Gazprom Buys Zenit
Published: December 23, 2005 (Issue # 1133)
MOSCOW — Gazprom has bought a controlling stake in FC Zenit St. Petersburg, a soccer club avidly supported by the gas giant’s chief executive, Vedomosti reported Tuesday.
Both Gazprom and Zenit declined to comment on the report. Governor Valentina Matviyenko said that while negotiations were underway, she was not aware that a deal had been reached, RIA-Novosti reported.
Last week Gazprom — which already sponsors Zenit — bought a 70 percent stake in the club from Vladimir Kogan’s St. Petersburg Banking House, the paper reported, citing sources in both companies. Gazprom subsidiary Lentransgaz, which holds 25 percent of Zenit, sold part of its stake to Kogan in 2002, giving his bank control of the club, the paper said. The sources declined to say how big the transaction was, but Vedomosti estimated it would be between $30 million and $40 million.
Russian clubs are extremely difficult to value as it is often unclear what assets they own said Anton Derlyatka, head of East European sports business at A.T. Kearney consultancy in Moscow. But Derlyatka said the club was likely to be worth tens of millions of dollars.
The club currently rents its stadium from the city authorities, but in November Gazprom CEO Alexei Miller announced a deal to finance a new venue for the team’s home games. Media reports at the time said the project could cost up to $200 million and be financed through tax payments by a Gazprom subsidiary that would be registered in the city.
UFG brokerage said that foreign investors, whose access to Gazprom shares are about to be liberalized, are unlikely to welcome the purchase of a soccer club.
“It would be a negative development in the context of Gazprom’s largely unsuccessful program to dispose of non-core assets,” UFG said in a note to investors. Gazprom’s ring-fence restrictions against foreign ownership could be lifted in a matter of weeks, once President Vladimir Putin signs off on it.
Several Russian companies including Russian Railways, RZD, and Norilsk Nickel own major football teams. “Gazprom cannot like all soccer teams, so they favor one,” said Valery Nesterov, an analyst at Troika Dialog. “They chose the one in St. Petersburg — it’s political.”