by Dmitrijs Kravčenko
While the title of this article may be a mash of metaphors that some people could find annoying or of poor taste, it is none the less appropriate as what happened to Virslīga 2022 Champions Valmiera FC over the course of last season has an impact on a range of different groups of people, with different lessons to learn for each one. Did Valmiera FC just get too ambitious or did they fall prey to a predatory owner? And what of the fans – the single largest stakeholder group of the club who have no votes but so much investment into it?
Prelude
Much has been written about Valmiera FC and their ownership structure post-2020 takeover by Swiss lawyer Ralph Oswald Isenegger, so there is no need to regurgitate that here. A colourful article in English on his connection funneling mysterious money to Donald Trump’s personal lawyer Rudy Giuliani can be read here with much more written in Latvian and in Polish on his numerous other dealings in and around football, involving various characters with less than stellar reputations.
To summarise for those unfamiliar with the situation, Ralph Isenegger is a representative of a group of shell companies that purchased controlling stake in Valmiera FC in the summer of 2020, after being introduced to the club by a former Skonto FC owner and long-time president of the Latvian Football Federation (as well as former KGB officer) – Guntis Indriksons. A range of investments into the squad and infrastructure followed, as a result of which Valmiera FC began a steady climb up the Virslīga table, culminating with their first ever title in 2022.
Besides lifting their first ever Latvia gold, Valmiera took a rare distinction of being the youngest new Champions side in all of Europe that year. As a result, a mighty sale of players followed, with most of the leaders being sold for healthy transfer fees, including the top scorer of 2022, Raimonds Krollis, to (at the time) Seria A side Spezia for a reported EUR 2.5 million. All in all, depending on the nature of calculations and percentages from various sell-on clauses, Valmiera sold up to EUR 6 million in players between 2022 and 2023.
Fresh off his success in Latvia, Isenegger allegedly teamed up with another Swiss lawyer – Paolo Urfer – to purchase Polish Ekstraklasa side Lechia Gdańsk (to which some of Valmiera players were also promptly sent to over the course of 2023). This club is now facing many of the same issues that afflict Valmiera – non-payment of wages and other financial obligations, CAS cases, FIFA sanctions, and the resulting questions about organization’s longevity.
All in all, while Isenegger and his entourage are very obscure individuals, there seems to now be sufficient evidence built up over the years to see a pattern of shadowy dealings with prominent representatives of organised crime, money laundering and subversive political actors, all financed by money coming in from russia in one way or another.
What happened to Valmiera?
It would not be an overstatement to suggest that Valmiera’s financial woes, once the hit, caught many by surprise. After all, reported income from player sales would have been sufficient to place them only behind Riga FC in the unofficial domestic ranking of financial muscle mass. If this was the case, many wondered, why all the financial issues? There is a number of ways to understand tax debt in accounting, one of which is as a loan taken by the non-paying entity from the state. If Valmiera’s coffers were, as it was reported at the time, full – why borrow from the state? If they were not, where did all the money from moving star players had gone to? With speculation abound and no official communication on the matter from the club’s side, nobody could be certain. For those aware of the club’s ownership structure, looking over to Poland at the increasingly distressing situation of Lechia Gdańsk must have come with a taste of eerie familiarity.
In hindsight, first signs of trouble appeared already last year, during the club licensing process for the Latvian championship – at the time, Valmiera received only conditional approval on account of tax debt to the Latvian internal revenue service. The amount was not tremendous by any means, only around 50 thousand EUR, and so Valmiera was allowed to participate in the top flight for 2024 season.
It did not take long, however, for alarm bells to start ringing. From obscure comments during post-game press conferences from the head coach about challenging conditions at the club to, finally, a breaking story by Edmunds Novickis in April about how Valmiera had not paid out any salaries to players or club employees for multiple months. The tax debt, as evidenced from public records, had also nearly tripled. Some reconciliation followed and arrears were largely settled by, allegedly, some third party, but debts to the state remained and were of sufficient amount for the Latvian Football Federation to reject Valmiera’s license for participation in the UEFA Conference League, instead awarding their spot to, at the time, bottom of the table Liepāja, who finished 5th the year before.
As multiple subsequent voluntary repayment plans were agreed and broken by the club, the Football Federation responded with points deductions, ultimately threatening a total of 31 points if Valmiera did not get their house in order. Valmiera did not, but some repayments were made and the final penalty the club suffered was only 9 points.
As tax debt from 2024 carried forward to 2025, again ballooning up to almost EUR 100,000.00, Valmiera’s application for the Virslīga license, and the appeal that followed, were both rejected.
Why, and what now?
What exactly happened to Valmiera FC and where all that money from player sales had gone to, if it ever existed other than as a number on a piece of paper, is anyone’s guess at this point. Club owners or management do not communicate on the matter but some money is, evidently, trickling in to periodically reduce the tax debt and to settle some overdue salaries.
In absence of direct information, all that is left is to look for patterns and correlations. One frequently reported pattern is the cited origin of the money used in various football and not-football related endeavours of Isenegger and Urfer – russian oligarch money. It is also no secret that one of Isenegger’s potential shell companies – DFL Diamonds – is registered in Dubai, which became a popular money parking and laundering destination for russian interest following sanctions triggered by the invasion of Ukraine. Coincidentally, it was in February 2024 that news first broke about Dubai banks, cautious of becoming targeted for secondary sanctions, began blocking and delaying transactions with russian banks. Did this close the financial tap for the entire operation of which both Valmiera and Lechia are a part of? Correlations, of course, do not necessarily imply causations.
As Valmiera FC’s appeal for a Virslīga license was rejected, it is not certain that 2022 Champions will not participate in the the Latvian top tier next year. This leaves the question of what will happen to them. The club could finish settling their remaining tax debt and apply for a second division spot. Assuming they keep in good standing with the tax authorities, being in the second division will not preclude them from UEFA Conference League qualification campaign this year. The club will also benefit from approximately EUR 500,000.00 in solidarity payments in the coming months, so this scenario seems plausible.
Of course, there is also a recent example of two-time Latvian Champions Jurmalas Spartaks. A club with a similar player sales-oriented business model to that of Valmiera FC post-2020, vanished out of existence after the 2022 season as investors lost interest and the money ran out.
The fans
Valmiera FC’s experience between 2022 and 2024 is a harrowing tale of fairytale-turned-nightmare. For fans of the club of this proud city sat amidst the deep forests and sandstone cliffs of Vidzeme region in northern Latvia, seeing their club reach the highs of domestic championship and of debut in the Champions League qualifiers followed by slow yet methodical carving up of the player base must have resembled witnessing a car crash in slow motion.
To gauge the sentiment among Valmiera FC’s fans, Baltic Football News reached out to the supporter’s community.
Not unexpectedly, there is some anger and frustration among the fans who blame club management and ownership:
What is happening with Valmiera FC is shambolic. The owners and directors are clearly to blame—mismanagement, lack of transparency, and an inability to communicate with the fans are unacceptable.
Watching the decline of such a great team, which I have regularly supported while visiting my family’s countryside, is devastating. This was a team that achieved results, outplayed Virslīga titans like Riga FC and RFS, and competed in European qualifiers against clubs like NK Olimpija Ljubljana not so long ago.
Others, however, take a more stoic view of the situation, no doubt remembering that this is not the first time Valmiera FC were relegated into the second tier due to financial problems:
Football is in my heart from childhood. Of course, the possible exclusion of the club from the Virslīga is a disappointment, but as they say in Valmiera: “after summer comes winter and after winter comes summer again”. Despite the legal and financial aspects, we will continue to support the club in the second, third or fourth league. The Latvian FA’s decisions, starting with the exclusion of Valmiera FC from the Eurocups in the previous season caused these financial problems, the consequences of which are still felt today.
This is nothing, we will be victorious in the end!
Others still, place the blame at the feet of the Football Federation:
The Ļašenko [president of the Latvian FA] regime completely evicirated any democratic processed within the Football Federation. Looking at how new members are accepted and methods of governance, it seems that the Ļašenko regime took inspiration from a dictator of similar height who rules east of Valmiera.
another fan added:
If LFF were the parents and Valmiera FC were the children, any court would have deprived such ‘parents’ of any parental responsibilities as they treat their ‘children’ worse then children were treated in Soviet orphanages.
Conclusion
Whether, much like Icarus in the Ancient Greek myth of Daedalus and Icarus, Valmiera FC soared too close to the sun, unaware that their wings were made of financial equivalent of wax, or if this is another cautionary tale about shady owners depends on who you ask and at what point in time you ask them. Few, if any, people were complaining when Valmiera was soaring high. When the team won domestic gold in 2022, they were near unstoppable in Latvia – an achievement that was years in the making, not purchased on the transfer market overnight. Indeed, the on-the-pitch success of the club can be something of a consolation to fans of Valmiera FC. Even when on their last legs in terms of squad depth last season and with 9 points in penalties from the Football Federation, the team still finished 4th and was well on course to finish a comfortable third not too long before the end of the season.
On a broader scale, Valmiera FC is just another one in the long list of examples demonstrating the precarious of football finance in the region. The absence of any meaningful matchday revenue and no TV deals to speak of make financially sustainable clubs as rare as unicorns in the Baltics. Indeed Latvia alone, past 5 years saw at least three top-tier clubs either perish out of existence of have to restart from the bottom because of various legal or financial changes in fortunes of their primary sponsors. In Estonia and Lithuania there were two each.
At the time of writing, it was not yet clear what Valmiera’s plans are for the future and whether the club will continue in its current form or not. Hopefully, Valmiera fans are right and another summer will follow this yet another winter, and we will see Valmiera lift their second Virslīga title in not too distant future; hopefully while on more solid financial ground that time.
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