IPCC Struggles With Cost Rises

Two months before presidential polls and brimming with ambitious visions of pre-election press conferences and debates, the International Press Center and Club-Moscow is struggling under financial difficulties -- most recently a 30 percent increase in overall rent and operating costs.


Unfortunately for the IPCC, it appears to be business as usual. But the center's president, Alexander Shelemekh, said rumors that the center is failing are incorrect.


"On the eve of presidential elections, to reduce the activity of the press center would be unacceptable," he said.


The non-profit IPCC, housed at the Radisson-Slavjanskaya Hotel and armed with a database of more than 600 media fax numbers, has established itself as a key independent location for press conferences in a city where most press gatherings are dominated by the government.


This month, the club was dealt a $10,000-a-month increase in operating expenses, including utilities and city services, on top of rent payments of $30,000 a month, sources said. Shelemekh said the figures were "about right."


Paul Tatum, president of Americom Business Center, the IPCC's landlord, said the increase was due to the rising cost of city services to the entire hotel, and is reflected in every tenant's rent.


However, as a percentage of its rent, the IPCC saw operating expenses shoot up more dramatically than most tenants, Tatum said. This is due to the already low cost of rent for the non-profit center: Combined with the operating expenses, rent is now about $500 a square meter annually compared with $800 and up for other offices at the hotel and $2,500 for retail space on the first floor, where the club is located.


Also, the center pays rent on a Radisson-owned restaurant located on its premises, which in turn pays 10 percent of proceeds back to the club, Tatum and Shelemekh said.


"Their rent is a combination of things," Tatum said. "It's an unusual lease. You couldn't really compare it to the others."


Both men shrugged off the increase in expenditures as part of doing business in Russia, although the IPCC suffers an added burden of all Russian non-profit organizations, in that it must pay value-added tax on its rent, while most large corporate tenants are foreign representative offices immune from the VAT.


"Prices are growing. Moscow is not a cheap place to be," Shelemekh said. Former employees of IPCC say the center's financial difficulties are nothing new, reflecting the difficulties faced by non-profit organizations throughout Moscow. Salaries are often paid late, they said.


"I would say the club is not profitable," said one former employee who asked not to be identified. "I would say it's not even financially stable."


Rent payments have in the past been delayed -- although Tatum said recent payments have been on time. For its part, Americom helped the center early on by providing it with free space for six months as well as the greatly reduced rent. Tatum's firm is one of the IPCC's founding sponsors.


"They're doing very well making their monthly payments now, but it's their start-up debt that's become the problem," he said. "You have to have a big brother to help maintain that lease, and you have to have support from the community."


Additional expenditures come in the form of the IPCC's top two annual dinner functions, the Freedom of the Press Awards in December and the Excellence in Reporting on Russia Awards scheduled for this month.


Each event is estimated to cost between $40,000 and $50,000, although some tables at the December gathering enjoyed corporate sponsorship at $3,500 a table, Shelemekh said.


Additionally, the center often absorbs the costs of press conferences, he said. IPCC has hosted about 600 press conferences in the past three years, each totaling an average of about $1,000.


Shelemekh, who said the IPCC draws its revenue from membership dues, corporate sponsors and press-conference support services, attributed most of the center's troubles to poor marketing.


The presidential elections will only increase demand for the center, he said, adding that the IPCC is trying to host a debate and press conferences for the top 10 candidates.


But the answer, he said, is to move forward rather than retreat.


"I believe it is a moral obligation to the journalistic community," he said.


The club will focus on boosting its internal resources, increasing membership and providing better and additional services, Shelemekh said.


Also, hotel guests currently restricted to using the club's restaurant only for dinner will be able to eat lunch on the exclusive premises beginning later this month.


IPCC currently has about 750 members, Shelemekh said, with annual memberships running $350 for Russian journalists, $800 for foreign correspondents and embassy officials, $600 for non-profit employees and $1,600 for initial corporate members, with additional members joining at reduced prices.


For his part, Tatum said Americom would work with IPCC to try to keep the center at the hotel.


"We want to help them, and we're trying to do everything we can to help them, while at the same time realizing that we represent our partnership, our joint venture," Tatum said. "We have an underlying rent that we have to pay to our partner, the City of Moscow."


A second former employee noted that the Radisson's reputation is boosted by the press center and the high-profile speakers it draws.