The financial statements of the sole shareholder of CSKA show: the Ministry of Defense completely withdrew from the capital of one of the main football clubs in the country, selling 24.94% of the shares for only $353 thousand

A little less than a year ago, in August 2011, Forbes revealed details of the business of football CSKA, based on the financial statements of the club's shareholder, Bluecastle Enterprises Limited (BEL) for 2008-2009. Forbes now has BEL reports for 2010 at its disposal. In our opinion, this document reliably reflects the financial condition of CSKA, because in addition to the football club, only the Oktyabr Sports Training Base, the Children's Sports School of PFC CSKA and AVO-Capital LLC (with insignificant financial indicators) are consolidated in the reporting.

Consolidation 100% CSKA

The reports say that BEL bought a 24.94% stake in the football club from the Russian Ministry of Defense and became the sole owner of CSKA. The book value of these shares is estimated in the financial statements at -$6.15 million. But BEL paid $353 thousand for the Ministry of Defense share and reflected goodwill (the difference between the acquisition price and the book value) in its reporting at $6.5 million.

A lot or a little - $353 thousand for almost 25% of one of the country's leading football clubs? On the one hand, in an interview with Forbes last year , the president of PFC CSKA Evgeny Giner said that an independent appraiser estimated the value of the club at $340 million. On the other hand, the website transfermarkt.de estimates the current capitalization of CSKA players at €137.3 million (or $180.4 million), and BEL's debts (more on this below) exceed $200 million and the group's equity capital is negative - $10 million. We cannot forget the fact that the club still does not have its own stadium, one of the key assets in the sports business.

Perhaps the relatively low amount for an almost blocking stake in CSKA is explained by the fact that the purchase and sale of shares was part of a deal to purchase land from the Ministry of Defense for a future stadium: in 2010, the football club, according to Kommersant, paid the ministry about 1 billion rubles for 6.4 hectares.

It was not possible to obtain comments from PFC CSKA and the Ministry of Defense at the time of submission of the material.

Finance

BEL's revenue in 2010 increased by 9% to $48.3 million. A caveat must be made here: the peculiarities of reporting of football clubs are such that revenue does not fully reflect the financial activities of the club. For example, income from the sale of players is allocated in a separate line and is not taken into account in revenue (by the way, the acquisition of players is not reflected in the profit and loss statement, without affecting profit/loss accordingly).

However, BEL for the first time revealed the revenue structure: the sale of television rights brought in $19.4 million, advertising and sponsorships brought in $19.9 million, and the ticket program brought in another $4.7 million.

How much does CSKA bring in from sponsorship? In February 2010, the club signed an 11-month agreement with Bashneft for $7 million (including VAT - $1.07 million). A year later, CSKA entered into advertising contracts with the Russian Copper Company and the Ural Bank for Reconstruction and Development of billionaire Igor Altushkin and the Krok company in the amount of $4.77 million (VAT - $727 thousand), it follows from the reports.

BEL's debts deserve special attention: the total loan debt at the end of 2010 was $202.9 million (for comparison, the Tottenham Hotspur and Arsenal clubs were $123 million and $670 million, respectively). But all loans were taken from related parties, for example, the former shareholder of BEL, Macasyng, borrowed $44.1 million. Most of the loans were issued at a low interest rate or without interest at all: in 2010, interest payments amounted to only $33 thousand. And loans due in 2011 were extended until 2016.

Transfers

Over the past few years, CSKA has annually parted with one iconic player, the sale of which, as a rule, provided the vast majority of the transfer proceeds. In 2008, it was Jo, who was bought by Manchester City for $37.8 million. In 2009, it was Yuri Zhirkov, sold to Chelsea for $16 million. In 2010, this player was Milos Krasic, for whom Juventus paid CSKA $17.9 million.

BEL's reporting also reveals details of the transfer of former CSKA star Daniel Carvalho, who, according to Giner, was “tortured by food”, which did not allow him to continue his career at a high level. In 2010, the footballer moved to the Brazilian team Atletico Mineiro. The transfer amount was $506 thousand, of which CSKA received $381 thousand, the rest went to Carvalho’s first club, the Brazilian Internacional.

2010 was the first year in recent seasons for CSKA when the costs of players exceeded the income from their sales. It can be assumed that Evgeny Giner’s successful business model “buy cheaper - sell more expensive” has come to its logical conclusion, because CSKA made its last purchases at fairly high prices of $9-12 million, and so far none of the players has “shot” in such a way that the increase your value.

How much does CSKA football cost?