Georgian Prosecutors Investigating Spanish Basketball Deal

The Georgian Basketball Federation signed an expensive deal to develop its young players in Spain. Nearly four years later, it has almost nothing to show for it — and prosecutors are on the case.

Two years after two board members quit the Georgian Basketball Federation in protest of a player development deal with Spain’s Saski Baskonia team, Georgian prosecutors are investigating the program.

Giorgi Kondakhashvili, a lawyer for a Georgian family that sent their son to Baskonia, says the investigation is looking into possible misappropriation and embezzlement of government funds. Prosecutors have taken documents from the Georgian Basketball Federation office, Kondakhashvili said.

The prosecutor’s office declined to comment.

The contract calls for the state-funded Georgian Basketball Federation to send its most promising teenage basketball players to Saski Baskonia, a top professional club in Spain, where coaches would help develop them.

In a few years, the idea was that the best of the Georgian players would go on to sign big-money contracts with the National Basketball Association (NBA) in the United States or with top European teams. The Georgian Basketball Federation would then collect big “contract transfer” fees, presumably amounting to more than it paid the Spanish club for its training services, and make a profit.

The federation signed the five-year contract with Saski Baskonia on Sept. 24, 2014. Nearly four years later, Georgia is on track to spend €2.5 million over the span of the contract and has almost nothing to show for it.

The deal is a startling departure from the usual system for finding and developing young athletes, and Georgian prosecutors have begun asking questions about how and why it was signed. They have been interviewing current and former federation officials since April.

Potential convictions could carry prison time of seven to 11 years if the amount of money involved is more than about US$ 4,000, Kondakhashvili said.

Hoop Dreams

A big-time professional basketball contract is a dream for young athletes in many countries. According to Forbes magazine, the average NBA salary of $6.2 million is the highest in U.S. professional sports

The sole Georgian in the NBA today is Zaza Pachulia, who was drafted in 2003 and played the last two seasons for the NBA champion Golden State Warriors in California. He is reportedly signing a contract with the NBA Detroit Pistons for the 2018-2019 season. Another Georgian, Tornike Shengelia, signed with the Brooklyn Nets in 2012 and spent two years in the league.

The odds of any athlete making it to the NBA are small. Only 60 players are drafted annually out of thousands eligible around the world. Outside the U.S., dozens of leagues and hundreds of professional clubs pay less than the NBA.

Most young athletes who make it professionally begin playing in school, sometimes gaining extra practice in skill camps where they are drilled and coached.

Professional teams and other basketball organizations often sponsor such training and invite sports agents and scouts to assess the talent.

If a player is chosen for an extended professional tryout, the team usually covers expenses such as air fare, stipends, housing and schooling costs.

That’s not how the Georgian deal with Baskonia is structured.

The five-year contract instead calls for the Georgian Basketball Federation to pay Baskonia €2.1 million up front, or €500,000 annually, with the hope — but no guarantee — that Georgia would earn part of it back through contract transfer fees if any of the players Baskonia accepts go on to sign professional deals.

Key points in the contract include:

  • Between 2015 and 2019, the federation pays Baskonia €300,000 a year for a total of €1.5 million. In return, the Spanish club is meant to invite and coach young Georgian players.
  • The federation must spend €200,000 a year (for a total of €1 million) to run a training program in Georgia. Some of the money covers flying in specialists from Spain to develop a basketball campus for young players selected by the Georgian Basketball Federation.
  • If any of the participating Georgian players sign pro contracts through 2024, Georgia and Baskonia will split any transfer fees 50-50.
  • Baskonia compiled a list of non-Georgians playing for the club. If any of these players sign pro contracts before 2024, Georgia would receive 30 percent of any transfer fee. (Four players on this list told reporters that this was news to them.)

  • According to an addendum to the contract, if Georgia hasn't recouped €1.5 million from the transfer fees by 2024, Baskonia says it will refund the difference.

Baskonia says its unusual setup with Georgia is just an attempt to help the country develop its basketball program by providing promising players with training they wouldn’t otherwise receive.

“They are not world-class players that we would normally invite to Baskonia,”
said Jesus Vasquez, the club’s international manager.

A Hitch with the NBA

The main problem, according to an independent expert, is that the contract is based on unrealistic numbers. Baskonia estimated that a Georgian player who made it to the NBA would fetch a transfer fee of €2.37 million, entitling Georgia to close to €1.2 million.

But for 2018, NBA contract rules cap such transfer fees at $700,000. Anything more than that has to come out of the player's own pocket.

Shengelia is the only Georgian player to jump from Europe to the NBA in recent years. He left a Belgium team in 2012 and signed with the Nets for just $473,604. The transfer fee was only $300,000, a fraction of the amount Baskonia estimated Georgia might make under its current arrangement.

So far, eight young Georgians have gone to Spain under the contract (though two quickly returned home). None are close to signing big-money deals.

The Genesis of the Deal

Saski Baskonia is a 58-year-old club that plays in both the Spanish league and EuroLeague. It was a powerhouse from 1995-2010, winning Spain’s King’s Cup (“Copa del Rey”) six times and reaching the final four in the EuroLeague five times.

Recent success has been more elusive, though Baskonia did reach the EuroLeague Final Four in 2016, and this year finished second behind Real Madrid in the Spanish league.

Shengelia, who left the NBA in 2014 and signed a three-year contract with Baskonia, is the club’s best player and its captain. Now 26, he averaged 14.9 points per game this season in Spanish League competition. He is now debating whether to try to return to the NBA.

His father, Kakha Shengelia, says he played an unwitting role in the federation’s unusual deal with Baskonia. Kakha was vice president of the Georgian Basketball Federation and a board member in 2014 when Tornike Shengelia returned to Europe.

That year, Kakha went to see his son play, along with then-Federation President Mikheil Gabrichidze and current Federation Secretary-General Giorgi Kartvelishvili.

Former Minister of Sport Levan Kipiani was also there, according to Vasquez, the international manager for Baskonia.

“It was not a business trip,” Vasquez says. “They just came to see Tornike play. But they were talking about the federation's problems developing players. We agreed that good young players needed to get out of Georgia to develop. We knew the federation couldn't afford to send players here. So we came up with the formula so it would be an investment for Georgia instead of an expense.”

Baskonia estimated that one Georgian and three non-Georgians could reach the NBA over five years, while three Georgians and five non-Georgians could play in the top Spanish division. That would have put the federation’s share of the transfer fees at €3,887,125, a healthy profit on the €2.5 million it was obligated to spend under the contract.

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