Sports Sanctions Hamper Oligarchs’ Ability to Launder Russia’s Reputation
On March 10, the U.K. government made the decision to sanction seven Russian oligarchs, including Roman Abramovich, the owner of English top-flight soccer team Chelsea FC, and restrict business interests, freeze assets and bar any travel into the country. In singling out Abramovich, the owner of one of the most valuable sports franchises in the world — last year, Forbes valued Chelsea at $3.2 billion — those sanctions spotlight how the global sports industry, unlike any other segment of the entertainment business, has been a tool in Russia’s use of soft power worldwide.
The restrictions imposed on the seven billionaires — all of whom the U.K. accuses of being “pro-Kremlin” and having “a close relationship” with Vladimir Putin — came after broad economic sanctions from the U.S. and European Union targeting Moscow and moves by the likes of Netflix, Disney, WarnerMedia and the BBC to stop or suspend all business in Russia in the wake of the war.
“There is no doubt that Russian economic and political interests are deeply embedded within the global sport ecosystem,” says Simon Chadwick, global professor of sport at the EM Lyon business school and director of the Center for the Eurasian Sport Industry. “Russian billionaires who presumably have considerable connections to the Kremlin and the political class within Russia have operated with impunity, investing into and embedding themselves into this ecosystem.”
Amnesty International and others have given the name “sportswashing” to this use of sporting events and sports sponsorship as a tool to improve a country’s tarnished reputation. For example, many observers noted how positive reporting around the 2018 World Cup — hosted by Russia — displaced reporting on Russia’s ongoing military actions in eastern Ukraine.
Prominent Russian athletes have been front-and-center in efforts to promote a pro-Russian and pro-Putin image internationally. In 2017, NHL star Alex Ovechkin started a social media movement called Team Putin to support the Russian leader’s re-election campaign. Ovechkin has since tried to distance himself from Moscow — “I am not in politics, I’m an athlete,” he said at a Feb. 25 news conference, adding “Please, no more war,” but his Instagram profile picture still features him posing with Putin.
Russian gymnast Ivan Kuliak was less circumspect after he was condemned by the International Gymnastics Federation for taping a pro-invasion “Z” symbol on his uniform while on the podium next to a Ukrainian athlete at the gymnastics world cup in Qatar. In an interview with government-controlled media outlet Russia Today, Kuliak said he had no regrets. “If there was a second chance, … I would do exactly the same,” he said, noting that he stands with his country’s military. “As an athlete, I will always fight for victory and stand for peace,” he added.
Also on the U.K.’s sanction list is Alexey Miller, chief executive of Russian energy giant Gazprom, which, before the Ukraine invasion, was among the world’s most generous sports sponsors, with deals valued at around $1 billion across numerous teams and associations, including a sponsorship deal with the Champions League, the top pan-European club tournament in soccer, in place since 2012 and valued at $45 million a year.
Sports fans, and the global sports establishment, have finally started asking questions about dubious Russian money. Within hours of Russia’s invasion of Ukraine on Feb. 24, German soccer team Schalke 04 canceled its shirt sponsorship deal with Gazprom, removing the company logo from its jerseys. UEFA, European soccer’s governing body, quickly followed suit, ending its partnership with Gazprom for the Champions League and all other competitions and joining world soccer body FIFA in kicking Russian teams out of all its club and international competitions. The home stadium for the 2022 Champions League final on May 28, the most watched club soccer game of the year, was moved from Putin’s hometown of St. Petersburg to Paris. In a particular irony, Abramovich’s Chelsea are the tournament’s defending champions.
The sanctions imposed on Abramovich severely restrict Chelsea’s ability to do business. Under the U.K. government’s restrictions, Chelsea will not be allowed to sell merchandise or new tickets to matches (only season-ticket holders will be allowed into games) and is banned from signing new players. If the club is sold, Abramovich will not be allowed to profit from the sale.
Alisher Usmanov, another sports-focused oligarch who used to have a major stake in London-based Premier League club Arsenal and a major sponsor of elite English team Everton, had his assets frozen after sanctions by the European Union, which noted that Usmanov “has been referred to as one of Vladimir Putin’s favorite oligarchs.” These assets included Dilbar, Usmanov’s $600 million, 512-foot mega-yacht, which authorities seized in Hamburg, Germany. Everton suspended its deals with Usmanov’s companies, which included a $16 million-a-year sponsorship of Everton’s training ground, an agreement that began in 2017, and an option — worth $40 million — for naming rights to the club’s new stadium. Usmanov reportedly fled to his native Uzbekistan in late February, with flight tracker records revealing that his personal jet took off from Munich International Airport to the Uzbek capital, Tashkent.
It should be noted that these Russian billionaires are not being sanctioned for their sports interests but for allegedly deeper connections to Putin and the Russian war machine. The U.K. Foreign Office said Abramovich was implicated through his equity stake in Russian steel manufacturing and mining company Evraz, which the government said may have supplied steel to the Russian military for the production of tanks (Evraz, in a statement, denied this). The EU accuses Usmanov of being “entrusted with servicing financial flows” for the Putin regime. Miller, as head of Russia’s largest gas producer, is, the U.K. government says, “involved in carrying on business in a sector of strategic significance to the Russian government.”
Those Kremlin ties go some way to explaining why the likes of Abramovich, Miller and Usmanov have been sanctioned but not (so far) other very rich Russians with major sporting interests, including Dmitry Rybolovlev (owner of French soccer club AS Monaco and Belgium’s Cercle Brugge) and Maxim Demin, the Russian-born owner of Bournemouth, a team in England’s second division. Demin is a British citizen, and Rybolovlev, who left Russia in 2010, has always sought to distance himself from Putin and his regime. On March 10, Rybolovlev and his two clubs announced donations to provide humanitarian aid to Ukrainian civilians during the conflict.
Chadwick sees the moves against Abramovich and the other sports oligarchs as a potential “tipping point” in the industry. He notes that while Russia is in focus at the moment, other questionable regimes are using sports to engage in similar reputation-burnishing activities. Saudi Arabia’s sovereign wealth fund last year acquired English soccer team Newcastle United for a reported £300 million ($409 million). Tamim bin Hamad Al Thani, the Emir of Qatar, owns top French club Paris SG. A private equity company controlled by a member of the Abu Dhabi royal family holds a majority stake in Premier League champions Manchester City.
“What’s happening now regarding Russia and Russian money should lead to changes across global sport,” says Chadwick. “It should lead to a more robust system of governance. But do I think it will? Well, don’t hold your breath.
A version of this story appeared in the March 16 issue of The Hollywood Reporter magazine. Click here to subscribe.