I am very fortunate to be well travelled (some refer to it as exposure) and to some extent well educated (my retention levels could be questioned but that’s for another day). This included a quick stint at one of Europe’s leading business schools where I explored the “business of sport” in some depth. These experiences in tandem with my life as a national athlete, a sports administrator and as sports entrepreneur have formed the basis of this blog “The State of Sport in Africa”.

The underlying question is why do African countries with the exception of a section of South Africa not see the value in being a part of the US$500-600bn dollar a year global sports industry.   This blog tries to explore the problems and their possible solutions.

According to the Price Waterhouse Report ‘Changing the Game “Global sports revenues will be valued at US$145.3 billion in 2015: an annual compound growth rate of 3.7%. This according to many reports is generated across every other region EXCEPT Africa!!!!

The Problem

The African Mind-set: Sports to most Africans is a luxury/leisure activity and is not seen as a viable career option. My father even as a Minister of Sport could not wrap his head around the idea of me playing tennis for a living (no pun intended Dad…. I am sure you are not alone). We are traditionally educationalists which 40 years ago might have made sense but today the Global sports industry is said to be worth about $500-600bn. According to a study by Largardere: from 2000 the spend on sports has grown faster than the GDP in many countries. China’s spend has increased by 20%, Russia by 57% and India by 17%.  So the question is why not in Africa? Are we immune to Global phenomena? I highly doubt it.

Sport is an ecosystem that employs more people than the mining industry in Europe. It is not just about the superstar athletes! There are media agents, doctors, lawyers, interns, facility owners, coaches, casual labourers etc.  As an example: At an estimated worth of $422 billion, the sports industry is a significant sector of the American economy.  20% of the American Population is employed in the sports industry directly or indirectly. Sports marketing and advertising spending alone is estimated at $28 billion. The NBA, NFL, MLB, and NHL together bring in $23 billion a year in revenue, which is much more than The budget of most African countries including my own Uganda which sits at approx. $4bn. (See my point!!!!)

Corporate Mentality: The majority of Corporates in Africa barring South Africa do not see value in partnering to develop sports properties over the long-term. The few who do, such as MTN Uganda who have invested in sports properties such as the MTN Marathon will be able to tell you that it has been worth the ride.

Sport is a new evolving industry and many marketers do not really understand how to extract value out of sports sponsorships. I do not blame them as this is not their job but surely they must have an interest in why sports are one of the fastest growing global phenomena.

Even when African based companies do invest in sport they struggle to understand that for every dollar that is paid in sponsorship there must be another three dollars invested to activate that sponsorship to generate the required ROI. There is an endemic failure to understand the difference between ‘paying to be on the platform ‘and actually ‘utilising the platform to extract value.’

African based companies or their representatives tend to make decisions based on the personal tastes/preferences of their decision makers for example in Uganda you will find no shortage of sponsorship at the Golf Club.  Golf Club has limited or no visibility and contradicts their usual stance of we want to see “numbers”. They do tiptoe around what sport they should “invest in” citing “bums on seat” but the majority of sporting events if organised and invested in will create the desired effect. Case in point is Friday Night Lights Uganda (do excuse my bias).

Limited Government Involvement: African leaders hence governments, as mentioned in point on “mentality” do not see the value proposition in sport.  Their view is sport is bunch of youth running around instead of studying yet is they who sit in establishments in their spare time idolising Messi, Rooney, Usain Bolt (like foreign athletes are some form of “alien”). These athletes that they idolise are products of systems established in their home countries, which have been supported by government intervention (for example by building stadiums and sports infrastructure).  I was shocked quite recently to learn that children in many schools in Uganda are not allowed to participate in sports activities during the term of final exams (this is borderline insanity) but goes to show the extent of our mentality.

In Uganda the youth make up 70% of the population and if a census was done you would find that majority of them will spend much of their time playing sport, watching sport or at entertainment events. Sport and Entertainment are by their pure nature recession proof…

Corruption: Corporate and Federation/Association representatives have over time in Africa used sports/entertainment events to generate “additional income” for themselves meaning that this has become a way of life…This has stagnated any possibility that the sports industry in Africa can grow and decisions are partly influenced by this “additional income”. Sports federations across Africa have been notorious for using funds for reasons other than sport.  This has a detrimental effect on grassroots sports all the way up to elite levels. This in my view is the biggest UNSPOKEN TRUTH.

Solutions

Mind-set is probably one of the most difficult things to alter.  Having said we in Africa must begin to look at sport as a business.  The same way we view the oil, real estate, agriculture sector is the same way we must view “sport”.  According to a report on 2012 titled African Economic Outlook there are 200m people aged between 15 and 24 and this set to double by 2045. These youth have to be employed and truth of the matter very few of them will become doctors, lawyers, economists etc. Amongst these few will have stable employment. Sport is among the top 20 grossing industries globally so parents, leaders etc. embrace sport if only for the opportunities that the industry provides. Look at it as a BUSINESS or INDUSTRY…

Corporates in Africa need to move way from the mind-set that sponsoring sport is a favour to society.  According to Report by Price Waterhouse Coopers: “Whilst the rationale for why companies decide to invest in sports sponsorships varies widely, what can be said is that the key motivation is no longer just about maximising brand visibility and awareness, but is also about gaining deeper and more emotional engagement with fans and staff, and even managing the perception of the sponsoring company. Fast food chain McDonalds − a sponsor of the Olympics since 1976 and FIFA World Cups since 1994 − signed up Olympic US multiple medallist Darra Torres to front its campaign in the run-up to the 2012 Olympics, promoting exercise and balanced eating”. It still beats my understanding why a Ugandan Athlete such as Ibra Sekagya a former professional footballer and probably Uganda’s most consistent athlete of the past decade is not entrenched in Ugandan society as a pillar of success.  Ibra is the penultimate ambassador. He is what children should aspire to be. Today he coaches at a major league soccer club in the US after an illustrious career. This further emphasises my point that Sports is not just about being an athlete. There are many career options within the industry.

Corporates need to think long-term when making decisions on investing in sport. Case in point, the General Electric sponsorship of the Olympic Games in 2005 .GE Made $100 Million From London Olympics and since signing on as a top Olympic sponsor in 2005, it’s pulled in about $1 billion selling equipment According to GE Chief Marketing Officer Beth Romstock. “It has been a good return for us It has been easily justifiable, a no-brainer in terms of the return.”

Whether big or small, one observation is constant: unless the sponsorship is brought to life and activated, it is money wasted’.Then there is the issue of extracting value out of sponsorship. As a sports entrepreneur I recently negotiated a sponsorship package for a local sports league. The sponsorship was granted but the corporate did not see the need to amplify their sponsorship through meaningful activations. The end result was disappointment by senior management. Corporates must activate their sponsorship i.e. for every $ that is invested another $3 should be invested to amplify that sponsorship and please NOT just teardrops. Radio mentions and print ads.

You only have to look at what corporates have done outside of Africa. There is a saying “put in peanuts you get monkeys”.  Activation engages you with your potential target market. Understanding how to leverage sponsorship through activation is the key to a successful Return on Investment. Lets call this pre-planning!

Government Support: African Governments must find a way to make sport a key driver of their economies.  The sports industry is growing faster than the GDP of most countries. Whilst I do understand that there are more life pressing issues such as unemployment, sickness etc. governments must look at sport as a “Way out”.  We in Africa will never catch up to Silicon Valley or a Hollywood but with sport it takes a Usain Bolt, Didier Drogba, Dikembe Mutombo, Frankie Fredricks, to change our position in the pecking order.  Africa is gifted by nature with a wonderful gene pool that can’t be bought or manufactured (e.g. Kenyan Long Distance Runners).  Having said that we must take this raw material and turn it into a production line so African can take its place in the Global sports industry. Imagine a combined “African soccer league” supported by youth academies.  This would give the premiership a very good run for its money and most importantly an ecosystem that would generate billions of dollars.

Whilst I understand political manoeuvring and positioning (having been an observer whilst my parents poilticked) governments must appoint sports leaders who either have a passion for sport if not a willingness to learn. This will inform my next point.

In order for a “sports industry” to develop governments must start off by creating semi autonomous National Sports Authorities (NSA’s) whose function is to develop the overall sports strategy, fund Federations/Associations secretariats, build and manages facilities, fund grassroots programs, fund national teams and support transition from amateur to professional sport. This in time will become self-sustaining.

Many will ask…. how will government fund an NSA? The answer is simple. Governments through their parliaments have the power to change tax regimes.  Give substantial l tax relief to private sector if they invest in sport. For example give a 5% tax relief to a company invests $1m or more in sport through the National sports Authority.

Allow me to dream for a minute and use Uganda as a case study! Lets say Ugandans ten leading companies gave $1m/year each to the sports authority on the back of a 5% tax relief granted by government for this gesture. This would mean that each Federation secretariat, grassroots and development programs through the 52 Federations would be fully funded against accurately developed strategies. Let us assume that the right people were put in place to execute.  All factors remaining constant the sports industry in Uganda would be hitting $100m in 5 years.  Now multiply this across Africa and you will soon see that the sports sector will be a source of employment and in effect a whole new ecosystem.

Here is an example of why governments Across Africa should invest in Sports as an industry.  The South African Government invested $5.2billion on building 10 world-class stadiums and hosting the 2010 World Cup.  Yes it was exorbitant! But these are some of the effects

• 5 million tourist expected by 2015
• The infrastructure legacy of the World Cup also includes stadiums, airports, and information technology.
• Attraction of Conventions, Conferences etc.
• Investment in stadiums had created some 6,000 new construction jobs, and the security demands of the tournament now meant the country had an additional 40,000 police officers
• According to Lee Ann Baac of Grant Thornton…The World Cup has brought more support across the communities for football… where there has historically been a racial divide”

My point just goes to stress the point that African governments must make sport a priority sector.

Now how do we deal with the almighty issue of corruption?  Corporates need to employ people that understand sport or at a least willing to learn and research. In the absence of budget engage agencies that do know how to deal with sports properties that are aligned to internal corporate strategies. Many times as a sports entrepreneur I have seen marketers struggle to understand the benefit so sport.

Governments must make decisions to select the right people to head up the sports sector through the recommended National Sports Authorities. This is no longer a purely Physical Education (PE) activity, it is a business. If they are able to do this there will be a trickle down effect to Federations/Associations. This will lead to creation of a fully sustainable “AFRICAN SPORTS INDUSTRY”.

Happy Reading people!

Look forward to all your comments and follow me on twitter @kineticafrica