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Roman Abramovich's company is Vitesse Arnhem's new shirt sponsor

Paul Meima | Vitesse

Roman Abramovich's company, Truphone, is officially Vitesse's new shirt sponsor.

Truphone is a London-based mobile telecommunications company, and in February 2013, Abramovich purchased a 23.3% stake for £70m.

We went into considerable detail last month on how the sponsorship deal affects the relationship between Chelsea and Vitesse, and it's worth reposting excerpts now that the deal is official.

The deal replaces the similarly named Youfone as Vitesse's shirt sponsor. Vitesse went without a shirt sponsor for much of this season and picked up Youfone for the second half of the season.

Peter Gansler, Vitesse's commercial director and chief marketing officer, attended the University of Notre Dame as an undergraduate, received his MBA from the University of Chicago (both excellent schools), and worked for adidas in international marketing before being hired by Vitesse in November 2012. This is all to say that he has the education and experience necessary to go out and land a lucrative long-term shirt sponsorship deal.

I strongly believe that Gansler and the other decision-makers at the club intentionally held off on signing a long-term deal with anyone because there was some homogenisation with Marina Granovskaia and Chelsea's sponsors in the works (and I speculated as much a while back). I had originally thought Vitesse might try to land Samsung or one of Chelsea's other primary sponsors, but the Truphone deal certainly makes sense as well.

The Truphone sponsorship may be classified as a related-party transaction (RPT) under UEFA's financial fair play regulations.

Essentially, a related-party transaction is a deal between parties that have a prior relationship. It is an international accounting term, and the financial fair play regulations dealing with RPT's is copied almost verbatim from the International Accounting Standards Board.

As relates to FFP and the Truphone deal, Annex X(E)(3)(b) likely controls here -

Entities will be considered related parties where,

One entity is an associate or joint venture of the other entity (or an associate or joint venture of a member of a group of which the other entity is a member)

Here, one entity (Abramovich and Truphone) will be engaged in a joint venture -- Chigirinsky and Abramovich both own large shares (sixty and sixteen percent, respectively) of a Russian property development company called Snegiri -- with another entity (Chigirinsky and Vitesse).

With regards to financial fair play, there is absolutely nothing wrong with RPTs in and of itself. The issue is with ensuring that each related-party transaction is for fair value, and this is why PSG found itself in trouble.

Article 58.4 states that "relevant income and expenses from related parties must be adjusted to reflect the fair value of any such transactions." This means that if an owner overpays for sponsorships, tickets, etc., the value of the transaction will be adjusted down to fair market value when UEFA starts reviewing the financials of each club.

For some perspective on what "fair value" might entail, Ajax received between £8-10 million per year from Dutch insurance company Aegon for a shirt sponsorship deal (the deal concludes at the end of this season). Given that Ajax is a much bigger club than Vitesse, it's reasonable to conclude that this would be the absolute ceiling for the Vitesse - Truphone deal in terms of annual revenue.

£6 to £8m million per year seems like a more reasonable projection for Vitesse, and this still represents a huge windfall. For perspective, the club earned a mere £9.5m in 2012-13 (however, that number will more than triple in 2013-14 just on the strength of the Marco van Ginkel and Wilfried Bony sales) and lost over £20m.

This deal is very likely Roman Abramovich's way of helping Vitesse's financial fair play situation. While the club certainly doesn't need the money, as Alexander Chigirinsky extremely wealthy in his own right, Vitesse could certainly use the profit on the balance sheet - note the distinction. Even though the deal may be considered a related-party transaction, the deal will fully comply with UEFA's financial fair play regulations as long as the deal reflects the fair market value for a shirt sponsorship.

This deal should also put to rest any lingering notion that Chelsea does not want Vitesse in the Champions League. Roman Abramovich and Chelsea already loan Vitesse some of their very best prospects, and are now handing Vitesse a lucrative sponsorship deal to ensure that they remain eligible when they do eventually earn their Champions League spot. In addition, Chelsea has a vested interest in seeing Vitesse succeed, as the opportunity to offer its loanees European football would be unparalleled, and would give Chelsea an enormous advantage over every other club in the world when it comes to recruiting sought-after young talent.

Finally, the Truphone deal cements the already-solid relationship between Chelsea and Vitesse.  If there are any Chelsea supporters that haven't been paying attention to the Arnhem club, it's time to start.

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