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.

 

With IRB 7s 2015/16 season done and dusted, can we conquer in Rio?

IRB 7s Series 2015-16
The 3rd weekend of May 2016 was always going to be a momentous one for Kenyan rugby fans, more specifically for the 7s game. Well, after the Singapore and Paris rounds of the HSBC 7s IRB Series, the expectations would only get higher. Unfortunately the Kenyan 7s team, affectionately known as the Shujaa Pride, seemed to have run out of steam in the final outing in London’s Twickenham Grounds.

Collins Injera – image courtesy of www.osbke.com

One Collins Injera had other ideas though. The winger who is celebrating 10 years since making his debut to the Kenya 7s team topped the tries to become leading try scorer of all time. After passing the previous record of 230 tries, he went on to add 4 more tries on the last day to increase his tries at 235. Below is a list of the top 5 leading try scorers;

  1. Collins Injera (Kenya) – 235 tries;
  2. Santiago Gomez Cora (Argentina) – 230 tries;
  3. Ben Gollings (England) – 220 tries;
  4. Dan Norton (England) -210 tries;
  5. Fabian Jurles (South Africa) – 179 tries.

{Special mention too to Humphrey Kayange, Collin’s elder brother who is 8th on the rankings with 159 tries}.
Congratulations to Collins Injera and the Kenya 7s team for achieving this feat! Commendable job by the team finishing 7th in the log of IRB 7s teams with 98 points , 1 point less than the highest ever points.
The team came of age this season winning at least 1 of the circuit series in Singapore though they featured in less Main Cup action than would have been anticipated. The team has also been able to withstand initial woes of delayed salaries (though not fully resolved yet). They have also had a fairly common front with the team management. This stability has ensured less rocking and more focus on the team’s deliverables.
With the IRB 2015/16 circuit coming to an end, the second half of the tough year starts almost immediately. These include;

  • Rio Olympics Games 
  • Kenya 7s circuit in the 3rd and 4th Quarters of 2016 (to be reviewed in Sep 2016)
  • IRB 2016/17 Circuit (to be reviewed in Oct 2016)

Rio Olympics Games



Having qualified among the last slots as Africa representatives, the Kenya 7s team saw its resurgence which formed the basis of the current success. However this will be banished first due to its sterling performances making them marked by the bigger teams.

The success too has meant the team has kept within its current players utilising a minimal number as substitutes along the season. This may again work as double-edged sword as the experience will serve them well. The negative though is the exhaustion from a tough season and the harsh weather in Rio.

Again the limited pool of players (sic) may hurt the team going from the circuit to the Olympics and onto to the new season 2016/17. No belittling the achievement of the Collins Injeras and Humphrey Kayanges of the team, it is also time new talent gets to step up and take the place.

The more realistic target would be for a medal bracket – Bronze medal at the worst. Gold and Silver would be ideal but you can lest assured the big boys in Fiji, Australia, New Zealand, fellow African reps South Africa as well as Argentina and USA will be no pushovers for the summer festival of Games.

Preparations will also be key to how the team performs. Here we invoke the GoK and the sponsors who first need sort out the payments to ensure players are fully remunerated. Being one of the few semi-professional sides in the top 10 of the IRB circuit, the players make heavy sacrifices. Its only fair they get rewarded their hard-earned monies.

Still relating to preparations, the pre-Games camp will be integral to ensure the team doesn’t run rugged in the humid conditions of tropical Rio. Ideally a few days in Mombasa or such a location would mimic the conditions down in Brazil.

Finally the Olympic team for Kenya under GoK and NOCK supervision would make ours a worthy Games. Previous Games have seen #TeamKenya get a raw deal with arguments over non-essential travel parties ( Sports CS READ THIS) making the Games at the expense of players and essential technical team members.

Once these are addressed, we can sit and enjoy an entertaining debut of the 7s rugby game in Rio, watching our only team hopefuls for #TeamKenya repping the country. Over to you KRU, GoK and NOCK!

Sports Bill – Let’s Get Kenyan Sport started

After a 10-year heart-wrenching and sometimes frustrating journey, Kenyan sport will finally get its biggest shot in the arm. As the 10th Parliament prepares to end its stay, the one thing the Kenyan sports fraternity will be grateful for is their passing of the Sports Bill ( it awaits Presidential assent to become law as early as March 2013).

Kenya 50 years oncourtesy of www.1500questions.org

At least our lamentations to our Minister one Ababu Namwamba seems to have borne fruit and history will judge him accordingly.
The Sports Bill had a number of proposals which will among others ensure Kenyan sport changes and is run more professionally as well as addressing the revenue issues which plague majority of the sports bodies.

Check this out;

  • establishment of Sports Kenya Development Authority ( mandated to oversee all sports activities, promote, co-ordinate and implement sports programs and manage sports assets and facilities countrywide among others);
  • establishment of a National Sport Fund ( to raise and manage funds for sports authority as well as advise sports federations on appropriate financial grants among others);
  • establishment of  a National Sports Institute ( to manage sports training facilities, promote research and development, check on current sporting trends and recommend appropriate practices to sports federations);
  • registration and regulation of sports organisations and licensing ( creation of Registrar of Sports organisations, licensing of sports bodies – federation, club or otherwise, inspection of financial records and books among others)

Once the Bill is signed into law, existing sports bodies will have to register afresh and in some cases might have to elect new officials for fresh mandate. This has surely not gone down well with many of the current sports officials. The Bill also prescribes regular monitoring and evaluation of sports bodies through annual reports and returns to the Registrar.

It also offers the Secretary of Sport ( equivalent to the current Minister) to intervene and dissolve a sports body in case of disputes or mismanagement. This again has caused discomfort with some of the federations such as Football Kenya Federation which believe they’re beyond any national government interference ( as FIFA honchos have always made national federations feel above the law).
The law has addressed the perennial headache of fund-raising which shall be taken care of by the Sports Fund. This will ensure future national and international representation will have sufficient funds to participate in events and also federations running their affairs smoothly.

But we in Kenyan sport should remain vigilant and ensure that the Sports Law is not just another clause in the Kenyan laws. Just like our legislators, most of the sports officials without interest in the development and growth of sport will fight back and stifle these developments. Law experts tell us that the law doesn’t operate in a vacuum and isn’t cast in stone – it is in the interests of all those involved to safeguard against its abuse. ( We know that a number of sports bodies campaigned for the removal of the clause limiting the terms of office for sports officials).

As the country marks the golden anniversary and in its over 60 years legacy in international participation in sport, the legislation will pave way for added investment and interest in Kenyan sport. It will ensure professionalism in running sports bodies and see that sport is firmly grounded in case of indiscipline.

Notice is served to all you charlatans running sport! Just like our outgoing MPs, start packing your bags too!

‘Useless’ Kenya Facts:
The 10th Parliament had quite a number of MPs who have either been sports personalities or managed sports organisations in one capacity or the other. Here are a few noteworthy ones;

  1. Peter Kenneth (MP for Gatanga) – served as Chairman for Kenya Football Federation 1996 -2000( now Federation of Kenyan Football…semantics), played for now-defunct Re-Union as goalkeeper,
  2. Alfred Khangati (MP for Kanduyi )- served as Chairman Kenya Volleyball Federation in the 1990s and
  3. Dr. Sam Ongeri (MP for Nyaribari Masaba)- served as Chairman for Athletics Kenya 1974-84, 
  4. Chris Obure (MP for Bobasi) – played for Gor Mahia in the 1970s ,
  5. Elijah Lagat (MP for Emgwen) – former marathoner who won Boston (2000), Prague (1998) and Berlin (1997) marathons respectively,
  6. John Harun Mwau ( MP for Kilome) – sharp-shooter who represented Kenya in the Olympics in 1968 and 1972 shooting category.
(…if anyone can recall any others, please help us note them)

Government of Kenya Pay-out – Great but more needs to be done…

Yesterday the Government of Kenya (GoK if you like) hosted sporting contingents that represented the country in the various sporting events ( All-Africa Games held in Maputo-Mozambique; World Athletics Championships held in Daegu- South Korea as well as Youth Commonwealth Games at the Isle of Man).
On card was the (un)official handing back of flags handed to the team captains by the Head of State. The more significant part was the handing out of bonuses which had been promised to medal winners of these events.
This has been a laudable feat by the GoK since they initiated this a few years ago. Mr. Pres, though went on to make ‘pronouncements’ where we shall put them (GoK) into task;

  • 47 stadiums – this one is quite ambitious and laughable to say the least. While we seek to develop sports development at the lower levels, this is one area we have not been successful. Look at the existing infrastructure and it paints a sorry state. We do not have proper steps to develop and maintain grounds, sporting clubs and related facilities. We have also not done a good job to providing incentive to private entrepreneurs to encourage investment in the same. We have not safeguarded what would be some major sporting grounds such as has been seen in Nakuru’s Afraha stadium, Nyeri’s Ruringu stadium, to name but a few.

So Mr. President, please check again, this might be paying lip-service to sport.

  • Bidding and Hosting International events – in the last 20 years we have managed to host some good international events. But if you look carefully, EXCEPT for the All-Africa Games in 1987, the rest have been more or less single discipline events; the most recent Africa Athletics Championships last year in August. Most of these have also been for less than a week going if we look at time spent within our borders. That informs our lack of facilities for hosting fairly large teams of participants. Sample this, if we bid for the next Commonwealth Games, where would you host the contingents of over 40 countries? Can our infrastructure withstand added pressures of the visitors ( traffic especially)?

We need to stop making populist statements just for the sake and carefully look into seeing to it we develop sports centres which can support modest numbers of visiting and local sporting enthusiasts…learn a thing or two from Munich’s Olympic Stadium.

  • Sports Lottery – this is another of the proposed developments which is included in the work-in-progress, yet-to-be-tabled Sports Bill. Another noble idea that seeks to raise funds for competing teams to major sports events such as the Olympic Games. We have a big one in 2012 in London ( which also coincides with the Queen of England’s Diamond Jubilee…see the significance?). Given Kenyans’ love for lottery and such like activities, this is a process that needs to be done with proper audits and openness to avoid the fraud that plagues such processes. It would become another major flop if any undue influence and inconsistencies are detected.

Mr. President, this is the part where you ought to admonish the Minister for Youth & Sports asking him where the ‘hell’ the Sports Bill is. Your term in office is slowly edging to its sunset & what better way for the youth and sporting talent to remember you than a Bill recognising their worth and contribution as well as formalising sports development in the country?

  • Sports Fund – though it might seem unrelated, I would wish to add this to your plate for consideration. Why? Well we have seen many a sporting talent blossom in their short-stints or even in their fairly modest careers only to fall into hard times once they are in retirement. Some have fallen off to the need of rehabilitation from drugs and alcohol abuse. Well such a Fund would be set aside to lump an athlete’s part-winnings and bonuses almost like the retirement funds and one can access these in their later lives. It will go a long way in inculcating a culture of saving in our current generation which is out to spend every single cent in sight.

Mr. President, once again, consult with your worthy economic advisors and the retired both current and soon-to-be would be in awe of you for remembering their fate.

Over to you, GoK!

Football : KFF & FIFA-Let’s not have the charade

The world of football was treated to some very interesting times in May and the run-up to the 1st June at the behemoth that is FIFA. Sepp Blatter fighting ( well not that the only other candidate Mohammed bin Hammamm) for the top post for a fourth consecutive term really opened up a can of worms and somehow wiggle himself free to emerge as the only candidate and win this post till 2015.
Well while he may want to wish away the whole charade whether the claims against Jack Warner and Mohammed bin Hammamm are proved or not; there is going to be lots of ín-house cleaning and PR as well as trying to keep the two gagged for the next couple of years if FIFA is to hold its own. Some disquiet has come from some of the major sponsors but nothing serious yet ( some had argued that they would withdraw their 2014,2018 and 2022 tournaments…)
Back to Kenyan football, we had our joke of a football official from FKL representing Kenya’s vote. Hoping they do not want to replicate a similar situation, it is about time the Independent Elections Board announced a date for the elections which are now becoming quite an obstacle for the local scene.
The whole scenario is not helped by the fact that the IEB seems to be reading from FIFA’s script and had to wait for the elections of the highest office to end before making any move. For the interests of our country and for us to save face, please do not let the fiefdoms from FIFA trickle down to our levels. Mr. Paul Otuoma kindly hold forte for the people of Kenya and if we shall be suspended for your cobbled coalition Government coming to our rescue then let be it.
IEB announce a date and save us all this hassle, let the best man win!