We heard lots of stories and rumors about Zalgiris Kaunas and its eventual bankruptcy these days. But now it’s official: Zalgiris Kaunas has been saved and will continue to exist. No players will leave the team and the Euroleague retains its participant from Lithuania. But what has really happened that the traditional green powerhouse has come into this situation?
The long story began in spring last year when Lietuvos Rytas, archrival of Zalgiris Kaunas, lost in the Lithuanian league finals against Zalgiris, meaning that Zalgiris was sure to be at the top of the national qualifying ranking for the Euroleague and would earn the license for the next three years to play in the best European competition. With the proposed new Euroleague system currently under discussion, this would have meant that Zalgiris would get the license as the permanent Lithuanian team in the Euroleague. Lietuvos Rytas would of course not like this to happen.
The summer went on, and Zalgiris awaited their annual payment of 5.2 million Litas from the municipality of Kaunas to ensure their budget. But the money did not arrive. The city of Kaunas budget was also not in the best situation and so was forced to take a bank loan in order to fulfill their contract with the Basketball team. But no bank was ready at that moment to supply such a loan due to the market situation. Additionally, Lithuanian newspapers were reporting that the banking situation was pretty tough. Nobody wanted to risk a situation in which people stormed the banks in order to take all their money back in cash.
On the other hand, with governmental elections then just ahead (they were held last Sunday), no politico wanted to state publicly that the banks should support Zalgiris and provide the loan. They spoke about the tradition of Zalgiris and that they wanted to help, but nothing really happened. Why? The most important media group in Lithuania is Lietuvos Rytas, the sponsor of Zalgiris’ archrival: No politician wanted to risk negative press just before the elections and ruin his/her ambition by supporting Zalgiris through more than rhetoric.
With the elections now over, the deadlock in the situation could be broken. The city of Kaunas attempted to find a compromise with the banks to set up financing for the contracted 5.2 million litas. By using a city-owned company that contracts a 2.5 million loan, the municipality makes the necessary step in fulfilling the initial requirements of their deal. This gives the team the opportunity to pay its players and nobody to leave. The second part of the agreement will be set up in the next few days, while Zalgiris has the necessary funding to play its season. The entire management board of Zalgiris is to step down and a new GM named.
Zalgiris Kaunas is and will stay alive. And that’s the most important thing: Most fans don’t care about the background work undertaken by officials during the last days and hours, and simply want to see their team win games. But a whole lot of work is still ahead for the new management, and I guess that we’ll yet be hearing more about this soon.