The Kontinental Hockey League’s meeting between its president and the managers of its franchises was scheduled some time ago. But it took on new, vital importance this week thanks to the league’s crisis over the ruble’s drop in value and teams struggling to pay players.
KHL President Dmitry Chernyshenko, still new to the job, revealed what course they decided to take to steady the league:
“For the first time the KHL and its leadership met with member clubs to openly, without the media, discuss all internal questions, problems, challenges we are facing. We need to understand that I, as a new President of the League, was tasked by the Board of Directors with presenting a new development strategy for the KHL. The League right now is a serious developed product. This is not a situation where something needs to be saved. The task is to make it more interesting and appealing [emphasis added]…”
The most interesting notes from the meeting:
According to Chernyshenko the League is monitoring the payment of salaries to players. The KHL will start narrowing the gap between the salary floor and the salary cap. Most importantly, there will be no indexing of payrolls to tie them to a dollar or a Euro.
“There is a document, which we will present, where all clubs agreed to and signed an agreement not to index salaries. This is extremely important not to tie them to [foreign currencies], not to give in to the panic. The most important thing is for clubs to guarantee honoring existing contracts. There will be no domino effect and attempts by one of the clubs to use this situation to solve their problems. The financial health of the League is good and stable. We are looking at the current economic situation with calm. This season will be played out as planned.”
Asked specifically whether player salaries will be cut, Chernyshenko replied:
“As I told you, this is the first question we started to discuss. Everyone needs to keep calm. And we have a signed agreement with all clubs to prevent the process of reconsideration of salaries, their indexing in accordance with foreign currency exchange rates. We continue to honor our obligations to players.”
The League wants to have more games played, and will start the next season in August some time with longer breaks to accommodate the Russian national team playing in Euro Hockey Tour legs. “The calendar is the solution of a multi-criteria goal. The main criterion is the interests of the national team.”
The Survival Of The Clubs
Chernyshenko said that the KHL clubs must meet League imposed guidelines without any leniency. This statement related to financial obligations of the clubs.
“We have the information that not all clubs currently are meeting their obligations [read: not paying salaries on time and/or in full]. I am not ruling out that at the end of the season we will reassess and will be tough in our approach as to what clubs are worthy of playing in season.”
Chernyshenko also mentioned that the regulations will not be changed to accommodate particular clubs.
The panic that set in early in the week seems to have subsided to a certain extent. The Russian Central Bank and the government came out with aggressive measures to save the economy and the free falling ruble that seem to have worked to a certain extent so far. The US Fed gave the ruble a boost yesterday by deciding not to raise interest rates in the US, which would have strengthened the dollar against all other currencies.
However, the KHL and its clubs need to adjust to the new realities of living in a world much different than even a year ago. They have to accept that the number of clubs in the league is likely to dwindle.
The financial guarantees that Chernyshenko talked about will have to be scrutinized further, and other mechanisms to ensure funding should be considered, such as trust account.
As much as the League talks about being calm, only time will tell what format the League will survive in. It will certainly be smaller. But for the KHL it may not be a bad thing after all. One of the disappointments, however, is that by having KHL’s interests sacrificed for the IIHF or the Russian Hockey Federation, its importance may take a hit as well.