Russian billionaires gamble on golf as crisis ravages fortunes

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Oleg Deripaska is among the billionaires investing in golf projects in Russia.

Oleg Deripaska isn’t letting $20bn of debt handicap his golf game.

Like fellow Russian billionaires Roman Abramovich and Vladimir Potanin, the 41-year-old golf enthusiast amassed, and then lost, billions of dollars on commodities. They now are turning to their hobbies as one way to help rebuild fortunes ravaged by Russia’s worst economic decline on record.

Golf, snubbed by communists as a sport for capitalists, wasn’t played in Russia until the twilight of the Soviet Union and even now the country has just three 18-hole courses, one owned by Deripaska. At least 40 more are either being built or funded as investors pour $500m into the sport this year alone, according to the Russian Golf Association.

“Russia is now one of the hottest spots for golf development,” said Andrea Sartori, the Budapest-based head of KPMG International’s Golf Advisory Practice for Europe, the Middle East and Africa. “Golf is still perceived as an elitist sport and current supply is mainly tailored to the wealthy Russian upper class.”

The golf association reckons the number of regular Russian golfers will swell to 100,000 by 2014 from 16,000 now and 500 in 2003 as more courses open and it gets cheaper to play.

In Scotland, where the sport was started in the Middle Ages, the national golf union covers 630 clubs and 260,000 players in a country with roughly half the population of Moscow.

Deripaska opened the Tseleevo golf, ski and polo resort in December. The complex is 50km (31 miles) north of Moscow, the capital, and its centerpiece, an 18-hole course designed by six-time US Masters winner Jack Nicklaus, cost $30m. Membership fees are $300,000.

The billionaire completed the project after losing $25bn of his wealth by Forbes magazine’s count, forcing him to cede stakes in Hochtief AG, Germany’s biggest construction company, and Canadian car-parts maker Magna International Inc.

Three months after Tseleevo opened, Deripaska’s United Co Rusal, the world’s largest aluminum producer, was forced to freeze payments on $7.4bn of debt to more than 70 international banks under an agreement that expires September 18. Deripaska’s holding company, Basic Element, said in April that its total debt exceeded $20bn.

“We consider golf to be a promising industry in Russia,” said Vadim Prasov, manager of Deripaska’s golf business. Tseleevo is forecast to “pay off” in six to 10 years, he said.

That’s not to say the record 10.9 percent economic contraction in the second quarter hasn’t had an effect.

The Moscow Open, the only Russian event on the PGA European Tour, was cancelled in the summer after lead sponsor ZAO Inteco, the development company of Moscow Mayor Yuri Luzhkov’s billionaire wife Yelena Baturina, backed out.

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