Why Presidential Professional Sports Club Astana Was Shut Down
The Presidential Professional Sports Club Astana received money from the Samruk-Kazyna Sovereign Wealth Fund for the professional football and basketball teams of the same name, the Barys Hockey Club and the Astana Pro Team for cycling. The PPSC is being shut down to save money on administrative costs. According to Kursiv’s findings, it will help save about 270 million tenge.
Under one umbrella
The PPSC Astana was created on Nursultan Nazarbayev’s suggestion in 2012 and was officially presented in summer 2013. According to the organization’s mission, it would unite and lead the best Kazakhstani sports projects under a single competitive brand which it would promote globally. The PPSC was financed by the Samruk-Kazyna SWF.
Originally, the organization included the following sports teams: Astana Pro Team (cycling), FC Astana (association football), BC Astana (basketball), Barys HC (ice hockey), the Astana Arlans (boxing) and Astana Motorsports (racing team which regularly participated in the Dakar Rally). The PPSC also tried to rope in the boxing world champion Gennadiy Golovkin with his GGG brand, but he declined the offer.
At the time of joining the PPSC, the Astana Pro Team cyclists already had a few prestigious victories in Grand Tours – Vuelta a España, Tour de France and Giro d’Italia – under their belts. They were, indeed, Kazakhstan’s signature players on the world sports arena. By contrast, FC Astana did not have any titles, even on the domestic level. The football team flourished when it became part of the president’s club, earning six gold medals in a row in the Kazakhstani Premier League and regularly advancing to group stages of the UEFA Champions League and the Europa League. While in the PPSC, the Barys Hockey Club advanced three times to the Gagarin Cup quarterfinals (the Kontinental Hockey League) and the Astana Arlans earned three victories in the world boxing series.
The club’s management was unwilling to disclose the cost of those successes.
Devaluation of the budget
In 2016, Darkhan Kaletayev, then-head of the board of trustees at the PPSC Astana, disclosed the PPSC’s budget for seemingly the first time: 30 billion tenge (slightly over $150 million at the time). The Ministry of Culture and Sports of Kazakhstan named the PPSC Astana’s budget for 2020 immediately after President Tokayev’s message to the people: «The Samruk-Kazyna SWF allocated 27 billion tenge for the PPSC’s maintenance in 2020.»
By the current tenge-dollar exchange rate, 27 billion tenge are equivalent to about $65 million which means that in the past four years, the professional sports budget got more than halved. The decreased opportunities are already affecting the PPSC’s international players. Alexander Vinokourov, Astana Pro Team’s general manager, reported that in the next season, the cycling team will be missing one of their leaders, Colombian Miguel Angel Lopez – the club can no longer afford to pay his salary.
This spring, both BC Astana and Barys Hockey Club suffered a mass exodus of international players as well. This season, for the first time since 2014, FC Astana failed to advance to group stages of the European cups. Due to this, the soccer club will fall short on at least three million euro from the UEFA and might have to put part of its roster on sale to free up the payroll.
To die in order to survive
The PPSC had already depleted its internal reserves for cost cutting a few years back, it seems: in early 2018, it had to disband its boxing team, the Astana Arlans. The following year, Astana Motorsports did not take part in the Dakar Rally, although in 2019, the Kazakhstanis planned to participate in three categories of the legendary rally at once: Dmitry Shilov was going to perform in the quad/ATV class, Ikhsan Kalilambekov in the UTV/SSV class and Artur Ardavichus in the truck class.
The racing team’s removal from the raid was then mainly connected to the criminal investigation on embezzlement of the funds allocated by Samruk-Kazyna for development of Kazakhstani sports and public image. Amanbek Kulchikov, former director of the PPSC Astana, and Artur Ardavichus, head of Astana Motorsports, were suspected of embezzling two billion tenge. However, Askar Batalov, former general director of the PPSC, claims that funding of the motor racing team and the boxing club was stopped so that there would be enough for the remaining members of the presidential club. The PPSC itself was shut down with the same goal in mind.
«In truth, the PPSC did not have a large budget on its own. Only about 1% of the total sum of financing was spent on the presidential professional club’s operations,» Batalov commented to Kursiv over the phone.
Based on the 27 billion tenge budget for the PPSC as announced by the Ministry of Culture and Sports, there are 270 million tenge to be saved. This amount does not solve the issues of the four professional clubs, all rights and obligations to which are transferred to the Samruk-Kazyna Trust. It’s highly likely that financing for these clubs will be cut again.
«It would be wise to finance 2021 in the same amount as 2020, since player contracts have already been signed for the next year. Then, everyone will know that there are going to be layoffs in a year and teams will be aiming for specific numbers when renegotiating the contracts. Considering material risks, it would also be the reasonable thing to do, because if we fall short on earnings next year, this money will still have to be paid – only through legal action and harm to our reputation and public image,» explained Batalov who continues to oversee the activities of the professional sports clubs, currently as deputy general director of the Samruk-Kazyna Trust.
From the look of it, all four clubs from the former PPSC will continue to play in the next season. But it is possible that as early as 2022, the Samruk-Kazyna Trust will be forced to sacrifice one of the clubs to let the other three stay in the game.
