Russian state bank takes control of soccer giants

Russian state bank VTB has taken control of Russian soccer club Dynamo Moscow in a deal which sees the club's US$290 million debt converted into shares for the bank.

VTB, which will now own 74 per cent of the club, one of the most famous and storied in Russian sport, will also invest a further US$50 million. The bank had lent the club the money to cover the redevelopment of the antiquated Petrovsky Park.

Russian state bank VTB has taken control of Russian soccer club Dynamo Moscow in a deal which sees the club's US$290 million debt converted into shares for the bank.

VTB, which will now own 74 per cent of the club, one of the most famous and storied in Russian sport, will also invest a further US$50 million in what is being reported as a sponsorship deal. The bank had lent the club the money to cover the redevelopment of the antiquated Petrovsky Park. In addition to the 74 per cent of shares it has secured in the club, VTB will hold 75 per cent minus one share of the Dynamo Management Company, the developer of the Petrovsky Park project.

Dynamo had worked hard to avoid the settlement. The chairman of the team's board of trustees, Sergei Stepashin, told reporters in March that he would not comment on "rumours" of a stake going to VTB, saying only that Dynamo would, "meet all of its obligations."

The bank intends to help the club complete the stadium project, and will then look to recoup its investment. "It's important for us that - difficult economic conditions not withstanding - the Petrovsky Park project be completed in keeping with top global standards," said VTB president Andrei Kostin. "We hope to recover all the funds we have invested in these projects." Kostin added that the borrowing limit for the stadium would be US$1.4 billion, and that while VTB was the only lender, new investors could be brought in later.

More than US$200 million of the club's debt to the bank had been relates to the stadium, with the rest used to secure the management buy-out of businessman Alexei Fyodorichev in 2006.

Kostin confirmed that a preliminary agreement has been reached which will see the renamed the Yashin-VTB Arena once the reconstruction of the ground was completed. Lev Yashin is the only goalkeeper ever to have won the European Player of the Year Award. He spent his whole career, from 1949 to 1971, at Dynamo. The club has promised to maintain the historic elements of the ground, built in the 1920s, including the famous facade.