By Manuel Veth –
Just like that, it was all over for Donetsk’s second club Metalurh, as the club packed its bags and moved to Dniprodzerzhynsk. On June 7 Futbolgrad had run a story that Metalurh Donetsk may cease operations and merge with FC Stal Dniprodzerzhynsk, then two weeks later the news was confirmed by Metalurh’s official homepage, which has since been taken offline.
The Armenian Oleg Mkrtchyan, who is understood to be the richest Armenian living in the post-Soviet space with an estimated wealth of $1.7 billion, had financed Metalurh. Mkrtchyan made most of his money in the Ukrainian steel and coal industry and, despite being of Armenian descent, has deep roots in the Ukrainian Donbass where he is the General Director of the Industrial Union of Donbass (IDS) metal producing company.
Mkrtchyan’s Football Empire
Like many oligarchs in the post-Soviet space, Mkrtchyan has invested heavily in football, and like Dnipro Dnipropetrovsk owner Ihor Kolomoyskyi, who owns several clubs in Ukrainian football, Mkrtchyan has built himself a small football empire.
In the past Mkrtchyan has been identified as the financial backer of several clubs in Ukraine, Russia, and Armenia. In addition to his financial investments at Metalurh, he was also linked to Kuban Krasnodar, and is listed as the chairman of the Armenian football club FC Banants Erevan.
He has also been involved, in some way, with the Russian Premier League club Kuban Krasnodar, where his nephew Suren Mkrtchyan was the long-acting General Director. At Kuban, however, his investments have been accompanied by controversy as the club’s staff and players went without pay for months in 2014/15.
As Chris Holley writes for the Russian Football News, Kuban had financial troubles throughout the 2014/15 season. The club has denied any setbacks and reports in December that the club was headed for extinction after the season or would move to Sochi where an empty stadium is awaiting a stable Russian Premier League tenant. Oleg Mkrtchyan owns between 50% and 75% of the shares of Kuban Krasnodar but according to some reports has stopped financing the club.
Then this summer, Mkrtchyan apparently stopped financing Metalurh Donetsk, and sold the club’s Ukrainian Premier League licence to up-and-coming club Stal Dniprodzerzhynsk. This move comes in the wake of the on-going conflict in the Donbass, which has put a major strain on the club’s finances. Metalurh’s role in the Mkrtchyan football empire had always been to develop players for some of the larger clubs in the region.
At Metalurh, the Donetsk-based oligarch Serhiy Taruta was listed as the major chairman of the club. While Taruta certainly was in charge of major investments regarding the club’s infrastructure, such as the new stadium that was supposed to be built on the outskirts of Donetsk, Mkrtchyan’s investment involved the ownership of many of the club’s most promising young players.
Mkrtchyan used his network of post-Soviet clubs to bring in players from South America, Africa, Armenia and other post-Soviet states in order to develop them at Metalurh and then moved them to clubs such as Shakhtar Donetsk where they could prove themselves in European competitions such as the UEFA Champions League.
Henrikh Mkhitaryan – A Football Investment
As part of his investment strategy, Mkrtchyan ensured that he would make a profit on future transfers of those players by holding on to a certain percentage of each player’s contract. The case of Henrikh Mkhitaryan who played for Metalurh in the 2009/10 season, before moving to Shakhtar Donetsk in 2010 shows how Mkrtchyan’s network operated.
Mkhitaryan’s transfer from Shakhtar to Dortmund in 2013 was extremely difficult, because Mkrtchyan still owned a part of the player’s contract; this type of contract is often referred to as third-party ownership. In fact the transfer shed a light on Mkrtchyan’s football network in the post-Soviet space and Armenia in particular where his influence reaches to the upper echelons of the Armenian Football Federation (AFF) and its president Ruben Hayrapetyan.
Ruben Hayrapetyan is not only the president of the AFF, but is also involved in Armenian club football. As one Armenian journalist who wants to remain anonymous told Futbolgrad, Hayrapetyan is heavily involved in financing several clubs in Armenia. The most commonly known is Pyunik Erevan, where Ruben Hayrapetyan’s son Rafik is officially listed as the club president. FIFA and UEFA regulations make it impossible for Ruben Hayrapetyan to be both the president of the AFF as well as president of a football club; clubs are supposed to be one hundred per cent independent from national football federations.
Robert O’Connor in his wonderful article for In Bed With Maradona describes the integrated Armenian football network as, in many ways, resembling that of Ukraine, and Russia. He shows that Armenian oligarchs have used football as a powerful networking tool. At Pyunik, for example, Hayrapetyan’s fellow oligarch Samvel Aleksanyan is officially listed as the major owner of the club, but the team, according to one Armenian journalist, has in the past received major cash infusions from the AFF, and in fact the Hayrapetyan clan seems to be in charge of the club.
Hayrapetyan also played a major role in Mkhitaryan’s career as the footballer had played for Pyunik between 2006 and 2009 and had won the championship and the cup in 2009 before moving to Metalurh Donetsk. When Pyunik sold the player to Metalurh the Hayrapetyans retained a certain percentage of the player’s rights. This meant that when Dortmund negotiated Mkhitaryan’s transfer with Shakhtar they had to buy out not only Mkrtchyan, but also the Hayraptyans.
Post-Soviet Player Transfers: Understanding the Network
In general, understanding how post-Soviet networks function is necessary to grasping what is involved in transfers in the region. Another example is Metalurh’s move from Donetsk to Dniprodzerzhynsk. As Futbolgrad explained on June 21, within a matter of days days the most important player assets were moved away from Metalurh to other clubs in the post-Soviet space.
Several players were moved from Metalurh to Dagestan’s Anzhi Makhachkala. This includes the young Dutch left-back Lorenzo Ebecilio, who played last season on loan at Mordovia Saransk in Russia. These moves suggest that Anzhi might now gear up to become a major actor in Mkrtchyan’s football empire. In addition, the transactions and moves that took place reveal the role of player agent Dimitry Seluk. Seluk, who represents the well-known football stars Yaya and Kolo Touré, also represents Ebecilio.
Seluk’s role in the Mkrtchyan football empire, however, remains murky. While he seems to represent many of the players who play for clubs that are owned by both Hayraeptyan and Mkrtchyan, Seluk has also been embroiled in a public conflict with the powerful president of the AFF over the rights of several players such as Henrikh Mkhitaryan and Aras Özbiliz.
Seluk claimed that he officially represented both players, but Hayrapetyan, in a public statement to the Armenian news outlet News.am, stated that he was not working with Seluk: “how can I cooperate with a person who first declares to be Henrikh Mkhitaryan’s agent even never being in this role, and then announces that he has transferred Aras Özbilis to FC Kuban, whilst I have personally asked Oleg Mkrtchyan to buy the transfer rights of Aras and talked to Aras and encouraged him to move to FC Kuban.” He also added: “My words concern the well known businessmen Oleg Mkrtchyan and Suleyman Kerimov. While the first has undeniable contribution in the development of Ukrainian, Russian and Armenian football, Suleyman Kerimov gives his efforts for the progression of Dagestanian football, with this helping the rise of Russian football to a completely new level.”
Mkrtchyan’s involvement with Anzhi Makhachkala’s owner Suleyman Kerimov, dates back to 2013 and adds another element to the story of Mkhitaryan’s difficult transfer in the summer of 2013; Mkrtchyan and Hayrapetyan were in conflict over where Mkhitaryan should go next, while Mkrtchyan and Seluk favoured selling Mkhitaryan to Kerimov’s Anzhi rather than Dortmund.
In fact Metalurh’s recent transfer activities that heavily involved Seluk suggest that Mkrtchyan has long-term ties with the player agent, and that Seluk is actually one of the major dealers in Mkrtchyan’s football empire.
Oleg Mkrtchyan – Destination in Doubt
It remains to be seen how the conflict in the Donbass will ultimately affect Mkrtchyan’s football empire. The fact that Mkrtchyan’s wealth seemed to be tied to the industrial heartland of the Donbass, could explain why Mkrtchyan recently had to downscale his investment at Kuban, move Metalurh to Dniprodzerzhynsk, and move many of his player assets to Anzhi Makhachkala.
Mkrtchyan’s partnership with the Dagestani oligarch Kerimov shows that he remains interested in preserving some of his football empire. In addition, there is evidence that Mkrtchyan is also involved with Stal Dniprodzerzhynsk whose current president Maksym Zavhorodny is also the chairman of Stal’s sponsor the Ukrainian steel and coal conglomerate DMKD. One of the major shareholders of DMKD in turn is IDS, which is run by Taruta and Mkrtchyan.
This connection is only apparent at second glance and is fitting for a man like Mkrtchyan who likes to remain in the background of his football operations, and seldom takes front office positions at the clubs that he finances. Altogether, however, the Mkrtchyan story with its involvement in third-party ownership contracts, backdoor ownership of several post-Soviet clubs, and the upper echelons of football federations in the region, helps to disentangle the puzzle of how post-Soviet football networks operate.
Manuel Veth is a PhD candidate at the University of London King’s College, London. Originally from Munich, his thesis is entitled: “Selling the People’s Game: Football’s transition from Communism to Capitalism in the Soviet Union and its Successor States”. Follow Manuel on Twitter @homosovieticus.