Sports Renaissance or Regression?

Good day to you ladies and gents! As we get back to our roots, we welcome you to read and indulge with our articles and posts. To get us going is an article published in the Marketing Africa magazine by Richard Wanjohi – who will be sharing these more often as well as other posts on sports in Kenya. Karibuni and feel free to indulge us in on Twitter @sportkenya and Instagram #SportskenyaTM

Salutations, ladies and gents! Great to have us reading from the same page in the New Year. We would be saying good riddance to a most challenging 2017 but alas the bad luck followed us straight into 2018! Work with me…

Image courtesy of www.spoonflower.com
Image courtesy of www.spoonflower.com

Sponsorship Blues

To the Kenyan sports fans following the last days of 2017, we were treated to the announcement of the ‘hallowed Kenyan’ courts throwing out a petition by one of the biggest sports betting firms in the country. The case had been taken to the courts for interpretation and suspension of the Finance Act 2017. In June 2017, the Finance CS had sought to introduce a 35% levy on revenues obtained from betting, gaming, and lotteries and as well, as firms with competitions running prizes to be won.

There was hue and cry from the many betting firms that have been at the fore in the sports scene both for betting and sponsorship purposes. At the turn of the year, it became apparent that the Government was not going to balk at criticism thrown at it.

Within the first week of 2018, the biggest sports betting firm in the country which had also become sports main sponsors across many disciplines dropped most if not all local sponsorship deals. Second-tier and smaller betting firms have also been mulling over their support of smaller outfits in the sporting world.

The ruse by the Government on the 35% levy may have two elements to it,

  • Revenue generation – most taxes are introduced to rake in monies which maybe in circulation and as a way of Government easing off its budgetary obligations. For an ambitious Government like ours has been it would be a no-brainer given the monies that betting and gaming firms have been making in the last 2-3 years. Conservative estimates put the figures at between KES 30-40 billion per year.
  • Regulation – the betting and gaming industry has been on an abnormal growth trajectory for the same number of years as above. Mobile technology has made it easier for even the common person in the village to bet and win monies at the palm of their hands. As of writing this article, there were over 20 betting and gaming firms. If we add the slot machines and other gaming platforms in most urban areas, this will easily cross the 50s.

To reduce the number of companies (maybe through mergers/partnerships) and introduce barriers of entry, it was important for the GoK to rein in on charlatans or those operating below standards.

The effects of the levy though have been to shake up the industry and potentially ring a death knell on a number of investments in the betting, gaming and lottery space.

Sports critiques have also harped on a Government that ‘gives’ with one hand and ‘takes’ with the other. Only 2 years ago in June 2016, the same Finance CS had introduced a tax holiday for companies investing and sponsoring sports activities – to entice companies both existing and new to invest more in sport.

In the subsequent 18 months, a number of firms did oblige. They set up shop in the country and invested in sports in unprecedented ways, with 2017 seeing the resurgence of sports sponsorships.  Other companies engaged in sport as they pushed their CSR budgets to procure visibility and presence as sports quite easily gives the spotlight. This has come a cropper in the past few weeks and may dwindle further if the sentiments of corporate firms are anything to go by.

What is amusing is the Government’s knee-jerk response to the withdrawal of sponsorship monies – a KES 500 million contribution. It may seem like a sizeable amount but it is a trickling if all the sports bodies and organisations in need of financial support from withdrawal of sponsorship monies.

Quick aside: I have a bone to pick with the national sports bodies and teams, is the challenge of procuring a single sponsor for your sport. We have seen the tragedy of singular partnerships in sport that prove detrimental and cripple the organisations activities’. It started with the sourcing of media partnerships and overall sponsorships for their sporting disciplines.

If there is anything to learn from the activities in January, it is the need for a number of corporate firms engaged in your sport. An example to learn from is the NBA, which has managed to rope in sponsors for most of its activities. Watch the NBA All-Star Game in the third weekend of February and you will know what I am talking about.

New CS – New Wine in Old Wineskins?

Coming through in the last days of January were the appointments to the Cabinet that included the new Cabinet Secretary for Sports. With 2018, being a busy sporting year for #TeamKenya, then the new office bearer already does have his hands full.

Starting off with the Winter Olympics in Pyeongyang – South Korea (yes Kenya is represented by the charming and affable Sabrina Wanjiru being only the second Kenyan and a chosen few of Africans to participate in the Games held under wet and chilly conditions on the icy slopes of this city in Korea.

It was embarrassing to see a South Korean company decide to pick Sabrina’s tab for sponsorship to enable her train and participate at the upcoming Winter Games. Where are the myriad Kenyan companies’ and what other proposition would they need to invest and brand such a rare gem?

Back to the CS’s matter, looking forward to his agenda for sport for Kenya in the next years. Beyond the political pronouncements – including the stadia et al – the most urgent matter is the setting up of the National Sports Lottery Fund.

Sports Fund

Drawing from the Sports Act, the Sports Lottery Fund serves as to receive an annual sports programme at least 6 months before commencement of every financial year. This programme shall specify and outline a comprehensive plan of action for development, rehabilitation and maintenance of the projects and programmes of the sports agencies and estimated costs for every activity.

4 years since the enactment of the Sports Act, nothing has happened yet – no officials, no structure and still no monies to boot. As a top sporting nation, we should be serious with this Fund and it would have come in handy with the reduction of sponsorship monies.

The Fund ought to form a centralised system and basis for disbursement of monies meant for sports development – be it the physical infrastructure or the sponsorship of teams especially those on national duty.

Last year saw Kenya miss hosting the CHAN (which ended up in Morocco – and to add insult to injury their national team ended up winning this year’s edition). In total contradiction of the Government’s pledge to sport, the country hosted the World Athletics championships, which the IAAF gave raving commendations (sic).

We can avoid such misadventures if the Ministry and relevant sports bodies had not only made the commitment to host continental and international sports fetes but also look towards investing for the future.

This column has noted severally the need for infrastructure for our sports disciplines and with the devolved functions, it is now imperative for both national and local (read county) governments to make this happen.

 

 

 

Success Stories of Sports Fund

When and if the Sports Lottery Fund becomes operational, it can form the basis of a rebirth of sport in Kenya. We have a number of countries that have benefited from such Funds in building teams to sterling performances and long-term invested in the future.

In South Africa, we have programs such as Sport for All – a trust fund whose monies come from the National Gambling and Lottery Board. This sees a fraction of monies generated from casino gambling as well as national betting and lotteries companies deposited in the trust fund.

The programme has been successfully in initiating youth programs for most of South Africa’s sporting disciplines including cricket, football and rugby to mention but a few.

In the UK, the country has a number of active and well-managed sports trust programs, which include the National Lottery Fund, which disburse over £600 million per year. Others are UK Sport – which manages monies from both the Lottery Fund and affiliate bodies such as NOC among others and UK Youth that ensures youth programmes for not only sports but also educational, arts and sciences in the schools.

The success of these programmes has seen the UK emerge as a major sporting nation in most sporting disciplines and good showing in international sporting events. This was the case in the 2012 Olympic and Paralympic Games held in London.

To bring us home, sports will remain secondary to our national psyche until there is a deliberate and sustained effort to invest in it. Beyond the national levies imposed on corporate firms and businesses, which have sought to engage in sport, the Government has to take a lead in investing and providing an environment to nurture sports.

Enactment of the Sports Act in 2013 was a step in this direction, but we have to move beyond the written laws and act. National sports bodies that are sponsored well have multiple revenue streams to ensure their sports activities across the year. The reward for this would be the supplementary monies from the Sports Lottery Fund once it starts functioning.

Beyond this, we can keep harping the same tunes year-in, year-out.

 

SportPesa’s Sponsorship Withdrawal – Biggest Gamble

2018 Cometh……

2017 has been one momentous year for the country. Even in the world of sport, it has been a well mix in the basket. Talking of baskets, tongues are wagging about the biggest sponsors of sport in Kenya – SportPesa – who are thinking of pulling back their bountiful offering, effectively reducing its involvement in sports in Kenya. What does this portend for sports in 2018?

We got the world...(image courtesy of SportPesa)
We got the world…(image courtesy of SportPesa)

A few posts ago, we predicted the impact of sports betting companies on our sports scene. A casual look at Kenyan sport in the last 3 years has seen a major impact both directly and indirectly on how we consume and interact with sport.
A PwC report on Kenya Entertainment and Media 2013-17 , revenues from sports betting were projected to rise from US$ 11.7 million (2012) to $17.3 million (2017).
As of writing this post, there are about 25 sports betting (and gambling )companies registered in Kenya. The biggest and easily recognisable is SportPesa – operating BCLB (Betting Control & Licensing Board) license no. 673 through Pevans EA Ltd.

Conservative estimates of sports betting and its impact to the economy are at between KES 635-700 million p.a. This is mainly in sports sponsorship, direct spending in improving sports facilities and teams, as well as employment. Add another KES. 2.4 billion in media spend (various media research reports in 2017) – from digital, print, radio and TV – as well as daily spends and we’re talking of billions of shillings!

The synergy enjoyed by both betting and telecoms companies have seen the mobile money in Kenya grow to daily transactions worth KES 18.4 billion! A good fraction of the monies are from your common man on the street, to the discerning campus student and many in blue-collar jobs who review their odds every other morning to make the winnings.

SportPesa Success

Back to SportPesa, the upsurge of sports betting in Kenya can be attributed to its adeptness and adaptability to their audience. As aptly summarised by BetMoran on the post titled ‘ Why SportPesa is very successful‘ the main points include;

  • Consumer spend – 50,000 users spending an average of KES. 500 = KES 25 million per month;
  • High and engaged web audience – an average of 16-18 million users every month (if using Google AdSense-this is another revenue stream);
  • Consumer education – when launching in 2014 just in time for the World Cup, SportPesa has continually educated its target audience on its various betting platforms and options;
  • Mobile technology – as noted above, riding the wave of over 25 million unique mobile phone connections, SportPesa was able to ride the wave of mobile money and making it integral in its platforms;
  • Media spend and engagement- as of Aug 2017, SportPesa was the biggest ad spending firm in media in Kenya rivalling telecoms and FMCGs such as Safaricom, Coca-Cola and P&G that have traditionally been high spenders in these.
  • Timing – launching in time for the 2014 World Cup, the brand was able to take advantage of the biggest sports extravaganza in the world. Pray they’re already looking forward to the 2018 one…

Enter GoK’s hand

In May/June 2017, the Treasury CS tabled proposals to tax sports betting firms in Kenya as high as +50% of the daily collections. While it is not our forte in matters taxation, with the numbers mentioned above, it would be foolhardy to assume this would not attract the Treasury technocrats. Given its agenda to invest in infrastructure including the now-on-then-off stadia development, the GoK has had a tough year in looking to bridge the budget deficit.

Sports betting firms did what is becoming our typical litigious selves in Kenya and took to court to stop the tax measures. The case to nullify the tax measures was dismissed last week, effectively attracting a 35% tax cap on the gross earnings of the sports betting firms effective January 2019.

As of close of 2017, the tax percentages were as follows;

  • 5% of lottery sales;
  • 7.5% for betting firms and bookmakers;
  • 12% for casino gambling and
  • 15% for raffles.
  • Additional taxes include 30% corporate tax and 25% of their total sales dedicated to social causes, including sports activities.

SportPesa is currently involved in major sporting disciplines including;

a) Football – FKF, Premier League, Super 8 , Gor Mahia FC, AFC Leopards FC and Nakuru All Stars FC

b) Rugby – through KRU, National 7s team and Kenya Harlequins;

c) Boxing – Boxing Association of Kenya and boxer Fatima Zarika;

d) Rallying – by sponsoring Leonardo Varese.

Other sponsorship includes shirt sponsoring Everton FC; sports partnership with Arsenal FC, Southampton FC and Hull City as well as La Liga in Spain.

All these associations are likely to be affected in one way or the other once the firm confirms its future role in sponsoring sports in Kenya and overseas too.

Having started expanding its geographical reach in the region to both Uganda and Tanzania, the main market still remains the local scene. The firm’s perceived close links within the GoK will also be exploring ways of either reducing the burden of taxation or enjoying tax holidays for a little longer than the prescribed date.

Way Out?

  1. National Sports Lottery – the establishment of this lottery is long overdue. The GoK through the Ministry of Culture and Sports ought to have fast-tracked this in the last 3 years. Among the many options would be to push for all betting and gambling companies to remit part of their monthly revenues to this common Fund. The monies raised would be apportioned to the sports associations proportionate to the scope of the sport and planned activities for the year. This has worked successfully in countries such as the UK.
  2. Commensurate Social Responsibility – in South Africa, betting and gambling companies have to engage a fair amount of their revenues to corporate social responsibility. While it may not be a sustainable business model for sports business, it is a means to the end of sports development in parts of the world as this.
  3. Lobbying – while we are not privy to what may have happened along the corridors of Parliament and the delays in confirmation of respective committees, it would serve them well to lobby the legislators to reduce the impact of the taxation on their revenues. Alternatively they can give their options of tax regime or tax holiday for those setting up to their 2nd or 3rd year upon which the applicable tax kicks in.

As of 1st January 2018, SportPesa had sought to appeal the ruling in the courts seeking to overturn the ruling. In the meantime, all local sponsorship stands suspended.

To managing the taxman and his demands, a lot still needs to be done to reach a consensus. For the sports organisations likely to be affected, a common ground on appealing to those in Government can be pursued.

It remains to be seen how the biggest gamble will finally play out in 2018.

 

NBA – Can Hasheem Thabeet please stand up?

Yes, some of you might wonder why we’re picking on a non-Kenyan to profile on our blog, well he’s the first East African ever to play in the most prestigious basketball league in the world – the NBA! Thabeet also happens to be among the few Africans ever to play in the NBA Playoffs ( others being Hakeem ‘The Dream’ Olajuwon, Dikembe Mutombo, D.J Mbenga in that list). We hope he inspires the next generation of basketballers from Africa more so East Africa which has seen little action in the US-base league.

H. Thabeet waits for ball – image courtesy of www.nba.com

Thabeet’s team Oklahoma City Thunder (OKC) led by current MVP Kevin Durant are currently in the Western Conference Finals playing last year’s Conference winners San Antonio Spurs (SAS). As of doing this blog-post, OKC was trailing SAS  0-2 games in a best-of-7 series. They also lost fellow African Congolese-born Serge Ibaka to injury going into the Finals.

NOTE: Serge Ibaka did somehow make a recovery on his injury and made it back to the team, inspiring them to a win over San Antonio Spurs in Game 3 on Sunday.

Is this time for Thabeet to step up his game?


Having been part of the bench for OKC, he can become a contributor to the franchise surviving and even challenging for the NBA Playoffs Finals. But playing against veterans such as Tim Duncan in the paint and his supporting cast of Parker, Ginobili amond others won’t be an easy ride. He can use his height to his advantage and also get the team to play the ball off their main player Kevin Durant (who needs to step up and show why he’s the league’s MVP…).
His regular season stats don’t look too favourable with 23 Games played, average of 1.2 points per game and 1.7 rebounds per game ( from www.nba.com). What is worrying though for Thabeet is his manager’s lack of faith in him especially in transition and protecting the rim. He might need to reinvent himself in the few minutes he might get playing as the Thunder look to surge back into the series.

Till then, twa kutakia kila la heri, ndugu!

In Related News:
2-time NBA Playoffs winner Hakeem Olajuwon was recently named an NBA Goodwill Ambassador for Africa. His achievements and accomplishments will come in handy as the NBA tries to reach to a wider African audience, both for its broadcasts and talent search. Dreams do come true indeed…

Can this be the year of Rebirth of Kenya’s Basketball?

Many a times a sport in this country undergoes serious degeneration and gets swallowed in the mediocrity of the administration of our general affairs as a State. It is true we can continue moaning about this and sing to the birds till heaven come but nothing changes.

Pres Obam hoopswww.guardian.co.uk

It is with this in mind that some of the administrators in the game of Basketball have decided to change the perception of the game and give it a slow but gradual ‘rise from the ashes’. This process started sometime last year when the Kenya Basketball Federation experimented with the Friday Basketball games which became a favourite for those fans who were looking for alternatives in sports entertainment.

Though the Friday games eventually started attracting less crowds ( the idea was being disputed between the federation and a local entertainment company the latter which wanted to own the rights and larger parts of the revenue and not entirely for the interests of the game), this idea can be explored if fine-tuned and well-thought out.

Coming into the 2013 season, the Federation has been in talks and arrangements in place to screen live games from one or two venues as may be decided by the pay TV channels. This is one big shot in the arm that would go a long way in changing the way the viewed in the country. TV does wonders to a sport which is able to organise and attract favourable crowds and audience both ‘online and offline’. It would also attract some form of revenues in advertising and promotions which the Federation can use to rebrand and gave the game a new face.

Talking of online, there is also a new magazine developed by basketball enthusiasts who also felt it is about time to talk about the game in its entirety, challenges and all. Titled “Inside B’Ball” it seeks to reach a growing number of sports fans who consumer their dose of sports online. It will also give the game of basketball a wider reach that it has been yearning for. It also good for the Federation to work closely with such entrepreneurs who will offer commercial assistance on ways to generate ideas and revenues for the game.

It’s now for Kenya Basketball Federation to start engaging corporate firms and the Government where necessary to ensure that they get better infrastructure across the country – venues, training areas and exhibition areas. This can start with a refurbishment of the Nyayo Gymnasium – the place is need of a serious paint job, better lighting, sound systems and a scoreboard. The court and its surroundings also need a touch and markings to ensure it fits to world standards. It was embarrassing in 2010 when the venue hosted the Street Basketball exhibition games and there was a leak on the roofs.

The only venue which fits the bill is Kasarani multi-purpose gymnasium which is slightly away from town and might not be able to attract crowds as yet due to its proximity and accessibility. Other venues such as the Makande gymnasium in Mombasa would need expansion and better markings to ensure better experience for players and fans alike. Kisumu and Nakuru and any other major towns should look to developing indoor venues for such sports and this will offer alternative forms of entertainment and engagement with the youth.

College Basketball in Kenyawww.basket-in-africa.blogspot.com

Another mention should be the Zuku sponsorship of the Universities and Colleges Basketball League (UCBL). Back in the late 1990s and early 2000s, this league was very competitive and saw 2-3 teams from qualify for the national Premier League. This should be followed through by Kenya Basketball Federation to see that they separate college and university teams from the semi-professional and corporate-sponsored teams. This way it will be easier to have a purely professional league and one that has learning institutions. The two would serve a complimentary role with one being a feeder to the other. We have seen that work successfully in more developed leagues such as the NBA and the NCCA College Basketball  in the United States.

Finally, NBA is making in-roads into Africa and it’s about time that Kenya got a player or two representing a team from this famed league. There is a liasion office in South Africa closely watching what activities Kenyan basketball is undertaking. There are also the equally well-developed European Leagues in countries like Spain, Greece to name but a few which can come and recruit our talent and offer exposure to our players to the international game.

Can this be the rebirth that Kenyan Basketball has been yearning for?