Czech your finances

Extraliga feeling the pressure of the global recession

05.12.2008
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Petr Vampola is leaving Plzen for Salavat Yulayev Ufa. Photo: hcplzen.cz/Milan Podpera

PRAGUE – The crisis in the global financial markets is now official. Both the U.S. government and the EU have come up with huge financial stimulation plans to get the economy back on track. In the Czech Republic the crisis has trickled through the Extraliga teams.

It was only a matter of time before the tightened budgets of sponsors would spell trouble.

Lasselsberger Plzen had a great start. Boosted by the return of prodigal son Martin Straka, who is both a GM and player, the team found itself in the top end of the table leaving fans dreaming of the team’s first Extraliga title. But as the season progressed, time took the shine of the team.

Just one win in nine games caused the team to lose ground on the league leaders. In their last three games, they collected seven points, lifting the team up to third place. Nevertheless, the gap to ninth-place HC Zlin is a slim three points.

But the lack of wins is not the biggest concern for the management. The team is cash-strapped and it is reported that salaries have not been paid for a substantial period of time.

Last summer, the club waved goodbye to General Manager Tomas Kral and Jan Sus. The latter served as fundraiser. “I believed the return of Martin Straka would spurn interest from sponsors in the region,” the club’s director Jaromir Zavoral told newspaper Idnes. “These assumptions unfortunately proved not correct.”

Nevertheless, Zavoral is not overly worried about the delay in payments. “This is not a new situation for the club. It happened in the past as well, just as with other Extraliga teams,” Zavoral knows. “I’m convinced we can manage the situation in the near future.”

At the end of the season the sponsorship deal with Lasselsberger, a ceramic tiles company, runs out and rumours are persistent that Plzen will be forced to sell its best players. Zavoral says that talks with new potential sponsors are ongoing and more news is to come before the end of the year.

Martin Straka’s learning path of being General Manager is not the smoothest, having to deal with difficult financial issues in his first year. “Already at the time I stepped in, we realized the budget was not fixed by the previous management and some money was missing,” Straka told Denik Sport. “I admit it’s difficult when you owe the players money but overall it’s not a huge sum of money that is still outstanding. I knew the situation here wasn’t rosy when I arrived but that’s not just the case with Lasselsberger Plzen.”

The former NHLer is not afraid the issues will affect his teammates’ performance on the ice. “Players with a heart for Lasselsberger Plzen will play regardless if they are owed money or not. It shows a player’s character. If he isn’t willing to play he is only with the club for the money.”

Being a member of the team himself means Straka can pick up the words in the locker room. “To me the money issue is not affecting my play at all. I’m always in the mood for hockey. If I were in it for the money I wouldn’t play here. Currently we’re trying to do our best for the club. It’s our job,” Straka said.

Elsewhere, the first signs of financial problems have also appeared. Sparta Prague offloaded nearly 20 percent of its staff mainly operating in marketing and arena operations.

President Viliam Sivek admitted he had to take measures. “It’s not a crisis but this will be felt throughout Czech sport for the next three or four years.” As Czech hockey is heavily depending on sponsors, the general recession in the country is quickly felt.

One of the first measures taken by companies to cut costs is to decrease their sponsorship activities. Sparta’s main sponsor Siemens has already announced it will close its factory in Prague next year. “I am sure we will be affected by this next season,” Sivek told Denik Sport. “Next season we will most likely operate with a lower budget.”

Anticipating smaller cash flow, Sparta Prague reduced the level of service and marketing after a slow increase of personnel. Sivek however is confident the tasks can be executed with fewer people, without losing quality. “There are no teams that had as many staff personnel as us.” The savings could reportedly run up to two million Czech Crowns (€78,000).

Sivek is also looking at other ways to save money. One of them are the costs of water and heating. “The price of heating has gone up 35% since I started,” Sivek says, pointing towards the continuous rising prices. The team also lost star goaltender Tomas Duba for financial reasons.

Duba left for a loan move to Ässät Pori in Finland. With Tomas Pöpperle returning to the team from North America, he saw the lions’ share of the starts. Therefore, Duba, who wasn’t the cheapest player on the team, became expandable. The Sparta Prague president can’t exclude the possibility that more players will be sold in the future in other to ease the pressure.

Plzen also had to say goodbye to their leading scorer Petr Vampola last week. With the forward’s contract running out after the current season, Plzen management decided to let Vampola go midway this season to join Russian giants Salavat Yulayev Ufa. For Vampola, who had 29 points in 26 games, it’s a dream coming true. “It really is. The last few years my numbers were good and there were rumours about other teams being interested,” the player told Czech media. “Despite being under contract, the interest increased recently. The offer from Ufa was so lucrative I could not refuse. After hearing it, I wanted to leave for Russia. Such an offer comes just once in a lifetime.”

In Ufa, Vampola will be accompanied by three other Czech players who are already on the reigning champion’s squad: Miroslav Blatak, Leos Cermak and Michal Mikeska. For Plzen the sale means some extra money coming in for a player that would otherwise have left for nothing as a free agent. According to the club’s management, the departure has nothing to do with the financial problems at the moment but was simple a logic decision given contractual circumstances. They stated a replacement player will be announced soon.

Furthermore, there’s also a tax raise looming, introduced by the Czech government. Within the current rules, players are not treated as employees but as independent business entities. As a result, clubs are not responsible for paying social and medical insurance taxes for them. The new tax law would put the athletes at same level as normal business employees much to the frustration of the Extraliga teams.

“We fulfil a public service role to the public,” says Miroslav Vanek, the General Manager of Energie Karlovy Vary, indicating that he is strongly against the tax plans. “Instead of supporting us in these hard times, the state is going to tax us more heavily. This could mean that we will have to cut down on activities and 350 children will have no room to play sports any longer,” Vanek told Denik Sport.

The Czech Extraliga marketing partner BPA is responsible for the central marketing of the teams and the league as well as the television rights. Director Jana Obermajerova is convinced BPA can survive this storm. “We have long-term partnerships arranged along with multi-year contracts. Most of our sponsors are still satisfied with the deals they concluded,” she says.

Although convinced the Extraliga will not have to suffer, BPA also has been struck with delayed payments itself. The organization is said to have only paid one third of its financial commitments to the clubs for the first two months of the season. Obermajerova: “It’s correct that we noticed a two-week delay in payments but I’m sure this will be corrected soon and won’t be repeated.”

With the car industry being heavily hit by the recession, one of the major industries behind Czech ice hockey is holding its breath now. BPA is not worried about this either. “Long term contracts were made and they have to be honoured,” Obermajerova stated. Main hockey sponsor Skoda has ensured to respect all ongoing contracts that run till 2011.

History has taught us that the Czechs can produce top talent despite having less resources available than most other hockey nations. Once again the Czech Extraliga teams’ creativity is being called upon.

Notebook:
  • After 28 games the Extraliga does not see one of the expected giants in the lead. Currently HC Litvinov is holding a two-point lead over Vitkovice Ostrava. The success is icing on the cake for the Litvinov club that celebrates its 50th anniversary this season.
  • On the other end of the table, title hopeful Mountfield Ceske Budejovice continues to struggle. They were eliminated in the Champions Hockey League. The unrest has lead to supporter protest prompting new coach Ernest Bokros to resign.
  • Ocelari Trinec forward Jiri Polansky surprisingly pops up in the league’s scoring chart. The 26-year-old has already broken his personal record for points scored. In 29 games, he scored 13 goals and 30 points, ranking second in the Extraliga in between the likes of high-calibre players like Tomas Vlasak, Martin Straka and Ondrej Kratena.
  • In his first season as starting netminder, Miroslav Kopriva is raising eyebrows. The HC Kladno goaltender has been spectacular between the pipes, stopping nearly 95% of all shots faced. Kopriva, 24, has been in net for 12 of Kladno’s 13 wins this season. Thanks to his heroics, Kladno is seven points clear of a relegation spot and in 11th place in the Extraliga.

JOERI LOONEN


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