Friday, May 29, 2009

The State of the Union in the KHL

I've done two separate posts today, so be sure to keep scrolling down after reading the first one to see today's featured jersey.

Dasherboard: News reports out of Russia have revealed that Washington Capitals forward Viktor Kozlov has and Sergei Fedorov may sign contracts to play next season in the Kontinental Hockey League. Kozlov reportedly has signed to play with Salavat Yulaev Ufa for two years and Fedorov has been offered a two-year, $7.6 million dollar deal from Metallurg Magnitogorsk.

Currently former NHLers Alexi Yashin, Jaromir Jagr and Alexander Radulov, who was still under contract with the Nashville Predators at the time, all signed to play in the first season of the KHL last year.

The KHL would be more than happy to lure as many NHL players as possible since they have been treated as nothing more than a minor league farm system by the NHL, who have signed away any and every young talented player developed by the Russian club teams for nearly twenty years now, with a minimum of compensation to the Russian teams who have discovered, nurtured and trained players, such as Alexander Ovechkin and Evgeni Malkin, only to receive just $200,000 for a player worth millions.

Fedorov made $4 million with Washington this past season and the Capitals probably would not come close to matching it. The move would allow Fedorov to play with his younger brother and give him more of a chance to audition for those in charge of selecting the Russian National Team for the 2010 Olympics.

Slava Malamud, a journalist for Sport-Express in Russia was quoted as saying, "In the future, the KHL wants to be considered a viable alternative for the NHL, but for now guys like Jagr and Fedorov might be expensive but help sell tickets and create headlines."

Don't forget, this is also the same league that once put up a $12.5 million per year tax-free offer for Malkin when his previous contract with the Pittsburgh Penguins was coming up for renegotiation. Compare that to Ovechkin's average annual income under the new salary cap at $9.54 million.

They also recently announced that they have set aside $31 million to help it's clubs attract players from abroad next season as part of its bid to eventually challenge the NHL as the world's top league. Former NHLer Slava Fetisov said, "Within five years, the Kontinental Hockey League plans to compete on equal footing with the NHL in terms of quality of play and team organization."

Now that's all very interesting, but also raises a red flag after reading a recent European attendance figure report in the latest IIHF newsletter iceTimes. Of the top 10 clubs in Europe, Avangard Omsk was the highest Russian club overall, ranked #6, with an average attendance of...


Yes, just 9,504, which was 93.18% of capacity. That's works out to a rink with just 10,000 seats. The next two Russian clubs were Lokomotiv Yaroslavl with an average attendance of 8,980 (99.27%) and Salavat Yulayev Ufa at an average of 8,172 (97.29%).

To put that in perspective, the top three professional club teams in the KHL are all averaging less than the University of Minnesota Golden Gophers in arenas that are smaller than the Gophers home rink. The report goes onto reveal that the KHL ranks only fourth in European league wide attendance, at an average of 5,097, behind Sweden's Elitserien (6,260), Switzerland's National League A (6,073) and Germany's DEL (5,867), for a league considered the second best in the world.

So where does the money come from to compete with the NHL when they are playing to 70% less people, being outdrawn by even the Swiss league? Certainly not ticket sales, TV revenue or merchandising.

It apparently comes from "sponsorships", but not in the traditional North American sense, but from men like Alexander Medvedev, a Russian billionaire, also called an "oligarch," the men who made blindingly enormous wealth buying former state owned Soviet industrial companies for pennies on the dollar, as well as the enormous political power they possess as a result. Victor Rashnikov is the sponsor of Metallurg Magnitogorsk as well as the owner of MMK, one of Russia's largest iron and steel companies. Mikhail Prokhorov supports CSKA Moscow while Alexi Mordashov sponsors Severstal Cherepovets, all similar to the more well known Roman Abramovich, owner of Chelsea in the English Premier League.

They use their sports clubs as promotional vehicles for their business interests, pumping funds into their clubs in order to raise their profiles, give their workers a source of pride and also as "toys for big boys", for themselves to simply own and enjoy.

While not a hockey club owner, Shabtai von Kalmanovic was recently profiled in Sports Illustrated and for his support of Moscow Spartak's womens basketball club, and are well worth a read if you want to understand these men and their way of conducting themselves as owners of sporting clubs.

But what happens when times go bad for them, as they recently have? Will they lose interest in sport, as many wealthy race team owners and various sports team owners have in North America when they grow weary of a continued stretch of spending money and losing games?

Even now KHL vice president Vladimir Shalaev has given five clubs, Khimik Voskresensk, Vityaz Chekhov, HK MVD Balashikha, Metallurg Novokuznetsk and Sibir Novosibirsk, until midnight Friday to sort out their finances or face suspension from the league, yet this is the league that is planning on competing on even terms with the NHL?

Perhaps when you were worth $3 billion and are now only worth $1.5 billion, you still have some cash to burn on player salaries, but sometimes if it looks like a house of cards, chances are it is.

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