Category Archives: Sports business

Guide to Baku, Azerbaijan

Getting There: Qatar Air was the best, and the only real option picked by our travel agent. We booked tickets early and they cost about $1,000 for a round trip. The flights are Nairobi-Doha and Doha-Baku and total time and the total journey time was about eight hours. Our layover in Doha was short and we had to sprint through the airport to get our connecting flight. Fortunately, we had received boarding passes for the Baku-leg in Nairobi, but in the rush, we lost some documents.

In the weeks prior to departure, there was some confusion about how to obtain a visa to enter Azerbaijan. The country has an e-visa page, but the pull-down menu of country choices does not list Kenya. Some other travellers going for the race chose South Africa as the nearest country to complete the e-visa application but we chose to wing it.

The Formula One race is a big business deal in Baku, and there was a Presidential directive on the internet that the Government of Azerbaijan would offer visas on arrival for F1 fans coming to attend the race. We had arrived early for check-in for our flight in Nairobi which was a good thing as we had to haggle with the Qatar Air staff and make some calls as they checked a book register of passengers. Eventually, they allowed us to proceed and board. There was no issue in Doha, other than the sprint across to catch the connecting flight.

On arrival at Heydar Aliyev International Airport (GYD) in Baku, there was a special desk section for F1 fans with special ushers around, dressed in F1 garb, ready to assist. You showed your ticket, paid a $26 fee and were issued with a 30-day single-entry visa. Note: We had bought our tickets through the official F1.com site and they arrived two weeks before the race, delivered from the UK by DHL to Nairobi.  

For other fans who already had applied for and got e-visas online, they could walk up to airport machines and get served.

After getting an e-visa, you then proceed to the immigration area.  There, they ask a few questions about the purpose of your trip and you also have to provide an email and phone number (we gave Kenyan ones).

if you intend to stay for more days in the country, you have to register online within 10 days of arrival and even the hotel you are staying at can process this

Getting Around: Baku is a small city and we walked end-to-end across it on different days. There was no need for taxis as it’s a very walkable city with lots of sights. We took a taxi from the airport that cost 50 Manat for a distance of about 40 kilometers using an unofficial cab (the official airport ones charge 70 Manat) and that was the only ride we hailed. All cabs are old Mercedes cars. As you walk around, note that weather changes were quite abrupt from sunny to cloudy. days were ok, but the nights were chilly.

Where to Stay: We had made a reservation at the Viva Boutique using Booking.com which we had made a while back and the rate was about $120 (200 Manat). They cost much more if you have booked late. Hotels tend to block off and charge higher fees for Grand Prix weekends. This room which would now be about  400 Manat on race day while other hotels would charge about 800 Manat. 

The hotel is not far from the track and we walked to different events of the race weekend.

We had arrived a few days before the race and had made an Airbnb reservation for the first few days. The homeowner had offered to pick us from the airport, and we had even negotiated an amount for this. But after clearing immigration, the Airbnb host was not answering his phone and we got worried. So we went to the hotel and negotiated for extra nights.

What to Eat: Restaurants are many, from local ones to others serving common international cuisines such as London Pub, McDonald’s and Starbucks.  Local restaurants had many dishes which we did not try. They have chicken served in many different styles and we ate a lot of chips and bacon.

Staying in Touch: It’s usually advisable, when visiting a new country, to get a local phone SIM card, in order to avoid roaming rates that are very expensive. We got Azercell lines from a booth at the airport that cost about $20, and which came with lots of minutes, SMS and 10GB data bundle that lasted the whole trip. This enabled lots of phone chats, browsing, and sharing of images and videos from the Baku trip with friends. However, like in a few other countries, you can’t make phone calls on WhatsApp – a VPN is advisable for that.

Shopping & Sight-Seeing: The local currency is called the Manat. It’s quite strong $1 = 1.70 Manat (so a Manat is ~$0.6 or ~EUR 0.5). Credit cards work well here for most purchases, but it is always a good idea to call your bank before you travel to any country.

Sights to see on the streets of Baku are the full-grown trees, especially in the old city section. The buildings also have interesting architectural designs, walling and engineering of tiles on newer buildings.

Baku is a small town. Malls are modest in size. There are kiosks that are rather expensive, compared to the supermarkets.  By Monday, after the race, malls were quite empty.

One popular tourism attraction is Yanar Dağ, (“burning mountain”), a natural gas fire which blazes continuously on a hillside on the Absheron Peninsula on the Caspian Sea near Baku. Tourist charges to visit are 2 Manat each.

Race Day:  The race is at 4:10 PM, which is late compared to other F1 races, and Baku is an hour ahead of Nairobi. 

We had great seats across the pit lane that cost about $500 and it was a fun vantage point. The race itself was kind of anti-climatic given the dominance of the Mercedes team who recorded their fourth consecutive 1-2 finish in 2019, and pre-race favourites Ferrari again seemed lost. The stage was set on Friday, during practice, when one of the cars from team Williams ran over a manhole cover which had come loose. This cause extensive damage to the car and the session had to be stopped. Other teams, including Ferrari, had their practice time limited as a result and this may have contributed to their Sunday pace.

During the weekend, we did the pit-walk to view cars up close in the garages. Many F1 races now put on huge musical concerts to entertain fans from across the world who have come to attend, and this year Baku had American rap star Cardi B performing on Sunday night, after the race.

Odd Points: You can exchange foreign currency with no questions asked and no need to show any identification (ID) in Baku.

A guest post by @asemutwa who travelled to watch the Formula 1 Socar Azerbaijan Grand Prix 2019 race in Baku.

Also see this other race trip report.- Guide to Abu Dhabi.

Reading the Kenya Rugby tea leaves

The Kenya Rugby Union held its annual general meeting on March 20. On the agenda too was the election of officials, including a new Chairman.

Officially called the Kenya Rugby Football Union (KRU)  the AGM came after a tough year, for the sport. Kenya does relatively well in international rugby, with its colourful ‘Sevens’ team featured on television broadcasts and with a loyal fan following around the world. The sevens team is currently ranked number 14 (after finishing number 8 in 2018)  and sometimes features Collins Injera, the all-time top try scorer.

But the team and the sport is rankled with management and funding issues, and while some corporations have supported different rugby series, competitions, and programs, there are still issues of team selection, coaching support and player welfares. During one series in Paris, the sevens team covered up logo of their shirt-sponsor, Brand Kenya, in protest over not receiving their allowances by the time they started their matches, and that drew the wrath of Kenya’s Tourism Minister, Najib Balala, who angrily cancelled their sponsorship contract, only to reinstate it a few days later.

AGM: The meeting was held after members overruled a request from the Government for them to postpone the AGM. The financial accounts of the Kenya Rugby Football Union (KRU), audited by PFK auditors, were shared with members at the meeting.

What do they tell us about the state of rugby?

Income: The income for 2018 included national squad income of  92 million (down from 117M in 2017), annual competitions income of 80M (up from 17M in 2017), World Rugby 21M and World Rugby sevens team support of 20M. There was also other income from jersey sales of just Kshs 736,000.

The annual competition income included 35M from Radio Africa and 9M  from Stanbic. East African Breweries donated 24M and 15M in 2018 and 2017 respectively while tickets sales in both years were 5.5M and 11.6M respectively. 

Of the national squad income in 2017, 97% of that (Kshs 113 million) came from Sportpesa, who later withdrew all sponsorships in protest at the Government increasing taxes on sport betting companies.  The 2018 income was more balanced, with Kshs 52M from the Government, and 20M from Brand Kenya as, to their credit, the Government fulfilled a pledge, at least for rugby, to plug the hole left by the Sportpesa departure.

In 2018, they also got 18M from Bidco, and enjoyed use of a vehicle that was donated by Toyota Kenya and containers from Bollore Logistics. Sponsorship income in 2017 included Kshs 20M from Wananchi (Zuku), Tatu City 5M, 4M from Bidco and a 2M bonus payment from Sportpesa

Expenses: In 2018, Kshs 132 million was spent on national squad operations (comprising 65M for the sevens team and 57M for the 15’s team), and 38M on competitions (comprising 10M each for club subsidy and the Safari Sevens tournament, and 8M each for international matches and the national sevens circuit). On rugby development, 10M was spent while 40M went towards administrative expenses (including 21M of salaries and 6M million on marketing and agency – which was down from 20M in 2017).

OverallThe Kenya Rugby Football Union (KRU) took in Kshs 227 million in 2018 and spent the same amount to end with a Kshs 527,104 surplus. The year before it took in 212 million and spent 247 million, resulting in a deficit of Kshs 36 million.

KRU has an accumulated deficit of Kshs 61 million, on its balance sheet with current liabilities of Kshs 120 million far greater than its current assets of Kshs 47 million. KRU had a negative bank position of minus 1.9M in 2018 (comprising a cash balance of Kshs 661,822 and overdraft of 2.5 million. They are owed 47M in receivables but owe 118M in trade payables (62M) and accruals of (50M)

These items were flagged by the auditors who also noted that KRU does not have a tax exemption certificate and the Society has made no provision for the payment of corporate tax.

Elections and Way Forward: The campaign manifesto of Sasha Mutai, one of the candidates for Chairman, was circulated online a few weeks before the election. In it, he articulated his plans including, short-term ones of settling the KRU debt, encouraging more (tax-eligible) corporate sponsorships, ensuring salaries are paid on time, supporting programs to nurture more women and schools rugby, increasing broadcast coverage and improving player welfare (including providing health insurance). His long-term goals include building an affordable national rugby stadium at Kasarani and to have Kenya qualify for the 2023 Rugby World Cup in France.

After the votes were counted, George Gangla was elected to succeed Richard Omwela as the  Chairman of the Kenya Rugby Union. He received 33 votes against Sasha Mutai 20 and Asiko Owiro who got two votes.  Geoffrey Gangla is the CEO of Genghis Capital, an investment bank while Omwela is Chairman of Scangroup and a managing partner at a leading law firm – HH&M.

Multichoice Group Spinoff and Listing

On February 27 Multichoice listed on the Johannesburg Stock Exchange, in a spinoff move by its parent company Naspers. The listing is expected to unlock value for Naspers shareholders and create an empowered African entertainment pay-TV business with strong financials and no debt to deliver returns for its shareholders.

The new company called Multichoice Group includes MultiChoice South Africa, MultiChoice Africa, Showmax and Irdeto a digital security company. It serves 13.5 million households around Africa and had a trading profit of R6.1 billion last year. Naspers itself has $20 billion revenue, and owns 31.2% of Chinese giant Tencent and large stakes in other e-commerce firms in Russia (Mail.Ru) and India (MakeMyTrip).

In 2006 Naspers facilitated the sale of a 20% stake in Multichoice South Africa to investors in a black economic empowerment program initiative and about 90,000 individual and companies bought the shares through a vehicle called Phuthuma Nathi (PN) that now owns 25% of Multichoice South Africa.  Over the years, PN’s shareholders are estimated to have got 17 times return on their investment through capital growth (from R10 per share to R130) and dividend payments.

In the listing, an additional 5% of Multichoice South Africa will go to Phuthuma Nathi at no cost and thereafter, Naspers will facilitate the exchange of a quarter of PN’s shareholding in Multichoice SA for shares in Multichoice Group.
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Similarly, in Kenya, the Group has implemented a transfer of 30% of the shares held by the Group in GOtv Kenya to a qualifying local nominee (whilst maintaining the beneficial interest in the stake) in order to comply with local ownership requirements.

Ten years ago, Multichoice’s Dstv regained the English premier league soccer rights they had briefly lost to GTV.

Kenya’s Sportpesa joins the world of Formula One sponsorship

Today in Canada, sports betting company Sportpesa was unveiled as the title sponsor of the Racing Point Formula One team in its latest international sponsorship venture.

Others sponsors of the team are Bombardier, JCB, BWT and team officials also announced there was room for more sponsors to push the team forward to better performances on track during the season that begins in March 2019 in Australia. The team’s drivers said their realistic aim for the year was for fourth place in the constructor’s championship (i.e. behind the perennial top three teams – Mercedes, Ferrari, Red Bull), to get some podium finishes, and perhaps even a race win.

Racing point is the former Force India team that ran into financial difficulties during the 2018 season. The Force India team had its best performances in 2016 and 2017 when it finished fourth in the formula one standings.

This also ends an unfortunate joke era when the newly-elected governor for Machakos, Alfred Mutua, unveiled his dream for a formula one track in his county, back in 2013.

The RaceFans site which broke the story last month reported that SportPesa is understood to be paying $8 million (i.e. ~Kshs 800 million) for its first year followed by $10 million in 2020 and a further $12 million if they remain for 2021.

Bankers Predict the World Cup – 2018 Edition

The 2018 World Cup is now in its semi-final stage. Let’s look at how some banks made their picks to win the tournament.

Who was Predicted to Win the 2018 World Cup?

  • Germany:  Was picked by UBS (Germany has a 24% chance of winning football’s ultimate prize, followed closely by Brazil and Spain, who respectively have a 19.8% and 16.1% chance).
  • Brazil: Picked by Goldman Sachs (Brazil to defeat Germany).
  • France/Spain: Picked by Nomura (France and Spain to meet in the final).
  • Spain: Picked by ING.

Here is a good write-up of the Goldman Sachs picks and a summary of some of the different bank forecasts.

The teams in the semi-final today are England, Croatia, France, and Belgium. With both of its initial finalist picks now out of the competition, Goldman Sachs has revised its model and …With Brazil now out of the world cup, Belgium is at the top of our probability table with a 32.6% chance of lifting the trophy, closely followed by France (29.8%). Similarly, our model’s modal projection is for Belgium to defeat France and England en route to winning the tournament….

Look back at the 2006 World Cup banker predictions.