Exit of gaming firms hurting local sports rights holders
What you need to know:
- The tax hike that imposes a tax of 35 per cent of gross revenue on all gambling and gaming companies indicate that this tax is too punitive.
- The exit of the title sponsor and the other gaming companies is and will have a negative impact football in Kenya.
On January 1 this year, the Gaming Tax Act came into force and had a telling effect on sports. SportPesa terminated its title sponsorship deal with the Kenyan Premier League and other gaming companies sponsoring Clubs followed suit.
The tax hike that imposes a tax of 35 per cent of gross revenue on all gambling and gaming companies indicate that this tax is too punitive. The exit of the title sponsor and the other gaming companies is and will have a negative impact football in Kenya.
The fans are the voice of football and have also been affected since their teams are not performing to their best potential due to the abrupt termination on the sponsorship. The recent example is AFC Leopards being bundled out of the Caf Confederation Cup by Fosa Juniors of Madagascar occasioned by lack of adequate financing which led to hence lowly motivated players and poor preparation.
Football is the undisputedly the most popular sport worldwide and in Kenya and the number 1 sporting platform that provides brands with as much coverage throughout the year, every year. Over 90 per cent of sports lovers are football fans.
KPL has been a key player in raising the professional standards and performance of football clubs, coaches, players and referees. In addition to Victor Wanyama who plays for Tottenham Hotspur in the Premiership, the KPL has been home to renowned players such as Michael Olunga (Girona, Spain), McDonald Mariga (Real Oviedo, Spain), Kenneth Muguna (FK Tirana, Albania), Musa Mohammed (FK Tirana, Albania), Masoud Juma Choka and Allan Kateregga (Cape Town City, South Africa), Paul Were (FC Kaysar, Kazakhstan), David “Cheche” Ochieng’ (IF Brommapojkarna, Sweden), among others.
These players are products of the local league body and clubs that invested in their amateur to professional development. The investment is in the form of grants given to clubs, training of coaches, and ensuring there is a competitive platform.
KPL primarily contributes to between 15 per cent - 35 per cent of clubs budgets through grants that is sourced from corporate sponsorships. For the last three years, over 50 per cent of KPL’s sponsorship has been from SportPesa and their exit had been a huge blow to the league.
With this huge revenue gap left following their departure, and as we plough through the market to replace and enhance our revenue streams, we now have the real dilemma of teams playing in the leagues and, facing a raft of issues at hand.
Like any other industry, if you shed of up over 50 per cent of your revenue, the immediate impact will be on the players as the clubs have not been able to meet the full wage bill cost. If their salaries are not guaranteed, the player will begin to split their time between football and another jobs to make ends meet.
Think about the turn of this decade, when there were no sponsors for the league, players played for passion and no pay, when we had many un-honoured fixtures, we may risk going downhill, again.
The quality of refereeing in the development of the sport cannot be overemphasised. Lack of sponsorship will have an impact on the refereeing. As a league body, we take care of the referee expenses and allowances, in situations such as these, when our purse shrinks and this is vital if not primary part of the game is not well taken care of, are we able to ensure credible refereeing? This may come into question.
Being an affiliate of the Football Kenya Federation (FKF) representing the member Clubs, the winners of the KPL represent the country in continental assignments, which is a source of national pride. Be it as it may, the exit of sponsors like the gaming firms, leaves these teams severely exposed financially, and may hamper their level of preparedness for these fixtures. This as we all probably know, attracts heavy penalties on the individual teams and country as well, sanctions that include suspension from international activities.
If we do not in the long run guarantee our customers (the fans) an exciting product (sport), then they will stay away from our stadia and grounds.
It’s time we rethought the sustainability of sports financing that brings the interests of sports, government and corporate Kenya at play and not just a zero sum game.