WTO. One of them has made China the largest construction site, and the other has made China the largest factory. These two events profoundly changed the fate of Chinese, and also changed the fate of Russia by pushing up commodity prices, especially oil prices.
It is also with the rise in oil prices that the oligarchs who originally got the mines at the shock auction may have accumulated tens of billions of dollars in wealth in a short period of time.
Roughly, it took 12 years from russia's "reforms" in 1992 to Abu's purchase of Chelsea in 2003. It took about 12 years from China's real estate reform to the "Golden Yuan Era" of Chinese football. This probably shows how long it will take for human beings to grasp the huge wealth to spread vanity into the field of sports.
Of course, there is an interesting little question here, why do those Chinese processing and manufacturing companies that come from the second factor, that is, because of the accession to the WTO, rarely buy sports clubs?
It is true that, globally, the owners of captive sports clubs rarely come from the processing and retail industry. People who speculate in these industries, making the company small to large, can clearly see how much profit each commodity brings for themselves. They are generally more sensitive to cash flow efficiency, i.e. they prefer to have a clear financial picture of how much cash flow a project will probably bring in the future – and sports clubs are often hard to say in this regard.
Therefore, the financiers of those famous sports clubs often come from several industries, including mining, real estate, monopoly industries, financial investors and the rich X generation.
And how did the Russians gradually withdraw from the world's hottest sports club?
It also has to do with oil.
Since the oil can be traded in dollars in human history, it is basically after World War II, and there have been three times when the price of crude oil exceeded $100 per barrel, which occurred in 2007-2008, 2014 and 2022, that is, this year. At the same time, in these three years, Russia has also fought three foreign wars – the "Five-Day War" in Georgia in 2008; the Crimean War in Russia and Ukraine in 2014 and what is happening.
The Russians' choice to send "peacekeepers" into neighboring countries at these three points in time to preserve "national security" is not random, and they may hope that the inflationary pressures brought about by the expected rise in oil prices will play a role in the opponents of the West – which is why every time the country that imposes economic sanctions on Russia always leaves a gap for Putin, that is, oil and gas are not covered by sanctions.
The expansion of Russian capital in the field of sports also encountered problems at these three points in time. After 2008, the expansion of Russian capital was less welcomed, while after 2014, Russian capital began to withdraw on a large scale, and this year may be the end of the Curtain of Russian financiers in the Western sports world.
Of course, there is another reason for the withdrawal of Russian capital from the sports world in several wars, that is, large-scale devaluation of the ruble has occurred in the Western sanctions triggered by several wars, which has also discounted the morale of the Russian rich. At the same time, the depreciation of the ruble will also hedge against some expectations of rising oil prices, which will be valuable to Western economies for a period of time.
Because of the political isolation, the Russians left. Prior to this, Chinese real estate and digital economy players had begun to take over the Russians, but the handover of real estate and digital economy anti-monopoly came to an abrupt end. This has undoubtedly greatly reduced the valuation level of global sports clubs. Probably the next five to ten years were less exciting years for European clubs.
What happens next? Maybe the next oil or economic frenzy will bring new club buyers and sellers, maybe Indians, or Chinese.
Who knows.
Disclaimer: The views expressed herein represent only the views of the author himself and do not represent Lazy Bear Sports.