Uncertainty has gripped the Kenyan sporting world after Pevans East Africa Limited, the company that owns online betting firm SportPesa, reiterated its threat to terminate all existing financial sponsorship agreements with clubs and federations.
Thursday’s High Court decision to uphold proposed tax laws requiring all betting companies to remit 35 per cent of their earnings to the government revived SportPesa’s threats of withdrawal, plunging clubs and associations enjoying their sponsorship into panic.
SportPesa has repeatedly stated that a 35 per cent tax is simply too much. That in fact, there will be no money to be made if such a tax cap is implemented and therefore no reason for them to continue normal operations.
Listening to the subtle and often indirect exchanges between the company and government, it is clear that SportPesa intends to put the blame squarely on the government for any negative impact that may befall players, clubs and federations if they pull out.
Since the Finance Bill 2017 was signed into law in June, the government has remained unmoved despite pleas from the sporting fraternity and threats from the betting companies. Sports Cabinet Secretary Hassan Wario was vocal last year in calling for the registration and regulation of betting companies in the country.
The Sports CS was of the opinion that the National Sports Fund created under the Sports Act 2013 was the best solution in funding the sporting sector.
The sports lottery has however yet to see the light of day.
SportPesa Chief Executive Officer Ronald Karauri on Friday said that they will issue an official statement next week.
The gaming company has so far committed more than a billion shillings for sports in Kenya over the next few years.
The company owns the naming rights to the top football club competition in the country the Kenyan Premier League.
No figures were given for their three-year partnership but it was reported to be valued at close to Sh100 million a year.
SportPesa are also major partners of national sporting bodies Kenya Rugby Union, Football Kenya Federation and Boxing Association of Kenya.
They are shirt sponsors of the glob-trotting Kenya Sevens and official partners of top football clubs Gor Mahia (Sh300 million over five years) and AFC Leopards (Sh225 million over five).
ALLSTARS 'COULD BE AFFECTED'
SportPesa are also the official sponsors of National Super League side Nakuru All Stars.
The withdrawal of SportPesa will particularly hit the Kenyan Premier League that has struggled to fully professionalise hard.
Majority of Premier League players continue to suffer poor pay with hard up clubs locked in a deadly struggle to overcome growing financial obligations.
AFC Leopards have stated that should SportPesa withdraw its partnership, the club will go back to begging for handouts from well well-wishers.
“The new tax law is something that all sports entities should come out and lobby against. Survival in the SPL is very expensive, especially for a club like ours,” said AFC Leopards chairman Dan Mule.
“We appreciate their contribution but the funds we get from SportPesa are hardly enough to meet all our requirements so you can imagine what could happen if they left. We may be forced to continue relying on the good will of politicians,” he added.
Champions League-bound Gor Mahia will also have to reconsider their financing.
The Kenyan Premier League Limited CEO Jack Oguda this week asked clubs to prepare for further cuts in their annual grants should the betting company withdraw. KPL gave each club annual grants of Sh8.4 in 2016 totalling Sh135 million.
Kenya Rugby Union chairman Richard Omwela is planning to nullify some of their players’ contracts should the SportPesa sponsorship be withdrawn.
“There are players whom we recruited recently, knowing that we have the financial backing of SportPesa. If they leave we shall have to either terminate those contracts or review them downwards because the truth is that the union, by itself, cannot afford their wages,” he said.
Across all sporting federations the picture painted is that of despair and hopelessness; but have these sports entities demonstrated to SportPesa that they add value beyond the traditional advertising exposure?
Undeniably, SportPesa has transformed the Kenyan sporting scene.
They have used every possible opportunity to make their brand visible and it shows in the huge market share that the company commands both locally and regionally at the moment.
The benefits have trickled down to fans, players, clubs, associations and even media in the form of exposure, monetary gain and employment.
The betting firm’s aim of going global has seen it sign patnership deals with leading English sides Arsenal, Everton and Hull City, which have a strong European footprint.
It is courtesy of SportPesa that global football star Wayne Rooney, in flesh and blood, landed on East African soil with Everton and played against Gor Mahia, an unprecedented feat in modern day Kenya.
It is also because of SporPesa that a select KPL side, consisting of top Kenyan players played against Hull City early this year in a historic match at Kingston upon Hull.
Now, through their “Tujiamini” initiative, SportPesa have begun a campaign about appreciating local sporting heroes, “transforming communities”, “raising hopes and dreams” of “fostering cohesion” among Kenyans.
Kenyan sports has almost been synonymous with SportPesa over the last few years.
Still, one question abounds. Can they provide credible data to back up their claims? Apart from the millions that they inject into clubs and federations, will their withdrawal have a significant impact at both a personal and community level?
Whether the SportPesa makes good its threat or not, the lesson is one of foresight and caution. Sports sponsorship is getting more and more popular because companies have noticed that it can bring extremely fast and visible results.
It however also means that the companies in question have to make the right choice and pick the best team, which is the main question troubling SportPesa at the moment. Is the Kenyan sporting scene worth fighting for in the first place?