The Business of Chess

The players were in a good mood for the Opening Press Conference. Photo Source: Sasha Lytvyn, Agon Limited.

The World Chess Championship has finally commenced in New York City. For chess enthusiasts, the time has come to witness the biggest heavyweight event of the decade. In this West versus East matchup,the current World Champion Magnus Carlsen from Norway will be defending his crown against the Russian Challenger Sergey Karjakin. This is the first time in over 20 years that a World Chess Championship has taken place in the U.S. The global audience is expected to be in the hundreds of millions with the prize fund for the tournament expected to be at around $1.1M, to be split 60-40 between the winner and loser.

The Challenger Sergey Karjakin ready to take on the Champ Magnus Carlsen for the crown. Photo Source: Nastya Karpovich, Agon Limited

The 12 round tournament has attracted quite a prominent selection of chess Grandmasters, businessmen, hedge fund managers, politicians, celebrities, and fans from all over the world. The event, which is being run by Agon Limited, has done a phenomenal job of organizing the event. The events at the Championship have been quite glamorous and have attracted the who's who of numerous respective industries. The Opening Night Gala, which took place at the Plaza Hotel, was hosted Actor Adrian Grenier, from the hit show Entourage.

Magnus Carlsen (L), Adrien Grenier (C), and Sergey Karjakin (R). Photo Source: Getty Images / Cat Orloff.

The exclusive red carpet Gala had in attendance Sienna Miller, Woody Harrelson, and prominent stakeholders from around the globe. The VIP party featured classical musicians Isa Caroline Holmesland (Violinist), Nikola Melnikov (Composer and Conductor), and the Harlem Gospel Choir playing in the background. Executives from the World Chess Championship sponsors of: Phosagro, EG Capital Advisors, S.T. Dupont, and Beluga were all in attendance.

World Champion Magnus Carlsen doing the honors of randomly selecting who will play White for the first match, while FIDE Chief Arbitrator Takis Nikolopoulos and Challenger Sergey Karjakin look on. Photo Source: Sasha Lytvyn, Agon Limited.

Michael Stanton, founding partner of EG Capital speaking at the World Chess Championship Gala at the Plaza Hotel in NYC. EG Capital was one of the primary sponsors of the event. Photo Source: Getty Images / Cat Orloff.

The Opening Night Gala took place at the Plaza Hotel in NYC. Photo Source: A.J. Steigman

Underneath all of the ritz and glitz, it takes true grit and business acumen to be able to pull off an event of this magnitude. Ilya Merenzon, CEO of Agon Limited, bought the exclusive commercial rights from FIDE a few years ago to organize these major international chess tournaments. With the chess community fragmented, Ilya has been trying to market chess in an upscale manner and unify the public message to the international business communities. In my exclusive interview with him, Ilya discusses this as well as what went into the preparation of the World Championship.

A.J. Steigman and CEO of Agon Ilya Merenzon at the World Chess Championship Opening Night Gala. Photo Source: A.J. Steigman

Agon is bringing an affiliate model of content distribution to the chess community. Until recently, the live-streaming of chess has been free to the public and covered by numerous chess sites. While this "perfect competition" model has led to the development of thousands of chess news sites across the globe, this content market saturation within the community has indirectly created an incoherent message. Chess can not be taken to the next level without corporate sponsorships and conventional business practices. The old adage that "there is no money to be made in chess" has impaired smart money from flowing into the game.

Actor Woody Harrelson played the ceremonial first move for the Opening of the World Chess Championship. Phosagro CEO Andrey Guryev and Agon CEO Ilya Merenzon watch in the background. Photo Source: Rob Kim, Agon Limited

While purchasing exclusive distribution rights are commonplace in any other sport, some members of the chess community have been fighting back against this disruptive "monopolistic" practice. Several prominent chess sites ignored the rights granted by FIDE to Agon and covered the Candidates Tournament in Moscow. It was there that Sergey Karjakin won this widely watched Candidates tournament and qualified to take on Magnus for the title. While Agon sued several of these entities for infringements, including, a recent Russian court just ruled in favor against Agon by saying that the chess moves from the event are in the public domain.

"I think, because I did study chess, that it did help me to become a successful businessman, and I think it is now time to give back to chess." - Andrey Filatov, billionaire, and Russian Chess Federation President

This new capitalistic unification of the chess community that Agon is trying to attempt, has been going against the grain of "purists" who feel that chess is above economics, is an artistic game, and whose distribution rights belongs to the masses for free. While no sports fan will argue about the ethics of purchasing an HBO boxing match, or how a TV network bought the exclusive broadcasting rights to any sports event, there is still a vast disconnect between the realities of business within the chess community.

The titans battling it out for the World Chess Championship. Photo Source: Maria Emelianova

At $75 a ticket, the 600 seats for Friday's opening game were immediately sold out. Hundreds of millions of chess enthusiasts will be watching the game on World Chess and its affiliate partner sites. Depending on the package, for $15 to $99, a user can watch the game in virtual reality, have access to live streaming, hear world class commentary by prominent Grandmasters, and receive a slew of features.

An all star team of Kaja Snare (L), Knut Solberg, Ilyas Akhmadov, Anna Burtasova, Reidar Stjernen, Joe Bandelli, and Grandmaster Judit Polgar (R) providing commentary on the match. Photo Source: Kaja Snare

"If you are in business, you play chess every day, every second, every minute." - Andrey Guryev, CEO of Phosagro.

Individuals can agree or disagree on the ethics involved with FIDE granting exclusivity rights. However, FIDE did grant these rights years ago, and they were purchased by Agon. If these rights are not recognized, then it sets a dangerous impeding precedent for prominent business owners considering to invest in chess. If IP piracy is supported and upheld by the legal courts, then chess will have to solely rely on philanthropic patrons of the game versus fundamental economic factors.

Which team will be better prepared and emerge victorious? The stakes are quite high for both players. Photo Source: Agon Limited

Besides the future economics of chess, the stakes today for this World Championship are quite high. The players have worked their entire careers to get to this once in a lifetime opportunity. Chess, as a sport, is huge in both Magnus and Sergey's respective countries of Norway and Russia. Since Magnus has come onto the world stage, chess engagement has skyrocketed in Norway.


Team Magnus: Carlsen's father, Henrik Carlsen, being interviewed by Norwegian TV stations during the match (L). Magnus's manager, Espen Agdestein, actively following the match (R). Photo Source: A.J. Steigman

While chess has always been a crown jewel in former USSR countries, it is still heavily respected and ingrained within Russia culture. The national pride of having a World Champion from your country is quite material. While Karjakin is lower ranked and is the underdog, the Russian Federation has been pulling out all of the stops to increase his chances. With a country that prides itself on the prominence of its chess players, Russia has not had a World Champion since Vladimir Kramnik won the title in 2007.

Vladimir Putin's Press Secretary Dmitry Peskov attended the event to support Russian Challenger Sergey Karjakin. Photo Source: A.J. Steigman

During the event, I was honored to interview two Russian billionaires and patrons of chess: Andrey Filatov, President of the Russian Chess Federation and Andrey Guryev, CEO of Phosagro. These two individuals have been supporting chess for years in Russia and internationally. Both businessman openly acknowledge that the skills learned from chess have helped them become successful in the business world. They conveyed to me that their generosity and monetary sponsorships are small tokens to pay to the game that helped develop their personalities.

"Everybody will be watching this game wanting Sergey Karjakin to win because he has a lot of fans in Russia... and of course we believe that the chess crown will come back to Russia, because it is a place where it should be." - Andrey Guryev, CEO of Phosagro

The first interview was with Andrey Filatov. We discussed his thoughts on the tournament, Karjakin's chances of winning, and the similarities between chess and business. Please enjoy the interview below.

Interview with Andrey Filatov

As a successful businessman, what drove your interest in running the Russian Chess Federation?

I am a passionate chess coach. I studied chess at the university and this was my initial education. I think, because I did study chess, that it did help me to become a successful businessman, and I think it is now time to give back to chess.

Actor Woody Harrelson playing chess with Russian Federation President Andrey Filatov. Photo Source: Rob Kim, Agon Limited

I actually currently attend the Wharton Business School. How do you think chess and business has changed in the last 5 years?

I think that new technology has changed chess as well. Now a lot of people play chess online. You can often see on the plane people have downloaded chess games, and chess is taking on a different level right now. Similarly, business has also changed with new technology.

What do you think needs to be done to further chess internationally?

It will be good if journalists maybe publish in the newspapers that if you want to have a successful retirement, then send your kids to learn chess.

Prominent Russian Businessman & Russian Chess Federation President Andrey Filatov (L) & A.J. Steigman (R). Photo Source: A.J. Steigman

What kind of resources are you aware of that the Russian Federation has provided to Sergey?

He has all of the necessary things to get ready for a match like this. We do not disclose the numbers in the budget.

What would bringing back a World Championship mean to Russia?

We would be extremely proud of our chess player and of our country. We are always proud of our country, but I think that it would be even more. Specialists were telling me as head coach of the men's chess team, that Sergey's chances of winning are similar to Donald Trump winning.

(Laughter) Very true. Which chess being so ingrained in Russian culture, how do you think chess and politics are intertwined in Russia?

Andrey Filatov discussing Sergey Karjakin's position with Grandmaster Vladimir Potkin and the Russian Team. Photo Source: A.J. Steigman

Chess is out of politics. But, unfortunately some politicians use sanctions. You know anyone can offend the chess player, but that never helped anyone. Robert Fischer was a great chess player in the U.S. and to his memory this tournament is partially dedicated. The U.S. use to be very proud of when he won the World Championship from Boris Spassky of the Soviet Union. There was a movie that just came out called Pawn Sacrifice...

Yeah it was a great movie

... and he was sanctioned to.

Billionaire Andrey Filatov (L) enjoying the press conference with Russian Press Secretary Dmitry Peskov (C); Photo Source: Sasha Lytvyn, Agon Limited

True. Where would you like to see the Russian Chess Federation go in the future? What milestones are you working on?

We are currently promoting chess in schools, and we also did research in that if kids play chess in schools they never use drugs. If a child counts a few steps ahead, then he will realize the consequences of his actions- so our goal is to popularize it amongst kids. We already have certain regions where chess in schools have become mandatory.

You asked me about chess in politics, and how they are intertwined. For example, the president of Armenia is also the president of the Chess Federation of Armenia. Currently, there are elections in Moldova on the 13th of November. The head of the Moldovan Chess Federation, Igor Dodon, is currently one of the elected to become the President. The Russian Chess Federation hopes that their colleague, Igor Dodon, the head of the Moldovan Chess Federation, the best of luck.

I actually respect what Russia has always done with chess, because I use to compete. I was a master at 13, #1 for my age for 8 years, and would represent the U.S. in the World Youths, so I have a lot of respect for what you are doing. I truly appreciate you taking the time, as it has been a real pleasure.

Thank you very much.

Sergey Karjakin focused and walking with his Russian team to the tournament site before Round 2. Photo Source: A.J. Steigman

Billionaire Andrey Guryev is the CEO of Phosagro and a prominent chess supporter and enthusiast. Phosagro has sponsored several World Chess Championships and is the primary sponsor of the 2016 World Chess Championship. I was honored to interview him as chess needs more like-minded individuals supporting this regal game.

Interview with Andrey Guryev

What did you think of the event so far?

I think it is just great. Really, it is a historical moment for chess, for Norway, for Russia, for New York. It is already the youngest World Championship ever. Too young guys with brilliant minds playing, it is just great, really.

Russian businessman Andrey Guryev has been a patron of chess for years. His company Phosagro is the main sponsor of the World Chess Championship. Photo Source: Ilya Ivanov, Agon Limited.

So what does chess mean to you personally? I saw during the press conference that you were very passionate about how chess is ingrained within the Russian society. What does it mean to you and what led to you sponsoring the event?

First of all, we as a company have a lot of social kinds of programs where we contribute in Russia, so we sponsor a lot of sports, particularly sports for children, for young children in Russia.... and of course, chess is just a brilliant game. I mean because it is so important for Russia and for Russians, particularly for this event. Everybody will be watching this game wanting Sergey Karjakin to win because he has a lot of fans in Russia... and of course we believe that the chess crown will come back to Russia, because it is a place where it should be.

Andrey Guryev commenting on the match. Photo Source: A.J. Steigman

That is great. Did Phosagro provide any assistance to the Russian Federation with training him or any resources?

We sponsored and financed the Russian Chess Federation, and I am a member of the Board of Trustee of the Russian Chess Federation. And of course it is important to us. This is not the first World Championship that we are sponsoring. The first one we sponsored was in Sochi where Magnus was playing against Anand. So, I decided that it is a really great opportunity for me, for our company, to bring this event here to New York and in particular we are a publicly listed company as we are on the London Stock Exchange, so we are a few stops from here, I have all of our investors and you know our stock brokers, bankers, and hedge funds, and so on, and these guys are big fans. So for me it is PR and investment relationship and particularly good marketing.
Russian Oligarchs Andrey Guryev (L) & Andrey Filatov (R) supporting Russian Challenger Sergey Karjakin (C). Photo Source: Sasha Lytvyn, Agon Limited

As the largest shareholder of Phosagro, what does chess mean for you personally? What is your passion behind it?

Chess is like business. I mean it is very important, because it is strategic thinking. You are calculating all of your moves. You know what is very likely (to occur).

CEO of Phosagro, Andrey Guryev, at the World Chess Championship Opening Gala. Photo Source: Gallup.

With your family being so successful, how do you see the similarities between chess and business?

I think it is simple. If you are in business, you play chess every day, every second, every minute. And of course it helps... it helps a lot just to think about the chess and to think forward. Like in business you have to calculate all of your moves and all of the steps, to understand the steps of your competitors. And of course it is great in that it helps your brain in the proper ways.

A.J. Steigman interviewing Phosagro CEO Andrey Guryev at the World Chess Championship. Photo Source: A.J. Steigman

Where would you like chess to go in Russia in the future or internationally as well?

You mean like National Championship?

Either the National Championship, or scholastics or where would like you to see the future of chess?

First of all, I think this event, as I said, is historical and great because it is will help to popularize this game in the world and particularly here in America and in this continent. Maybe, as I said, the crown may come to Russia and that will also help to popularize to Russian children to start to play again this particularly great game. Maybe Asia, so if the next World Championship will happen in like Hong Kong or Singapore, it will also be very important for chess.

Valeria Guryeva, wife of Andrey Gurvey, attends the 2016 Gala Opening for the World Chess Championship at The Plaza Hotel. Photo Source: Jason Kempin/Getty Images

So I actually use to be #1 in the country for my age for 8 years, and I was a master at 13. I am actually currently getting my MBA at the Wharton Business School, so I am a very big fan of your business career. I really appreciate, and I think that I can speak on behalf of many in the chess world, that we appreciate how the corporate sponsorships are coming to chess [Thank You] because it is very important. How do you think we can get more money from the corporations, in addition to Phosagro, into the chess world?

You know I spoke with lots of businessmen here - Russian and foreign businessman during these games, during these days, and they are quite amazed. I think my money and my finances will come to this game and maybe we will reshape the world chess like into a kind of really fashionable and cool kind of business.

Andrey Guryev speaking at the World Chess Championship Opening Gala. Photo Source: A.J. Steigman

Yeah, we would really appreciate that because we need patrons like you, (Andrey) Filatov, and all of the others. We would really appreciate it, because chess needs individuals like this, and they need the attention and the resources, as it is such as regal game.

Yeah it is. I have been doing this like you know since I was early. My parents taught me that business is business, but when it (business) comes with your personal passion it is more real and sincere.

Very True. I appreciate you taking the time here. Thank you.

Thank you