ALLOW HIM to lead you through the chambers of his Moscow office, the entire floor of a six-story building he owns, and Shabtai von Kalmanovic—international businessman, former Soviet spy, lifelong basketball Bennie—will impress upon you one additional entry on his résumé. "I am a collector," he says between gestures toward his private acquisitions. Here are rooms full of menorahs and mezuzahs, part of a collection of Judaica so impressive, he says, that rabbis come from around the world to inspect it. Here too are Fabergé eggs and Russian folk paintings and Soviet curiosities such as a limited-edition chess set (Red Bolsheviks vs. White Russians) commissioned by Stalin himself.
The czarist-era porcelain, impressive as it is, pales next to what can be found in another of Kalmanovic's residences, in St. Petersburg, where a visiting staffer from the Hermitage let out a gasp upon realizing that the collection rivaled even that of Russia's greatest museum.
And then there are Kalmanovic's women. More precisely, there are his female basketball players, the three gemstones of which reside on the southern edge of Moscow, in a gated villa replete with sauna, indoor pool and on-call cook, and are showcased on his Spartak Moscow Region Vidnoe team, the defending Russian and Euroleague champions. A discerning collector would be sure to acquire only the finest specimens, and so Kalmanovic has. This season Spartak features seven Olympic medalists, including the players he regards as the world's best at their positions: guards Sue Bird and Diana Taurasi and center Lauren Jackson.
These three wintering WNBA stars call their mullet-haired benefactor Papa, and he in turn calls Bird "my Jewish daughter," Taurasi "my Italian daughter" and Jackson "my Australian daughter." Free of WNBA payroll restrictions, Shabtai's Angels earn up to 10 times more during a Russian season—around $500,000 for Taurasi, for example—than during a U.S. summer. After big Euroleague wins, Spartak players collect cash bonuses of $5,000 and diamond jewelry. On trips to play club teams in provincial cities in France and Italy they make Kalmanovic-arranged shopping stopovers in Paris and Venice. "We don't do it backpack-style," Jackson says. "We do it seven-star-hotel-, chauffeur-style."
December 15, 2008
A year ago, after Taurasi idly mentioned that she had always wanted to play the piano, one materialized in the living room of Casa Papa. When Kalmanovic discovered that Jackson had never seen her favorite performer, Marilyn Manson, from beyond a mosh pit, he treated her to VIP concert seats from which she sipped champagne. Last fall, when USA Basketball auctioned the uniforms of its Beijing Olympians, Kalmanovic bought Taurasi's and Bird's so that he could give them to the women he regards as their rightful owners. "Don't ever sneeze around him," says Bird. "He'll pull out five different medications. The way he treats us, it really makes you want to play hard."
Next to playing for "Shabs," Taurasi says, with irony that hits as hard as a well-set backscreen, "the WNBA is, like, communist."
Kalmanovic shrugs. "I trust them, so they trust me," he says. "I give them better conditions, they give me better dedication."
True as that may be, it doesn't fully explain why Kalmanovic spends $6 million to $7 million annually on his club—a sum approximately matched by its main sponsor, the Moscow Region government—while collecting virtually no revenues. (The club doesn't charge admission and pays to have its games telecast throughout Russia.) But then Kalmanovic's heart has always been tangled up in basketball. He grew up in Lithuania, where the game is a national passion, and later partnered with Soviet-era star and former Portland Trail Blazer Arvydas Sabonis to bankroll the Lithuanian team Zalgiris Kaunas during its drive to the 1999 Euroleague men's club title. Over the next two years Kalmanovic stepped away from hoops, until one day when he was in Yekaterinburg, the Russian city at the foot of the Urals, tending to his construction and pharmaceutical interests. He ducked in to watch the local women's team and literally fell in love with the point guard, Anna Arkhipova. In short order he had married her and bought the team.
After helping Russia to a bronze medal at the Athens Olympics, Arkhipova retired in 2004. Kalmanovic and his wife left Yekaterinburg for Moscow, where Shabtai soon resurfaced as owner of Spartak Moscow Region, which had just finished 11th in the Russian league. Four years and hundreds of millions of rubles later, the club is hunting its third straight Euroleague crown—although Spartak expects stout challenges from CSKA Moscow, whose natural-gas-mogul owner spends lavishly on such WNBA stalwarts as Becky Hammon and Katie Douglas, and Yekaterinburg, Kalmanovic's old team, which is now under the stewardship of two copper barons who, according to a Russian basketball source, will pay Candace Parker, last summer's WNBA MVP as a rookie, $1.2 million for four months beginning in January.
"There is a very big difference between having $100,000 and a million," says Kalmanovic, who goes on to hint at the extent of his own wealth. "For sure there's a difference between having $1 million and $3 million, but after $150 million or $200 million, you're just rich. So if you understand that you can't eat breakfast twice, and you can wear only one tie at a time, there might as well be something else. There still isn't enough of a middle class in Russia for sport to pay for itself. And you cannot deduct expenses on sport [from your taxes]. So you need to have a very big heart and very big balls, and need to be something between a fanatic and a patriot. And a little bit crazy."
"O.K. Like me."
WHETHER THEY'RE fanatics, patriots, fools or some combination of the three, sports sugar daddies like Kalmanovic have surfaced all over Mother Russia. Virtually every prominent sport and prestigious club team has a patron—if not one of the oligarchs (the well-connected, early-moving businessmen who became billionaires after the collapse of the Soviet Union), then some arriviste multimillionaire minigarch or well-placed politician with the influence to flush out cash. "Russians by nature are a people intrigued by the idea of power," says David Blatt, the American-Israeli coach of Dynamo Moscow and the Russian national men's team, who in 2007 delivered Russia's first title since Soviet days at Eurobasket, the biennial competition among European national teams. "It's culturally ingrained—whether fear of power or enjoyment in having it. These guys use sports to amuse themselves and further their own interests. Russia is steeped in the tradition of sports, and they combine that passion with money."
Today Russian businessmen no longer merely vie with one another to see who can win domestic titles in soccer, basketball and hockey. They've also taken their competitiveness to the world stage, where they own several of the most storied soccer clubs in the English Premier League, including Chelsea (the pride of oligarch Roman Abramovich) and Arsenal (in which metals, lumber and media mogul Alisher Usmanov holds a 24% stake). Last spring Abramovich's Avangard Omsk, a hockey club in an oil town on the Siberian plain, lured New York Rangers captain Jaromir Jagr from the NHL with a tax-free $14 million over two years. (Omsk is the flagship of the fledgling Kontinental hockey league, commonly referred to as the KHL, which extends to Belarus, Latvia and Kazakhstan, and whose president, Alexander Medvedev, heads the export division of Gazprom, the state-controlled energy giant.) Oligarchs' support also helps account for the recent head-turning results of Russian national and club teams: in basketball, besides that Eurobasket title, a Euroleague men's championship for CSKA Moscow in 2008; in ice hockey, a world title, Russia's first in nearly two decades, last spring; in soccer, UEFA Cup crowns for CSKA Moscow in 2005 and Zenit St. Petersburg this year, as well as a semifinal appearance for the national team in June's Euro 2008.
Russia was a surprising disappointment at the Beijing Olympics, where it barely beat out Great Britain for third in the gold medal count—but within weeks came word that the 15 oligarchs who compose the Russian Olympians Foundation would increase to $40 million a year their spending on more and better coaches, training stipends and incentive bonuses for athletes. "It's unclear whether we can make an impact [at the 2010 Winter Games] in Vancouver," says foundation executive director Alexander Katushev. "But I'm sure we can make one by London [in 2012], and we'll have a lot to say about Sochi in 2014 [page 65]. The fact that [Russian] president [Dmitri] Medvedev is chairman of our board gives me grounds to say, 'This will work.'"
The global financial crisis has pared the oligarchs' wealth, and the plunging price of oil is slowing the flow of cash into the Russian economy in general. But sports haven't been substantially affected yet. "They should be, because as the market suffers, people aren't able to buy as many tickets and sponsors' products," says Dmitri Navosha, who blogs about sports business on his site sports.ru. "But in Russia few people look at sports as a real business. In the States, if the NHL weren't making money, they'd close the league. But since Soviet times [influential] people here have supported sports mostly for political reasons."
The Russian press recently carried a picture of Nikolai Patrushev, the head of the Russian Volleyball Federation, turned out in Karch Kiraly sunglasses and a backward cap—an odd getup for someone who runs the FSB, the state security bureau that's one of the successors to the KGB. "Patrushev attracts money," Navosha says. "He loves volleyball, and there's lots of volleyball on the government sports channel—not because of ratings, but because of Patrushev. Otherwise, go down the Forbes list [of richest Russians], and almost everybody is involved in sports. It's not all soccer, basketball and hockey—there are Olympic sports too."
Shortly before the financial meltdown, the 6'7" billionaire and pickup hoops fanatic Mikhail Prokhorov sold his stake in Norilsk Nickel to fellow oligarch Oleg Deripaska for about $10 billion ($6.5 billion in cash and the rest in stock), which means that Prokhorov's twin passions—the CSKA Moscow men's basketball team, on whose directorate he has served, and the astonishingly popular TV sport of biathlon (the race combining cross-country skiing and riflery, and nicknamed the Russian Formula One)—won't lack for support anytime soon.
When Kobe Bryant and LeBron James mused last summer about jumping to Europe after their NBA contracts expire—"$40 million a year, and I'm there," Bryant jokingly told a Russian reporter in Beijing—Prokhorov's name made every short list of European basketball figures who could produce the requisite cash. Even if Bryant and James remain safely Stateside, though, Russian businessmen are likely to continue altering the contours of worldwide competition with the kind of wealth and commitment that led Taurasi, upon hearing someone mention Kalmanovic in Beijing, to exclaim, "I'd take a bullet for that man!" Whereupon she clutched at her heart and went into a mock death spiral.
TO FULLY grasp the mixture of nationalism, wealth and political influence currently remaking Russian sports, it's necessary to revisit the early 1990s and the collapse of the Soviet Union. With no regime to regulate the oil, gas, timber, coal and precious metals scattered across the 11 time zones of the world's largest country, oligarchs-to-be acquired stakes in Russia's extractive industries for a fraction of their worth. Today 22 men reportedly control some 40% of the country's gross domestic product, and in virtually every case their wealth can be traced to footholds seized during the chaos.
In 1995, with the country on the verge of bankruptcy, a coterie of oligarchs went to president Boris Yeltsin with an offer: We'll bail out the government, but only if the state collateralizes our loans with further shares in national industries. Yeltsin had little choice. When the loans came due and the state could not pay, the oligarchs added to their portfolios for mere kopeks on the ruble. A year later, with the country deeper in crisis and the Communists poised to beat Yeltsin at the polls, the oligarchs rushed in to prop up their patron with cash and with favorable coverage in the media they owned. Yeltsin won another term, and the fortunes of the oligarchs and the Kremlin became even more intertwined.
Enter Vladimir Putin, who succeeded Yeltsin in May 2000. A former Leningrad city judo champion, Putin brought to the presidency an athlete's comfort with confrontation. He read the mood of the public, which had come to regard the oligarchs as kleptocrats. As Putin told The New York Times, "The state appointed them as billionaires. It simply gave out a huge amount of property, practically for free. Then .?.?. they got the impression that .?.?. everything is permitted to them." Using tactics worthy of the black belt that he is, Putin played them for his own purposes.
The flow of oligarchs' cash into Russian sports can be traced to a July day in 2000 when Putin summoned the nation's most prominent billionaires to the Kremlin. They could keep their riches and operate freely, he told them, so long as they paid their taxes, didn't meddle in politics and tithed to the interests of the state when asked. The fates of two oligarchs, media mogul Boris Berezovsky and oilman Mikhail Khodorkovsky, would soon prove instructive. In 2001, after his TV station infuriated Putin with its criticism of his response to the Kursk submarine disaster of 2000, Berezovsky fled to England in fear of being arrested. Since then he has been the target of several thwarted assassination attempts. Khodorkovsky, for his part, supported opposition parties and tried to circumvent Putin's foreign policy to cut oil deals with U.S. companies and the Chinese government; in 2003 a government SWAT team seized him at gunpoint while his private jet refueled on a Siberian runway, and soon he was watching his oil holdings disappear while he served out a nine-year prison sentence for tax-code violations and fraud. It's not hard to read between the lines of the slogans of Putin's political party, United Russia—they include "Putin's Plan for Russia: Victory!" and "United Russia is an athletic Russia!"—and conclude that keeping the First Fan happy is a small price to pay for the freedom to continue to accumulate and enjoy one's wealth.
"Putin did an amazing job of frightening the oligarchs into doing what he wanted," says Jim Riordan, a professor emeritus at Britain's University of Surrey who has written widely on Russian sports before and after the breakup of the Soviet empire. "If they demur, they know they will lose not only their gas, oil and metals assets. They may end up shot, poisoned, pickaxed, debris in a helicopter crash or working in a Siberian labor camp."
Paying tribute to the state might mean buying back cultural artifacts that had wound up in private hands, such as Malcolm Forbes's nine Fabergé eggs (repatriated by the oil, gas and metals magnate Viktor Vekselberg) or Kazimir Malevich's painting Black Square (which now hangs in the Hermitage thanks to conglomerateur Vladimir Potanin). But more and more it means underwriting sports. Usmanov, the oligarch who holds the stake in Arsenal and serves as head of the Russian Fencing Federation, also helps bankroll the Russian Olympians Foundation, as do Vekselberg, Abramovich, Deripaska and Potanin. The latter three are also underwriting much of the infrastructure for the 2014 Winter Games.
NO ONE has more artfully pulled off the delicate dance between prosperity and politics in the New Russia than Abramovich. Orphaned by age three—he lost his mother to a botched abortion and his father in an industrial accident—Abramovich wound up with relatives in Moscow and, after secondary school and military service, seemed ticketed for a dull Soviet-era life. Then, in the late '80s, he took advantage of new economic freedoms under Mikhail Gorbachev, sinking a 2,000-ruble wedding gift from his in-laws into cosmetics, dolls and plastic ducks that he sold at various markets around Moscow. As the Soviet state crumbled, he turned to banking, then oil trading. With Berezovsky's sponsorship, he gained entrée to Yeltsin's inner circle. During the loans-for-shares episode, he and Berezovsky jointly acquired a controlling interest in the Siberian oil giant Sibneft for less than $200 million. Not six years later, their stake in the firm was worth 75 times that.
Unlike Berezovsky, Abramovich recognized the importance of flattering the Kremlin even more slavishly after Putin rose to power. In 1999 he helped bankroll Putin's political party, and the next year, at the president's request, took over as governor of Chukotka, the desperately bleak far eastern province from which it might be said that one can see Sarah Palin's house. Abramovich wound up pouring some $1.3 billion of his own fortune into building or upgrading hospitals, schools, shops, roads, bridges, recreational facilities and supermarkets, pulling back from the brink a region where many people still subsisted on whale blubber. His service put him in such good graces with the Kremlin that, in 2005, Gazprom, the energy giant, had no reservations about paying $13 billion for 72% of his stake in Sibneft.
The story goes that Abramovich spent about $233 million to buy debt-ridden and downtrodden Chelsea in 2003 after spotting the club's stadium during a helicopter flight over London. Moscow mayor Yuri Luzhkov decried him for "spitting" on his homeland by not sinking that fortune into Russian soccer, criticism that resonated among a population whose annual per capita income is less than $8,000. But in short order Abramovich would set things right. Following Russia's humiliating 7--1 World Cup qualifying loss to Portugal in 2004, Putin ordered the Russian Soccer Union to collect oligarchs' cash to help restore the honor of the motherland. Abramovich took a place at the front of the line, bankrolling a soccer-development binge that in three years has propelled the national team from 34th in the FIFA world rankings in November 2005 to eighth last month. He has sunk hundreds of millions into the National Academy of Football, a foundation committed to establishing 9,000 soccer schools and building 75 artificial-turf fields around the country; a new national team training center; the salary of national team coach Guus Hiddink, a Dutchman; a new national stadium in Moscow; and at least part of the funding for another 10 stadiums around Russia. This is more than a matter of paying protection money, insists Abramovich spokesman John Mann: "The pundits and outsiders say, 'Oh, Putin told them they must give back.' But that doesn't account for the fact that they love their country as much as anybody, and for specific sports they're willing to help out."
In the meantime Abramovich has poured more than $1 billion into Chelsea, hoping to build a global brand to rival Manchester United's. "The idea is to play catch-up, to increase the value of the club," says Mann. With fresh buzz and cachet, Chelsea generates more annual revenue than ever in tickets, rights fees and merchandise. But Abramovich has spent so much on player signings that the club is running up huge operating losses, and it's hard to see a path to the black. Imagine Warren Buffett or T. Boone Pickens buying the Pittsburgh Pirates and stocking the roster with A-Rods and Teixeiras. Abramovich, who grants virtually no interviews, has made one public comment that begins to explain himself, and it could serve as the Oligarchs' Credo: "The goal is to win. It's not about making money. I have many much less risky ways of making money. I don't want to throw my money away, but it's really about having fun, and that means success and trophies."
An additional benefit goes unsaid. Abramovich may be a Russian Jew who speaks halting English, and Chelsea may be the team historically supported by Britain's anti-Semitic, xenophobic right—but the standing ovations he receives at games, as well as the Russian song Kalinka sung by fans in CHELSKI caps and shirts in the stands, suggest that he'd have a refuge if he were ever to fall out of the Kremlin's favor.
Shabtai von Kalmanovic watches Abramovich with admiration. "He was smart enough and lucky enough, and God helped him and he became very rich," Kalmanovic says. "I know a lot of people for whom that would be the end of the story. But, being honest, he knows he should pay his debt to Russia. He loves soccer and decides to help. One oligarch may want to pay his debt for what he's made here. Another may want to get closer to politicians. You will not find one reason that fits all the oligarchs. But all believe [investing in sport is] a good way to spend their money."
For his part, Kalmanovic protests that he's not an oligarch. He reserves the term for those with new money and much greater influence. The beginnings of his own wealth date to the Soviet era, when the elite could parlay foreign travel and overseas political contacts into private riches. Gifted in languages, Kalmanovic was plucked to serve as an intelligence officer in the Red Army. When he moved to Tel Aviv in the 1970s, he appeared outwardly to be another Russian Jewish émigré—albeit a strikingly well-connected one, for he made an early fortune as a developer of South Africa's Sun City resort. In December 1987 he was arrested in Israel and soon convicted of passing information to the Soviets; news reports suggest that he was exposed as a result of the prosecution in the U.S. of Israeli agent Jonathan Pollard.
Kalmanovic says he can't speak about this chapter of his life because of the terms of his release in '93, after serving six years of a nine-year sentence, in a deal between Jerusalem and Moscow that led to greater Russian Jewish emigration. The gag order, he claims, expires in five years. Then, Kalmanovic says, "I will tell everything in my book."
ON A Saturday afternoon in late October, the Spartak women are entertaining a team from Orenburg in their new arena, which accommodates 4,000 or so and sits hard by a beltway in the Moscow exurb of Vidnoe. With the slate-gray sky and a conga line of traffic, the scene outside could be of Auburn Hills, Mich. Inside, Kalmanovic stations himself at a corner of the scorer's table for pregame introductions. Before loping onto the court, the Spartak players detour to the owner, who plants Eurokisses on each.
Moscow Region governor Boris Gromov, a former general who commanded Soviet forces in Afghanistan, presides over this fastest-growing part of Russia, a sprawl of shopping malls and housing blocks. Many people choose to relocate to Vidnoe from central Moscow, where traffic is so bad that in the last several years sports teams have at least twice been forced to abandon buses and hop the Metro to make games on time. The quality of life may be better outside the capital, but that's a relative standard in a country in which life expectancy for men has plunged to 59 since Soviet times, and up to 30,000 people die each year of alcohol poisoning, a per capita rate 200 times that of the U.S. The Gromov government nonetheless tries to do its part to promote health and fitness, having built 18 gyms in the last year alone, as well as the showplace that is the site of this day's game.
To a politician like Gromov and a developer like Kalmanovic, it makes sense to curry each other's favor. When he stands for reelection, Gromov can point to prestigious titles and thriving grassroots sports programs; when he wants a piece of the development action, Kalmanovic can count on fair hearings for his zoning appeals. These exercises in mutual goodwill are delicately known as "governmental relations," or GR.
One of the Moscow Region's new gyms houses Kalmanovic's two-year-old Olympic Reserve School, which is developing more than 200 basketball prospects of both genders. When not occupied with her three-year-old twin boys, Arkhipova runs the school. "Not all 200 will become big stars," says Kalmanovic, who knows that Putin himself was once an aimless youth for whom sports provided discipline and purpose, "but at least that child won't become a drug user or a hooligan. The more schools built, the fewer children in the street with bottles of beer in their hands."
And the more schools built, the closer Russia is to creating a privately funded equivalent of the state-run sports schools of the Soviet era, which usually placed the motherland atop the Olympic medals standings. From Abramovich, with Chelsea and his archipelago of soccer schools, to Kalmanovic, with Spartak and his efforts on behalf of youth basketball, wealthy Russian businessmen are working both ends of the sporting street: at the top, high-priced "collectibles" for inspiration; at the bottom, masses of kids for investment in future glory.
It has been a long time since there has been this much method to Russian sport amid the madness of life in the former Soviet Union. During the height of the decadent '90s, every evening at midnight, one Moscow restaurant favored by the nouveau riche would auction off a single red rose. After watching the rose fetch $110 one night, journalist Chrystia Freeland described the scene in her book about the rise of the oligarchs, Sale of the Century: "It could have been a nauseating moment. But there was something glorious about it too. The man in the suit that was a little too shiny and the tie that was a bit too wide bought that rose just because he could. Because there was no central planner, no head of the factory Communist party cell, no stern censor of morality in the workers' state, to tell him not to."
As Putin's brand of state capitalism fills the vacuum left by state socialism, and Mother Russia tells men what to do with at least some of their money, sport is the great beneficiary. Leonid Fedun, president of Moscow city's Spartak soccer club and vice president of Lukoil, is one of those men. In the fall of 2007, after Russia's national soccer team slipped through qualifying for Euro 2008 by the grace of England's 3--2 loss to Croatia, Fedun said he would make good on a pregame promise to deliver a Mercedes to each of Croatia's top four players if they led their team to victory. The practice of paying incentives to the opponent of a rival remains commonplace in Russia, where it's known as stimulyatsiya, or stimulation.
To any Russian who felt the sting of the 7--1 World Cup qualifying loss three years earlier, the riches of Leonid Fedun didn't seem quite so objectionable. And if it took the Kremlin to induce the man to spring for a little stimulation rather than a red rose, then so be it.
AFTER BIG EUROLEAGUE WINS, SPARTAK'S STARS COLLECT CASH BONUSES AND DIAMOND JEWELRY.
WHETHER THEY'RE FANATICS OR FOOLS, SPORTS SUGAR DADDIES HAVE SURFACED ALL OVER RUSSIA.
ONE SLOGAN OF PUTIN'S POLITICAL PARTY IS, "UNITED RUSSIA IS AN ATHLETIC RUSSIA!"
"IT'S REALLY ABOUT HAVING FUN," ABRAMOVICH SAYS, "AND THAT MEANS SUCCESS AND TROPHIES."
IT'S RAINING RUBLES IN SOCHI
Thanks in part to oligarchs, a Black Sea resort will be transformed for the 2014 Winter Olympics
EVEN MANY Russians scratched their heads 17 months ago when the Black Sea resort city of Sochi won the right to host the 2014 Winter Olympics on its third try. That's because Sochi is regarded as the Cannes of the Russian Riviera, a temperate retreat where tourists dine alfresco along a palm-fringed promenade. Yet the city where Soviet strongman Joseph Stalin kept a dacha and prime minister Vladimir Putin now lights out for summer getaways is committed to pulling off the best and most compact Winter Games in history. The opening and closing ceremonies, as well as any sport contested on a sheet of ice (hockey, skating, curling), are set for a cluster of coastal venues. Not 30 miles away, an Alpine cluster in the Krasnaya Polyana mountains promises skiing on the dry, fluffy snow known as champagne powder.
Today untended cows wander along the highway that links the mountains to the coast. A burst of building over the next five years will upgrade this road and add a parallel light-rail link and a three- to four-lane expressway, not to mention a new port where oligarchs can berth their yachts. To ensure that these ambitious plans come off on time, the Kremlin has tapped as its liaison to the organizing committee Dmitry Kozak, the no-nonsense bureaucrat Putin once entrusted with running Russia's restive and resource-rich Southern Federal District. After reports in April that the Games could wind up costing twice the budgeted $12 billion, and in light of the subsequent global financial crisis, Kozak in November announced that spending might in fact be scaled back. In any case, he reaffirmed commitments from private investors, who are footing some 40% of the bill.
Those Olympic angels include three of Russia's wealthiest men—or at least the richest before the meltdown double-boiled the oligarchs' wealth. Roman Abramovich's companies are invested in infrastructure around the coastal cluster. Oleg Deripaska is building the athletes' village, the main press center and a new airport terminal. Vladimir Potanin, whose Rosa Khutor resort will host Alpine skiing and snowboarding, is the most emotionally invested; he is an avid skier who urged Putin to mount bid No. 3 for Sochi. The grand plan is to transform the region into a year-round tourist destination so that the thousands of Russians who visit French ski resorts each winter, most of them millionaire "minigarchs," won't have to leave the country to get in a good run.
Putin's persuasive presence at the 2007 IOC vote in Guatemala City helped Sochi edge PyeongChang, South Korea, for the 2014 hosting rights. Even if the world economy deteriorates further, and the price of oil continues to snorkel below $70 a barrel (the minimum at which the government balances its budget), Russia is sure to find a way to pay for the Games because of the national pride at stake. "There's tremendous pressure from Putin on down to make this happen," says David Watts, a U.S. sports marketing consultant based in Moscow. "Putin himself recently approved changes to the Alpine cluster. It never should have gotten to him, but people are so paranoid, they're afraid the IOC will say they're doing something wrong and take the Games away."
If there's any doubt that a resurgent nationalism is joined to the oligarch-fueled sports boom and to plans for the Sochi Olympics, a rejoinder will soon be visible. A $6 billion resort called Federation Island and shaped like the Russian mainland is to be built just nine miles from town off the Sochi coast. An architect and two engineering firms from the Netherlands are behind the project, which will meet the housing, shopping and recreational needs of 25,000 people. Though formally unconnected to the Olympic effort and bankrolled entirely with foreign capital, the resort is scheduled to be completed in time for the Games.
As the global financial crisis has made clear, no nation is an island. But the Russian Riviera is trying to offer up evidence to the contrary.