I am averse to betting for personal reasons but I will confess that the recent Ksh. 221 million jackpot win almost made me reconsider my stand. Kenyans have taken up betting like fish into water which has led to overnight growth of betting firms like Sportpesa. This has also attracted other global players in the industry into the local market. Betting has its negative effects which ended up in parliament. Even before parliament passed the bill, the government proposed severe tax measures beginning next financial year.
The government recently announced plans to tax 50% of betting firms gross profit and a further 30% on net profit. It can never get worse than this for any industry. The truth is, betting firms cannot survive these measures after enjoying great profits in the past. Sportpesa- the biggest player in the local industry – has reacted by threatening to withdraw sponsorship to football, boxing and rugby outfits. Is this sabotage or a genuine distress call?
Amidst all this, Sportpesa was reported to have signed a shirt sponsorship deal with EPL side Everton worth Ksh. 3 billion. This could have been prompted by the relegation of Hull City FC who have athree year deal worth about Ksh. 400 million with Sportpesa. The cry from local fans has been that Sportpesa makes the bulk of its money locally, gives local clubs peanuts but rewards foreign clubs well.
Recently Sportpesa spread across the border into Tanzania where they got into partnerships with local sports outfits. They are renovating the artificial turf in a local stadium while they are now the shirt sponsors of local football giants Yanga and Simba. I waited for the details of the two deals to shed light on the cry of KPL fans but it did not yield any juice for this article.
Sportpesa is giving Simba and Yanga about TSh. 5 billion each which is in the tune of Ksh. 250 million over five years. This is in the range of what Gor Mahia receives though slightly higher than what AFC Leopards earns which is Ksh. 225 million over a similar period. May be the outcry from local fans pushed them to set their ceiling around the amounts they have with Kenyan clubs.
Sponsorship is not charity. A firm goes into a sponsorship or branding deal with a football club for purposes of brand visibility. Sportpesa is going to get more visibility in Tanzania through the two local clubs than they are getting in Kenya. Tanzanians love their football and they show up for matches in big numbers. The league is also well featured in the local press. Tanzania Breweries Limited the shirt sponsor of the two clubs pulled out of football after it changed hands which meant Sportpesa got the two giants in financial straits. This could be the reason why they may have given in to not so good deals.
Kenyans should build the brand equity of local football in general but most important KPL clubs in particular. Sportpesa will only pay what the brand they are partnering with is worth. There is a big difference between their deal with Everton and what they signed with Hull City yet both clubs played in EPL. If brand equity is a measure of sponsorship then Sportpesa has been good to Kenyan football, especially clubs. Look at their perks for Kenya Rugby Union, Ksh. 607 million over five years and purported Ksh. 360 million over four and a half years as KPL title sponsors.
The term ‘purported’ comes before the KPL deal because unlike KRU, KPL did not reveal the actual value of their deal. That is a big pointer of where brand equity tilts; Kenyan rugby is a better brand than football despite having fewer followers. To attract more funds, clubs must package themselves as institutions worth of any amount they feel they are worth. People do not buy products or brands; they buy emotions associated with them. We must make our clubs and league attractive.
As Sportpesa and other betting firms prepare to fight it out with the government over the new tax regime, clubs must prepare for any eventuality. If the government’s stands its ground, Sportpesa is justified in transferring about Ksh. 400 million annual budget for local sports institutions into part of the tax that the government collects. Only two things are certain in life, taxes and death. Either way, we must play football.