The 2008 League of Champions Cup, on display on Red Square, May 20, 2008
Photo: Sergey Kiselev
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Soccer Buoys Business, Not City
The League of Champions final, besides a sporting event, is a grandiose financial undertaking. The winner of the match will become about £85 million richer, and Moscow will receive about £35 million. City officials see it as a losing proposition, however. They were permitted to spend all of the city’s two-year sports budget of $227 million. So far, only the service sector is seeing a payoff from it.
Manchester United, win won the match yesterday in Moscow, will make about £85 million in increased attendance at its matches, higher payment for television rights to its games, sales of items with the club’s logo and advertiser interest, says Simon Chedwick, professor of sport business strategy at Coventry University Business School in England. Chedwick also estimates that English fans left about £35 million behind them when they visited Moscow, with every fan spending over £650 on the two-day trip. That makes this year’s championship twice as expensive as last year’s in Athens. Chedwick’s estimates are based on the attendance of 40,000 fans. In reality, only 25,000 Britons came to see the match, with many holding back due to the trip’s high price.
The expensive of preparing for the match were shared by the City of Moscow and the Russian Soccer Union. A RSU spokesman said that most of the expenses, the size of which is not being made public, were borne by the city. Kommersant has learned that the city spent 800 million rubles (about $33.7 million) on Luzhniki Stadium, 10 million rubles ($420,000) sprucing up the stadium’s grounds and the surrounding area and 37 million rubles (about $1.5 million) on temporary pedestrian bridges over roadways near the arena. Moscow will receive from the UEFA 20 percent of the revenue from ticket sales, or 30-35 million rubles. Moscow will also receive a premium of $1.15 million. The only other revenue the city received from the event was in the form of restaurant and hotel taxes.
The city’s foreign guests were greeted by special inflated prices. The Baltschug Kempinski Hotel was booked for the match dates as soon as they were announced last year. A special rate applied between May 20 and 22 with rooms starting at 28,000 rubles. Swissotel Red Hills was charging 40,000 rubles for rooms that usually cost 18,500 rubles. The Euroluxe Hotel at the edge of the city raised the price of its double rooms from 3950 rubles to 16,000 rubles. Rooms that cost 2900 rubles in the Izmailovo complex were raised to 6000 rubles. Restaurants saw a 50-percent increase in business.
www.kommersant.com
All the Article in Russian as of May 22, 2008
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