What happened

On Tuesday, February 22, the US Department of the Treasury announced that the football club CSKA was included in the country's sanctions list after Russia recognized the independence of the DPR and LPR. A number of companies included in the structure of the VEB corporation, which is the owner of a controlling stake in the army club (77.64%), fell under the sanctions. The owners of the rest of CSKA's shares are not publicly disclosed.

CSKA General Director Roman Babaev told the Sport Express newspaper that the news for the club and fans was unexpected. “However, the club continues to function normally, the team is calmly preparing for the resumption of the season and Saturday's derby, and our lawyers understand the situation. We will defend our rights, based on the generally accepted thesis that "sport should be out of politics," he said.

VEB said they would continue to fulfill their obligations. “Despite increased pressure, VEB will continue to improve its financial stability and operational efficiency, properly fulfill its obligations, and use all available means to protect its rights and legitimate interests,” the corporation said.

In addition to VEB, CSKA has sponsors in the person of the Russian Post, Aeroflot, the IT group ICS Holding, the online retailer Wildberries, Rosseti, the bookmaker Fonbet and Promsvyazbank. The latter was also included in the sanctions lists of the USA, Great Britain and the European Union. Almost all sponsors of CSKA are Russian companies, with the exception of the outfit manufacturer Joma (Spain) and Hyundai Motor CIS (South Korea) and the American PepsiCo.

RBC turned to lawyers who described the possible risks and consequences of a football club falling under US sanctions.

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“After being included in the “list of blocking sanctions” of the United States, all Western, primarily financial and economic entities, cease to have the right to continue any relationship with this object or addressee of sanctions. As a rule, everything is limited to the closure of bank accounts in Western jurisdictions and the termination of any financial and economic relations. If the operation was carried out in US currency, no bank will make such a payment, neither from nor in favor of CSKA, ”Glandin believes.

VEB Arena Stadium (Photo: Global Look Press) At the moment, CSKA's inclusion in the US Treasury Department's sanctions list does not threaten the team's participation in the national championship, but it may cause problems with renting players from foreign clubs.

“In Russia, the club will not have any problems. Sponsors will simply scatter, which are various international, Western organizations. They will immediately be forced to end all relationships. But the team has played in the championship, and will continue to play. As she had an account in a Russian bank, so it will exist. There may be issues with the loan of players abroad and payment of rent. Or, when a player is transferred, there may be problems with payment. Apparently, CSKA will no longer have such an opportunity. Or other clubs in the ruble zone - in Russia they will need to open a bank account so that payments for such a player can be made in rubles, ”added Glandin.

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Is it possible to achieve lifting of sanctions against CSKA

A hypothetical change of ownership will not help the club bypass US sanctions. “Re-issuing will not help in this case. You can transfer ownership to another company and provide documents confirming this. If the Ministry of Finance responds positively, the sanctions may be lifted. Now there is a practice of successful removal from sanctions in such cases. In addition, CSKA is not a core asset for the VEB structure, ”George Voloshin, director of the French branch of the British consulting company Aperio Intelligence, told RBC.

What threatens CSKA a possible hit under the sanctions of the EU

Glandin clarified that in the case of the introduction of European sanctions against CSKA, the club may close for the eurozone market.

“I consider the introduction of European sanctions unlikely, but if they are introduced, then everything will be more complicated. All transfers in Europe between football clubs are made in euros. And this will close the opportunity for CSKA to operate in the European market, which will significantly affect the development of the club, ”said Galadin.Photo: Global Look Press Voloshin is sure that the main problem for CSKA may not be the European package of restrictions, but the negative trail of the current sanctions. “The club should not face additional problems in the event of the introduction of European sanctions, they should not have a new effect. American sanctions are the main vector of Western sanctions policy. For CSKA, the main problem may be the indirect effect of the restrictions, as the club becomes a toxic organization for Western investors. Any contacts will be discussed in the press, banking structures will try to limit contacts with you, as there is a risk of violating the laws of the United States,” Voloshin said.

How CSKA will now cooperate with Western sponsors

Voloshin noted that there is a scenario in which CSKA will not be able to cooperate with sponsors from European countries and the USA, which will force the club to look for partners in other markets.

“CSKA may now have problems with foreign partners. American brands will not be able to work with them and will most likely have to switch to alternatives from other countries. At the moment, there are no European sanctions yet and there is room for maneuver, but in practice they are trying to distance themselves from organizations that have fallen under US sanctions. European companies operating in the US will certainly try to abandon these operations. The involvement of even one American person already entails a violation of sanctions. Either there will be Asian partners, or small European companies that are not very involved in the American market.

The technical sponsor of the Joma team said that he was not going to refuse to work on the Russian market after the imposition of sanctions against CSKA

“The Joma brand has not yet received information about being included in the PFC CSKA sanctions list. We will continue our cooperation within the current contract with the club. The brand will continue its work and the fulfillment of all its sponsorship obligations to partners in Russia. We see many prospects for the development of the company in Russia, ”Igor Zavodyany, commercial director of Joma Sport in Russia and Belarus, told RBC Sport.

RBC also asked PepsiCo and Hyundai Motor CIS for comment.

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Will CSKA be able to take and buy players from abroad

Voloshin believes that it will be extremely difficult for Western contractors to cooperate with CSKA now due to the high risks.

“So far, some transactions are possible through non-dollar channels. They will be structured for a very long time, there will be a very large number of lawyers involved. Although the door is not yet closed, financial intermediaries will be less willing to make such deals,” Voloshin said.

PFC CSKA midfielder Chidere Ejuke (Photo: Global Look Press) According to Glandin, the sanctions will spur the football club to cooperate with Russian companies to search for players

“As for the scouting organizations that are engaged in the search and selection of players, as a rule, these are European organizations. Now they are likely to end their relationship with CSKA. But Russian organizations do not have to comply with US law, and will continue to do their job. The agreements will most likely be translated into the Russian ruble or a third currency, such as Chinese yuan,” Glandin said.

How Akhmat fell under sanctions

CSKA has become the second Russian football club to fall under US sanctions. In December 2020, the US Department of the Treasury imposed sanctions against the Akhmat Kadyrov Foundation, created at the initiative of Ramzan Kadyrov, as well as against companies and sports clubs associated with it, including FC Akhmat. The reason was the accusation of the head of Chechnya in violation of human rights.

Those on the updated sanctions list are prohibited from entering the United States, and their financial assets in US banks are blocked. The global "Magnitsky list" does not provide for secondary sanctions. However, in accordance with this document, any persons who help, provide services, provide goods to sanctioned structures may fall under the restrictions.

Akhmat is funded by the Akhmat Kadyrov Charitable Foundation. According to the Federal Tax Service, the club's annual budget is 1.2-1.4 billion rubles.

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