Europe Short Read

Putin, Pipelines and Football Finance

What do a Serbian football team, the Kremlin and Germany’s former chancellor have in common? They are all directly linked to Gazprom, a Russian natural gas company whose logo is gradually cropping up all over European football. Logo sponsorships aren’t just commonplace in football, they’re practically omnipresent. Even historic holdout Barcelona caved in 2011, plastering the Qatar Foundation across its kit. Clubs make an enormous amount of money offering shirt space to sponsors, advertising things like cars, banks and bookies. Chevrolet pays Manchester United an astonishing £65 million per-year to be their shirt sponsor. But Gazprom isn’t like most sponsors. They’re not a private company advertising a product to consumers. It’s a company owned by the Russian government that makes money selling natural gas to foreign countries. Nevertheless, it’s across European football. If consumers can’t buy anything, why is Gazprom spending millions to sponsor teams and games? The explanation is fundamental to a greater story that’s confronting the sport: foreign nations with state-owned companies sportswashing their reputations abroad. To understand why Russia is involved, you need to look at a map and where the pipelines are positioned.

Russia holds the world’s largest natural gas reserves, most of them controlled by Gazprom. Since the Putin presidency, the Russian government has become the largest owner of Gazprom. Meaning company business is under Putin’s control, which is opportune considering oil and gas sales account for approximately 36% of Russia’s annual budget.

This map shows how dependent various European countries are on Russian gas, with the eastern European nations notably more dependent. In the 1990s, Germany represented the biggest opportunity for Gazprom. Chancellor Gerhard Schroeder had instituted a shift away from coal and nuclear power, so Germany needed more natural gas to maintain their energy supply. Gazprom sensed an opportunity. However, to reach Germany, Russia’s gas needed to pass through pipelines that crossed numerous countries, all charging Gazprom transport fees. Moreover, many of those pipelines crossed through Ukraine, a country that has an uneasy relationship with Russia. Therefore, Russia planned to circumvent Ukraine and ship their gas directly.

This is the Nord Steam pipeline – a route through the Baltic sea straight to Northern Germany. In 2005, Gazprom had nearly finished financing the project while Schroeder was nearing an election. Schroeder had become friendly with Putin and domestic critics were increasingly concerned about the Kremlin’s growing influence. Only two weeks before the election, Schroeder met with Putin to sign an agreement officially approving the pipeline. Two months later, despite an election defeat, he had a new job; overseeing Gazprom’s pipeline to Germany. It also came out that. while in office, Schroeder had approved a secret Gazprom loan of over a billion euros to finance the project. The narrative of Gazprom’s project in Germany was becoming a story of scandal, corruption and Russian infiltration. But then the story soon changed.

In 2006, Gazprom sponsored German football team FC Schalke 04. Schalke’s finances were dire, and Gazprom’s sponsorship provided funds the club seriously needed. Schalke is in Gelsenkirchen – a town in Germany’s Ruhr Valley, where much of the country’s energy industry is based. It’s also close to the Rehden, a hub for pipelines to the rest of Europe and holding western Europe’s largest natural gas storage facilities. In fact, a Gazprom chairman said Schalke’s ‘connections with the German energy sector’ were why they decided to become their sponsor.

Schalke wasn’t Gazprom’s first football deal. In 2005, they had bought a team on the other end of the Nord Stream trail: Zenit St. Petersburg. Gazprom’s investment made Zenit a major force. Two years after taking control, Zenit won their first Russian championship and have attracted high quality players, unusual for the Russian league. In 2006, as Gazprom logos were revealed around Schalke’s stadium, German newspapers were praising the Russian company for providing millions to the club. Over the next few years, the Gazprom logo would become a team symbol displayed at Schalke games and printed on official merchandise. Schalke also won the Bundesliga in 2011, and by then, Nord Stream had been completed.

There was also another struggling team that started featuring Gazprom on their shirt. Serbian giants Red Star Belgrade. Red Star was over $20 million in debt when Gazprom signed to become their shirt sponsor. Unsurprisingly, there was also another pipeline. The South Stream would have skipped Ukraine, by going directly through the Black Sea, Serbia and eventually to Southern Europe. That project closed in 2014, but Gazprom has continued increasing their access to Europe by building Nord Stream 2, increasing the gas flow from Russia to Germany. Gazprom has also expanded their footballing network to include partnerships with Chelsea, the Champions League and the FIFA World Cup. These sponsorships have made Gazprom’s logo familiar to many across the world.

The logo is everywhere. It’s on side-lines and shirts during the game and on advertisements in half-time. Schalke fans have also started to see Nord Stream 2 ads at home games. While climate activists like Greenpeace have staged protests against Gazprom, it has had no difficulty expanding their brand and renewing their sponsorships. Now, Russia controls the tap for nearly half the natural gas consumed by Europe and other countries are learning from their example. Emirates, Etihad and Qatar airways are all owned by Arab monarchies in the Gulf, with interests that go beyond selling airline tickets. As Gazprom shows, having a high profile football sponsorship presents a path around bad publicity by winning support on the pitch. For fans, it’s difficult to reject money that helps teams win, as Newcastle discovered with its impending Saudi-led takeover, but it’s starting to change the sport itself. Now that it’s normal to see a French team sponsored by Dubai’s royal-owned airline compete against a Mancunian team with Abu-Dhabi’s royal-owned airline on their shirts, it’s beginning to look like the match is a component of a greater competition. An unassuming match between teams potentially involved in a larger strategy for international soft power that endures long after full time.

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