SportPesa exit spells doom for football

In Summary

• All clubs and partners will have received notices as provided for in their contracts

SportPesa CEO Ronald Karauri
SportPesa CEO Ronald Karauri

The complete departure of leading sports betting firms Sportpesa and Betin is sure to leave a huge hole in the finances of football institutions in the country that may not be plugged in any time soon.

Football Kenya Federation, Kenyan Premier league, Gor Mahia and AFC Leopards were among the entities that hugely benefited from the betting largess fronted chiefly by SportPesa.The firm in their statement while declaring their decision to quit the country registered their disappointment in their departure but promised to reconsider their stance should the circumstances change. “SportPesa is disappointed with the decision by the Kenyan legislature to impose a 20% excise tax on all betting stakes. The tax is based on a fundamental misunderstanding by the Rotich-led treasury of how revenue generation works in the bookmaker industry,”opined the statement from SportPesa—warning that the decision will have a damaging impact on both customers and treasury.“Further compounded by the currently in-effect 20% Withholding Tax on Winnings, the economic incentive to place bets will be completely removed as the taxes will deprive consumers of their total winnings.

This will have severe consequences for licensed betting companies, which dutifully pay their taxes and ultimately will lead to a decline in government tax revenue to near zero and will halt all investments in sports in Kenya,” added the press release.“Until such time that adequate taxation and non-hostile regulatory environment is returned, the SportPesa brand will halt operations in Kenya,” concluded the Sportpesa statement.Football Kenya Federation (FKF) President Nick Mwendwa said football lost over Sh600 million after Betin and SportPesa decided to take a hike. Nick revealed that betting companies support 60 percent of football in the world today providing an example of the UK.“ I agree betting should be regulated but also the government should look into a way of tapping into it as there are hazards in betting. However, there are also good things that come with it,” said Mwendwa.

Only last year, SportPesa forked out a total sponsorship amounting to Sh682.4 million. Gor Mahia got Sh198,607,000, AFC Leopards Sh156,406,403 and KPL Sh259,712,000. FKF got Sh69.4 million for three years.All these deals were terminated when the government first decided to regulate the industry and canceled the licenses of over 20 betting firms some of which have since resumed operations.“We regrettably wish to announce that due to the uncertainty of this situation (cancellation of the licence), SportPesa will be canceling sports sponsorships effective immediately.

All clubs and partners will have received notices as provided for in their contracts,” Sportpesa said in a statement when the whip was first cracked and the government refused to budge despite pleas from the industry stakeholders.Now that the firm has left the country, not only have hundreds of jobs been lost but their benefactors are struggling to keep their head above water. The federation for instance has thrown the burden of paying referees to clubs who themselves are living from hand to mouth with no sponsorships from other corporates.Clubs like Gor Mahia and AFC Leopards have once again turned on gate collection and well wishers to meet their day-to-day expenses.

The overall consequence of these are players who are demoralised as they are no longer sure of where they will get their daily bread.Reports have emerged that players from both clubs have not received their monthly pay for the last two months and new signings were yet to receive their sign on fees.“The exit of Sportpesa is a disaster for us as a football club. We were depending one 100 percent on them for all our expenses including our day to day operations. Since they went, we have been struggling and I can reveal that we have not paid our players for the last two months yet they have families of their own and rents to pay,” lamented AFC Leopards chairman Dan Shikanda.

The Leopards boss went on to urge the government to rethink their hard-line stance as the losers would ultimately be the youth whom they pledged to create jobs for.“We don’t know what is the tiff between SportPesa and the government but as representatives of the people, the government should know that 40 percent of the youth depend on sports and SportPesa was a huge sponsor of the sector in this country,” said Shikanda.“Now where do our elders expect the aspiring sportsmen and women to go when they know that the future particularly in football is bleak?” he posed.

Shikanda further disclosed that due to the financial hitches they are experiencing, no longer can Leopards go into residential camps ahead of matches—something he states will eventually affect results“We have hotel bills that are unpaid. We have milked our branches dry. Our gate collection are meagrer. I can say for certain we are in dire straits and it is painful for me as a former footballer and now chairman to watch the plight of my players who are suffering for no fault of there own,” complained the Leopards boss.

In spite of the current cash crisis at the club, Shikanda revealed that he has engaged several sponsors but ‘it will not take a day’ to secure a firm proposal citing March as the earliest they can secure a deal.“I shudder to imagine what our players will go through until then. We now implore our members to register in numbers to show their commitment to this club. I am happy to note that since the election, we have increased our registration from about one thousand to over three thousand. This numbers will come in handy when we are trying convince sponsors to come on board,” he implored.

The Kenyan Premier League, the company that manages the country’s top flight league, was also hit hard by the decision of SportPesa to relocate outside the country. KPL CEO Jack Oguda said in 2019 alone, they missed out on a Sh93 million commitment from SportPesa as part of their three-year agreement. “As a result of the termination of our contract, we have not been able to pay our referees,” said Oguda.He added: “We have also not manged to release grants to our clubs (18) as we used to do. Even though it was not a significant amount, it still helped the clubs in one way or the other.”

Oguda went on to reveal that KPL’s day to day operation have also taken a hit, further hinting that there might not be any prize money for the KPL winners this year.“Unless we get a naming rights for our league or we get a broadcast sponsors, there will be no monetary reward for our KPL winners this year,” Oguda said.The long and short of the cries in the football fraternity is that the government should be flexible in dealing with the betting firms given their importance as a source of tax revenue as well as a key employer and partner in sports development in the country.