FC Zenit has risen in price to 15.4 billion rubles

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JSC Football Club Zenit issued 14,951 new shares and attracted 5.9 billion rubles, it follows from the club’s reporting under RAS for 2015. Their par value is 1,000 rubles, the placement price is 395,025 rubles. per share. After the issue, the club’s authorized capital increased to 39,004 shares. Thus, the shareholders estimated the club at RUB 15.4 billion. The previous issue in 2011 was placed at 132,000 rubles, and the entire club was estimated at 3.2 billion rubles. (all data – “SPARK-Interfax”).

The shares were placed at a market price that reflects the growth in the value of the FC Zenit brand and the market value of the team in recent years, said a club spokesman. According to him, as a result of the additional issue, the composition of shareholders of JSC FC Zenit “has not changed significantly,” but the representative refused to say which of the shareholders and in what proportions bought the additional issue.

According to SPARK, the main shareholder of Zenit is Gazprombank (51%). But in the financial statements of Gazprombank for 2015, 51% of shares of FC Zenit disappeared from the list of assets. As of June 30, 2016, FC Zenit JSC remains in the list of Gazprombank’s affiliates, but the bank’s share of the club is not indicated.

Gazprombank could have bought the additional issue together with other shareholders, but not in proportion to its share, but somewhat less, thereby diluting its stake to less than 50%, suggests Ivan Tertychny, partner of Tertychny Law. Perhaps the club’s losses in 2014 had a negative impact on the financial performance of the entire Gazprombank group, and the bank chose to reduce its share so much as to be able to take Zenit outside the group’s perimeter and thereby not consolidate its financial performance in its financial statements, adds he. The representative of “Zenith” does not comment on the disappearance of 51% of the club’s shares from the financial statements of Gazprombank. Bank representatives did not respond to the request.

Most likely, there was no real increase in the club’s capitalization, and as a result of the non-market placement, the club added as much funds as is required to cover losses, debts and support for operating activities, suggests Deloitte partner Sharif Galeev.

Under UEFA rules, clubs cannot spend more than they earn. Clubs are threatened with sanctions, including exclusion from tournaments, if their losses in the last two seasons exceed 45 million euros. Due to violation of this requirement, UEFA fined Zenit 12 million euros in 2014 and imposed restrictions on the amount of losses at the end of 2015 – they should not exceed 30 million rubles. The loss of Zenit for 2014 was 5.2 billion rubles, in 2013 – 320.4 million rubles, in 2012 – 700.8 million rubles. The loss for 2014 was more of a “paper” nature and was associated primarily with the change in the exchange rate in 2014, says a representative of Zenit. According to him, the club was forced to recalculate its obligations on long-term foreign currency loans in accordance with the new exchange rate.

Profit of FC Zenit for 2015 – 229 million rubles. It is mainly due to sporting successes: this is prize money from performance in the Champions League, from victory in the Russian championship, says a representative of the club. In addition, Zenit ran an efficient transfer campaign, generating substantial revenue from the lucrative sale of Salomon Rondon without making expensive acquisitions. According to transfermarkt.com, Zenit sold Rondon to West Bromwich, England for 17 million euros.

Zenit has entered into an amicable agreement with UEFA. Evaluation of loans using financial fair play methods changed the club’s performance and it was decided to conclude an amicable agreement, a representative of Zenit said at the time. UEFA has banned the club from taking new credits to buy players.

The capital increase does not violate the rules of financial fair play, a UEFA representative told Vedomosti. The organization allows assistance to club owners, but their investments must not exceed 45 million euros in two seasons from 2013 to 2015 and 30 million euros in the next three seasons from 2015 to 2018.

Among the major shareholders of Zenit are also OOO Gazprom Transgaz Saint Petersburg (25.01%) and Sibur Holding (10.75%). Representatives of the companies advised contacting the club for comments.

Minority shareholders of the club are JSC Lomo, LLC Oasis Plus, Leningrad Regional State Property Committee, Committee for Property Relations of St. Petersburg (KIO), JSC Karavai, LLC Strike, Fund for the Development and Support of the Media. KIO did not use the pre-emptive right to purchase, given the position of the Committee on Physical Culture and Sports that this acquisition was inexpedient, as well as due to the lack of funds for this in the budget of St. Petersburg, says a representative of the committee. Since 2002, the Leningrad region has owned 50 ordinary registered shares of Zenit, the region has not acquired additional shares, says a representative of the Leningrad region administration. According to him, with the additional issue of Zenit in 2015, the share of the Leningrad Region in the authorized capital decreased to 0.16%. According to SPARK, the Leningrad Region had 0.21% of the authorized capital.

The owner of Oasis Plus did not know about the additional issue. The general director of “Karavaya” declined to comment. Lomo and the foundation did not respond to the request. It was not possible to contact Strike LLC.

Zenit is a four-time Russian football champion, winner of the UEFA Cup and Super Cup. Zenit will play in the UEFA Europa League this year.

The general sponsor of the club is Gazprom. His subsidiary Gazprom Neft will pay the club 90 million euros by 2019. In total, Zenit has about 30 partners and sponsors.

In 2012, the Brand Finance agency estimated the Zenit brand at $ 56 million. The club’s popularity is growing, this is evidence of the positive dynamics of the Zenit brand value, says Sergey Panteleev, General Director of Sport Media Group. According to him, Zenit is one of the most popular clubs in the country, which is reflected, for example, in the number of sponsorship contracts and their cost. The club’s capitalization will continue to grow, but due to the crisis, the pace will not be so fast, he adds. There is no strong correlation between sports success and brand value growth. Manchester United hasn’t won any major titles in years, but the club’s popularity is on the rise, he recalls.

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