Russian Revolution
It was Living Legends Night at Moscow's Ice Palace hockey rink, and the place was sold out. Vladislav Tretiak, arguably the greatest goalie in hockey history, watched solemnly from center ice as his old Central Red Army Club number 20 rose toward the rafters, where it would hang in spartan splendor in retirement. This American-style honor had never before been given to a player in the former Soviet Union, and the 41-year-old Tretiak was moved to say, "It's a nice gift. I have waited nine years for this. Thank you so much."
The applause rang out for the old hero, just as it had in the past. But if the applause was familiar to Tretiak, little else about the Ice Palace was. In the corridors merchants hawked sweatshirts emblazoned with the Russian Penguins' logo, symbolic of the new partnership between the Central Red Army Club (known as CSKA) and the Pittsburgh Penguins of the NHL. Garish advertisements pitching everything from Clark Bars to Apple computers lined the boards. We Will Rock You was being blasted through the P.A. system to the hyped-up crowd of Muscovites, who were merrily guzzling Iron City beer from Pittsburgh. And when the CSKA team was introduced, the players took the ice like performers in the Old Moscow Circus: Lights were dimmed, drumrolls sounded, and each player was ushered in by spotlight. The team jerseys bore little resemblance to Tretiak's unadorned garment in the rafters. A big grinning cartoon penguin perched on a star was sewn on the front, a tad beneath the logo of Iron City beer, the team's major sponsor.
But such festivities belie a darker side of the reinvigorated Russian athletic landscape. In some hockey arenas in Moscow, hoods dressed in gangster-style leather trench coats—long enough to hide automatic weapons—mill about in the corridors within sight of the dressing rooms. What is going on here? A brave new world has blossomed with frightening ramifications from the wreckage of the financially bankrupt sports system of the former Soviet Union. It is called capitalism, and in the past year the four big C's of the new Russian capitalism—cash, commerce, chutzpah and corruption—have made many incursions into the previously hermetic world of Russian sports. There's much more, both good and bad, to come.
Just how much more became apparent over the Christmas holidays, when Los Angeles King defenseman Alexei Zhitnik, who's from Ukraine, admitted that last summer an organized-crime group from the former Soviet Union had tried to extort money from him. "I have a little problem with [Russian] mafia," Zhitnik told the Los Angeles Times. "They say things like, 'Blow up your car.' " Zhitnik, whose $400,000 salary is a sheikh's fortune in impoverished Ukraine, denied paying any money to the mobsters, saying friends helped him out of the jam. "If you pay the first time, next time you pay much more," Zhitnik said. "The cops can't do anything. No rules. No laws."
So it goes in the Wild West of modern Russia, where bribes, protection money and threats of violence are part of doing business. The threats, sadly, are not always just threats. Six prominent Russian bankers have been assassinated since last summer, the most recent on Dec. 7. And last August a Russian executive with the Old Moscow Circus, whose concessions are operated by Delaware North, the parent company of the Boston Bruins, was shot to death when he apparently resisted the demands of a local mafia.
"This is a dangerous place, even if you are only trying to make a little money," says Paul Sporn, a Boston entrepreneur who arrived in Moscow three years ago to help develop marketing strategies for Russian sports teams. "If you want to sell something, you must have a Russian partner. If you don't, you'll be twisted, turned, knocked down and kicked. I've been robbed, my partner has been mugged, and we know people who have been killed."
Zhitnik's revelation spawned a flurry of follow-up stories about other Russian hockey players in the NHL who were either fearful of returning to their homeland or who had paid money to the so-called mafia so their families wouldn't be harmed. Few players spoke on the record, except to deny the reports, and there were no confirmed cases of physical violence—although Winnipeg Jet general manager Mike Smith did say one of his draft choices (he declined to name which one) had been "roughed up" by members of organized crime in Russia. Still, it is common knowledge in NHL circles that a number of players have been threatened.
"If you make lots of money, you have to pay a percent—this is life," says Sergei Lyakhov, one of Russia's top discus throwers. Last year Lyakhov brought home some $15,000 in hard currency. "But this is nothing," he says, "so I'm not in trouble. Now, if you take [Detroit Red Wing star Sergei] Fedorov and his $3 million, that's another story."
Fedorov signed a four-year, $11.7 million deal on Dec. 22 but took the precaution of bringing his family to live with him in the U.S. before signing his contract.
"It's a country that lives off payoffs," says one Russian hockey insider. "Everybody's getting paid off. That's a fact of life when you do business in Russia today. It was addressed with the Penguins' ownership. They were told the mafia could be a serious problem down the road. But they haven't been touched by it yet. What I think has helped the relationship is [the mafia] doesn't perceive them as ugly Americans who are trying to make a fast buck. They've invested a lot in the team."
Sports reflect life, and life in Russia today is as unpredictable as tomorrow's headlines. But one thing is certain: The formerly mighty state sports organizations have become shadows of their previous selves. In order to keep sports in Russia healthy, fans, athletes and officials have had to rethink how they do business.
This fall in Moscow, glitzy TV commercials were made featuring such sports stars as Igor Dobrovolski, a striker on the Russian World Cup soccer team, who hawked Snickers bars for M&M/Mars Inc., lifting that candy to No. 1 among Russia's millions of sweets eaters. Also playing TV huckster was Viacheslav Fetisov, the former CSKA and Soviet Olympic hockey hero who's now a defenseman for the New Jersey Devils. Last summer Fetisov, who had reportedly been approached by the Russian mafia, opened a chain of hi-fi electronic and clothing stores in Moscow, and his commercials feature a clip of him playing for the Devils that's backed by a jingle that burbles, in Russian, "A star in Russia, a star in the NHL, a star in business, too."
Of course, anywhere there is even the slightest whiff of high-octane sports marketing, there will be fierce competition among athletic-shoe companies. So it is in Moscow, where Reebok and Adidas now battle. In a coup a year and a half ago Reebok snatched sponsorship of the Russian Olympic team from Adidas and then went on to sponsor a host of local basketball teams, including Moscow Dynamo and Moscow State University. Adidas retaliated last summer by sponsoring Russia's first three-on-three street-basketball tournament, a 300-team extravaganza in Moscow's Gorky Park. Many of the participants wore baggy pants, Air Jordan T-shirts and fade cuts, and played to the rhythmic pounding of rap music.
Another source of sports money is Russia's privately operated trading companies, which are licensed to sell oil, gas, gold and minerals to the West and thus are rolling in hard-to-get foreign currency. One such firm, the Balcar Trading Co., has become an angel for the CSKA women's basketball team and put up the cash to import a pair of pioneering former U.S. Olympians, Teresa Weatherspoon, 28, a feisty point guard, and Medina Dixon, 31, a sharpshooting 6'3" forward who had played for seven years in a Japanese league until it was suddenly closed to foreigners this year. As the first Americans ever to play pro basketball in Russia, each is being paid about $60,000 a season plus a barrel of perks—a raja's ransom in Moscow, where women players average $1,000 a month. As one team official puts it, "We will solve all their problems. If they want a fax, they got it. A car, O.K. Free gas, no problem. Bodyguards, they are there. Nannies, drivers, apartments—all of it, we give."
There were some hardships for Weatherspoon and Dixon to overcome, like the 17-hour train ride to Kiev before the most important game of the season and the road trip to southern Russia when they were confined to their hotel rooms "for safety reasons." But all in all, playing basketball for CSKA has been mutually beneficial for the Americans and the Russians. So far this season the CSKA women are on track to win the league title.
Another sports-oriented trading firm, Macwell, is run by a mysterious hoops-happy Israeli known only as Sheptai, who has latched on to the men's basketball team of the venerable sports organization Moscow Spartak. This year Spartak has moved up to Russia's top league, and to make itself competitive with traditional powers Moscow Dynamo and CSKA, Spartak looked across the ocean to the U.S. for help. Like the Central Red Army women's team, Spartak imported Russia's first pair of NCAA Division I players—Tony Turner, 22, a 6'8" forward from Providence who arrived in Russia in September, and Chuck Evans, 22, an electrifying 5'11" point guard from Mississippi State, who followed a month later.
So far, all has gone well for the American men. Turner and Evans are earning both money (about $50,000 for the season, with the possibility of a bonus) and respect. Since they arrived, the Spartak team has advanced to the second round of the playoffs in the Russian Championship Basketball League. Indeed, in a Russia that has lost its best basketball players to the West, Evans and Turner are considered among the top 10 players in the country. Perhaps even more important to Sheptai is that having better players leads to more sponsors, higher attendance and eventually, the hope is, TV and media deals.
"There is a sports revolution going on," says Sheptai. "We are in the forefront and will be the first out of the tunnel."
But nothing rivals the success story of the CSKA hockey team. This outfit was the Soviet equivalent of the New York Yankees; it was a dynasty that from its inception in 1947 won 33 national championships. Once the Communist regime began to crack in '91, so did this team.
In deep financial difficulty, the club eventually fell under the management of a shadowy Georgian businessman named Nugzar Natchkhebia, who, by common Moscow belief, sold off the best players to the NHL at bargain prices and may or may not have taken the bulk of the transfer fees for himself. Plenty of legal questions over Natchkhebia's stewardship remain, but one sad truth is that the team's performance sank steadily, reaching an alltime low last year, when the club had a 7-28-7 record. To make matters worse, CSKA developed a reputation for refusing to pay its players for weeks on end, if at all, and for giving them only one meal a day. Attendance at the 5,400-seat Ice Palace fell from near-capacity crowds to an average of 300 per game. Desperate for cash, the club management rented the front of the arena to a Mercedes dealer and turned the rink into a raunchy disco on nongame nights.
It got so bad that in early 1993 the team was near death. And at that point Russia's—and perhaps the world's—greatest hockey coach, the dour, dignified Viktor Tikhonov, 63, who had led CSKA to 13 national titles and the national Olympic team to three gold medals, faced the painful realization that life as he had known it was changed forever. There was nothing CSKA could do but sell a piece of the team to the highest bidder. "It would have been easier just to quit," Tikhonov said recently, "but I am a battler."
He and a handful of Russian Army officers traveled to Montreal last February for the NHL All-Star Game. They were in search of a white knight to bail them out, and they found one. Howard Baldwin, the often unorthodox chairman of the Pittsburgh Penguins, listened at a breakfast to the pitch from Tikhonov & Co., and as Baldwin says, "I was intrigued by the deal, but I didn't quite know why. It was a sort of fantasy of the hunt. We knew that there was knowledge to be gained by having this foothold in Russia, but we didn't know exactly what knowledge."
Despite his puzzlement and the still-pending legal action over Natchkhebia's management, Baldwin went ahead. He formed an investors' group called Penguin Army International Ltd., which included actor Michael J. Fox, and put up more than $1 million to buy a 50% interest in the CSKA hockey team and a management contract to run the Ice Palace. From that moment on, the grand old team was called the Russian Penguins, with the overly cute new cartoon logo—"a hip-looking bird," says Steven Warshaw, the former IMG marketing agent for Joe Montana and Wayne Gretzky who is now vice-president of marketing for the Russian Penguins.
With Baldwin's management contributions and Warshaw's marketing smarts, the team has gotten some solid sponsorship capital from Iron City premium beer ($600,000 over three years) and Canadian sports-equipment giant CCM ($300,000 over three years), while some of the U.S.'s heaviest corporate hitters—McDonald's, Kraft, Coca-Cola—have put up a lot of dough to plaster their names on such things as pads and gloves ($32,000) and the Zamboni ($20,000). There are also luxury suites in the Ice Palace that sell for $23,000 a season. All of this has generated enough money so that the team was able to sign six free agents, increase player salaries to an average of $12,000 a year (last season it was $3,000) and field a more respectable team, which, through Jan. 2, was 15-14-4, a massive improvement on last year's record.
Crowds are averaging 4,267 per game, more than a tenfold increase over last season, and the team's improved record isn't the only reason the fans are coming back. These days the building is filled with pure sideshow. As Warshaw says, "We know what excites fans. We're doing something weird every game."
The weirdness ranges from Gorbachev-Yeltsin look-alike contests to young women stripping down to bikinis on the ice to dancing bears to barrel-jumping contests to a blonde female acrobat sliding down a rope and handing the referee the puck for a face-off. Sometimes crowds are brought in on the promise of free Iron City beer, sometimes for giveaways of pucks, pins or beer mugs. There is always rock 'n' roll music blaring, and the fans love having the Russian Penguins introduced in the glare of a spotlight in the darkened arena.
When Warshaw first suggested this classic bit of American hype, Tikhonov was stunned that anyone would think of turning off the lights on a visiting team. "That would be offending our guests," he protested. Warshaw countered by pointing out, "That's what we in the U.S. call a home field advantage."
Ultimately Tikhonov not only bought the spotlight gimmick but also signed on with enthusiasm to most of the other high jinks. "The team has woken up," he says, "and the fans are coming back to life."
While the hype has brought the fans back, at an average ticket price of only 16 cents, no one—including Howard Baldwin and his group—is going to get rich from admissions to Russian games. So what is to be gained from Baldwin's little investment? CSKA doesn't really work as a farm team because all other NHL teams have access to drafting Russian Penguin players. But as Baldwin says, "This is a little like having a junior team. There are huge pools of talented kids over there, all over the country. This business is so competitive that if we can just get a little leg up on our rivals discovering new talent, we're ahead of the game." (But not that far ahead. The Red Wings are reportedly interested in purchasing a piece of the Soviet Wings hockey club in Moscow, and the Edmonton Oilers are rumored to be interested in the Sports Club of the Army team in St. Petersburg.)
Baldwin's returns on his investment will most likely show up less in great hockey players than in great hockey merchandising. With a nifty array of Russian Penguin paraphernalia already for sale in the U.S., Baldwin and the CSKA hockey team expect to sell about $250,000 worth of merchandise this year.
For many Russians there is, of course, a sense that great traditions have been violated at the famous old club, that the memory of the legends who once played for it has somehow been stained. But Stanislav Lagovsky, a decorated army colonel who is president of CSKA's sports organizations throughout Russia, points out, "If the Penguins hadn't bought in, it's not certain there would be any hockey team at all here. In fact, it is only our commercial activity—our support by Adidas, Mercedes, Iron City, McDonald's—that keeps us from closing sports schools and canceling programs."
More and more athletes, teams and sports clubs in Russia are learning they cannot survive without the advice, ideas and investments of capitalists and capitalism. They are also learning the harsh realities: The sports world is not immune to crime and corruption. "There's a lot of money floating around our hockey these days," says Georgi Zhuravlyov, head scout for Moscow Dynamo. "And it's clear where there's lots of money, you will find a group of people trying to do business on it."
Too often, these days, that means funny business.
FOUR PHOTOS
DAMIAN STROHMEYER
Brave new world (clockwise from bottom left): Lagovsky (center) & Co. watched Tretiak being honored; Evans was urged on by Spartak cheerleaders; Zhitnik became the target of threats.
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RICHARD MACKSON
[See caption above.]
THREE PHOTOS
DAMIAN STROHMEYER
Sports logos are hot in Moscow, where corporate America has also left its mark.
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DAMIAN STROHMEYER
In Moscow's GUM store Evans (left) and Turner got a good look at Russian consumers.
TWO PHOTOS
DAMIAN STROHMEYER
Weatherspoon (right and below) and Dixon were welcome additions to CSKA.
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JOHN BIEVER
Fedorov didn't sign his new contract with Detroit until his family was safely in the U.S.
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DAMIAN STROHMEYER
Just about any merchandise that has to do with NBA stars is a big seller in Russia.