Professional Football Business: Paving its Way in Ethiopia

Mengistu Worku, the late renowned Ethiopian Footballer, ones said, ‘‘we used to play for the passion of the sport not for the money that we get from it’’ and he reminisced about how the late Yidnekachew Tessema, refered by some as the father of Ethiopian football, used to give him ten or twenty five cents for transport after training. Such stories were common in the amateurish, early stage of the ‘beautiful game’ in Ethiopia. In those days, formal organization and structure were absent, but recently, following the trend in other sectors of the economy, some changes are occurring in the Ethiopian football, though it still has a long way to go before becoming fully professional.

Among the many sports that were introduced by foreigners who dwell in Addis Ababa at the beginning of the last century, football became the most favored. Following this, youngsters who lived around Arada Giorgis established St. George Football Club in 1928. Youths in other sections of the city were also able to form their own teams. This was how organized football competition started in the country. From these humble beginnings the sport was able to achieve international success in a relatively short period of time.

In a quarter of a century the national team was also able to win the African cup of nations. This is just 51 years before. In the last three decades though, Ethiopia was out of the continental tournament.

In these 31 years, there hadn’t been any major organizational change regarding the structure and administration of the football governing bodies. ‘‘Ethiopian football was asleep’’ says Markos Elias, a sport journalist who host weekly radio sport program focusing on Ethiopian Football. Even though he recognizes some of the changes taking place, he still believes that the sport has a long way to go when it comes to being professional. But the recent results of the national team have given the process the needed impetus.

Following the national team’s qualification to the African Cup of Nations, the national team is enjoying unprecedented attention from the business community. The situation seems to pave the way for professional football to commence in the country. Adane Girma, the striker of St. George and the national team, agrees with this. ‘‘Sponsorship and business activities of this scale may not have come if it was not for the huge attention the national team was able to garner following its qualification for the African Cup of Nations,’’. The national team was able to secure from Heineken and MTN, the two multinational companies that sponsored the national team with 24 and six million Birr respectively.

The growing money surrounding the Ethiopian football

Surely the business activities and the amount of money circulating in the sport have grown exponentially, even before the national team secured its place in the African cup of nations. The player’s contract signing fees has skyrocketed from tens of thousands to hundreds of thousands just in few years. Now it is common for clubs to pay over half a million birr to get a player sign a contract for a two-year.

Addis Hintsa, 25, is an attacking midfielder for the national team and Dedebit Football Club; he was paid 700,000 Birr to extend his contract with the Club for two years. Even though this is officially the biggest contractual payment for a local player, industry observers indicate that St. George F.C. has paid close to one million birr to one of its well known players. The Management of the club however refrains from commenting on this issue for much of such decisions are decided by the Board of the Club.

As we can see from Table 1 most of the players are transferred to Dedebit, the emerging power house of the league. Only in its fourth season, the club has managed to make a big splash in the sport. Addis Hinsta agrees with this, ‘‘before Colonel Awel Abdurahim (president of the Dedebit FC) came into the scene , the situation was totally different, payments and benefits of players were not this much, but now with the emergence of Dedebit, it has dramatically grown’’ he said.

Even though the transfer fees are a big surprise to outsiders, some players believe there is a lot to improve; they mention the amount of their monthly salary to make their points. Adane Girma, married and a father, is paid a monthly salary of 2500 Birr. “This is not enough to support my family had it not been for other incentives and transfer fees I get”. Addis Hinsta agrees with this, even though their club has increased their salary to 3000 Birr, last November 2012. In fact their salaries are insignificant when compared to their international colleagues in the same club. According to data from EFF, Robert Odon Kara, the indomitable Ugandan St. George goal keeper, is paid 6,000 dollar per month. The general manger of the team, Terefe Anberber, said international staff are paid in hard currency from international accounts of the big supporters of the club. Other African players in Dedebit are paid 1,000 – 1,200 dollar. Coaches also get big salaries. Dedebit pays 20,000, 8,000 and 5,000 for its head-coach, assistant coach and goalkeepers’ coach respectively.

Table1: Top five players with the highest amount of money paid during transfer.
Source Ethiopian Football Federation (EFF).

Although it is uncommon for coaches to be paid for signing a contract, they are now getting big pays, which in some cases are higher than the salary of some of the bank presidents in the country. For instance, Sewnet Bishaw, the male national team head-coach, is paid 30,000 Birr monthly, while his deputy, Seyoum Kebede, gets 20,000 Birr. Abraham Teklehaimanot, the former female national team head-coach, used to earn 25,000 Birr monthly. This is in addition to the various other benefits that they get. Although this is by far a big salary in the country, it is still too small to compare it with international experiences.

Sport in Ethiopia is also becoming costly for those who own clubs. As a result, diversifying and increasing revenue sources are timely. However, commercialization is still a very far concept for people running the industry. “I know a government club, which sets a 50 million birr budget for 2012/13 season, more than half of which goes for their two football teams,” an expert at the Federal Sport Commission told Ethiopian Business Review on conditions of anonymity for he isn’t authorized to speak to the media. St, George and Dedebit have allocated 18 million and 16 million birr respectively. The budget of Ethiopian Bunna FC is also believed to be in millions, but the management of the club was not available despite our tireless effort.

The Ethiopian football is slowly becoming a business. Professionalism is paving the way. This can be attested with the negotiation the EFF has started with Heineken and Ethiopian Television so that selected premier league matches will bee televised live. According to Sahlu Gebrewold, president of the federation, the live transmission will start in a couple of months. This will further strengthen the growing business interest surrounding the football. ‘‘Other companies have also shown interest to work with the Federation ’’, Sahlu said.

Organizations of clubs as a challenge to professionalism

According to Mulugeta Gebremedhin, Marketing Lecturer at Addis Ababa University, College of Commerce, professional sport teams drive their income from four sources: spectators fee, sponsorship, television transmission fee and merchandise sales. In our country most of the incomes of the public clubs comes from cause-related marketing or sponsorship. This is especially true for the public and governmental clubs that are under the patronage of one or more companies.

When it comes to infrastructure “most clubs don’t even have training facilities, most of them use rented facilities’’. But some changes are on the way; St. George will have its own stadium in a year, with a seat capacity of 22,500. Mebrat Hail is also in the process of building its own stadium. In addition to this some clubs have established training camps for the youngsters in different areas.

A large number of Ethiopians love football. They support both the national team and different clubs enthusiastically. But when we come to club fun membership, the number is amazingly small. According to the data we collected from different clubs, St. George has over 9960 registered fans. Dedebit FC has around 3,000 registered fans where as Arbaminch Ketema managed to register close to1500 fans. Although Ethiopia Bunna is estimated to have the largest number of funs, its management was unavailable to comment.

Contrary to the sport policy which envisages independent sport clubs with their income source, 75 pct of the surveyed clubs are dependant on government handouts. As a result, they fall through the crack when the organization changes takes. What happened to Harar Brewery Football Club is a good case in point. Following the purchase of the Brewery by Heineken, there was some kind of confusion surrounding the future of the Club.

In fact zonal administrations from the north (Amhara and Tigray National Regional States) were eager to take the club to their cities, promising attractive budgets to the club managers, because both regions have no club that represents them in the Ethiopian Premier League. But, according to a written response from Heineken, the parent company of Harar and Bedelle Breweries, to Ethiopian Business Review, “Termination of the Harar Football Club has never been an option pursued by Harar Brewery. Rather, in line with the FIFA and Ethiopian Football Federation policy of encouraging the professionalization, independence, and profitability of football clubs, Harar Brewery has been working on finding a modality to ensure the independent and sustainable ownership and management of its football club.’’ Heineken’s management said in an email response.

At the moment 84 pct of sport clubs in the country are owned and funded by governmental institutions, according to a survey conducted by Federal Sport Commission in mid 2012. One of this clubs is Arbaminch Ketema FC. According to its general manager Tarekegn Getachew, the club is striving to be a public team and is working to change its huge fun base to cash. Yet it is still dependent on its overseer, the Gamo Gofa Zone Administration. In preparation for the current season the club has spent 3.2 million birr for transfers and extending contract, with a 400,000 birr highest payment for a single player. The Club has also allocated 11 million birr budget for the year. What will be the fate of the Club, if the administration shifts the budget to other priorities of the zone? No one seems prepared for such eventualities.

Although the money flowing in the sport is growing, the situation doesn’t show a full business trend. “This is because there are no sport clubs in the country that work for profit; most clubs donot even have a marketing plan.” Belayneh Teshome, 42, former Mebrat Hail Sport Club manager reflects. Unless the clubs start to generate their own resources, the consistent increase of cost of running sport club will pose a critical impediment on their sustainability.

Legal status of clubs as a challenge for professionalism

The ways clubs are formed and organized in Ethiopia donot follow a business model. Profit making is not considered. As a result, their leaders’ donot develop viable marketing strategies to generate resources to operate on their own. This is because; their legal status is usually as a charitable association which doesn’t allow them to do business. This is in addition to the lack of qualified human resource with all the incentives to work for the transform of the sector.

In fact, several of the football clubs, be it in the premier or the national league, are run by people who neither have the business mindset nor the know-how and exposure that is necessary to command a gear shift in the industry. The industry is currently run by a rule of thumb.

However, with the issuance of proclamation no.729/2012, which sets the legal framework for sport to be an area of investment, there is a growing optimism that things could slowly change. This however will require several of the existing clubs to redefine their identity.

The Federal Sport Commission has already prepared directive that states the necessary criteria to get a trade license in the sector. However, at this time, even the bigger football clubs are not aware of the need to make sport a business says a survey conducted by the Commission.

“The commission should put a concerted effort in awareness creation to club officials about the case,” experts advise. Some of the potential challenges for clubs might be related to their legal status. For instance, those who get licensed as a charitable association will have challenges to face unless they registered again as a private entity. The Great Ethiopian Run (GER) has been in controversy with Charities and Civil Societies Agency for a claim that the former is involved in activities defined as “profitable”. The agency had implicated that it has a legal ground to confiscate all the funds and properties of GER though the two parties are still in negotiation.

The other issue is the way the league is managed; ‘‘without reforming the present amateur league so that clubs run it on their own, embarking the long journey to professional football in the country would be unlikely’’ says Colonel Awel, referring to the league that is run by members from clubs and the federation. Sahlu Gebrewold, President of the Federation agrees with the idea that the league has to be professional with its own identity, but that shouldn’t happen now. Industry observers however ask, if not now, then when?

In Kenya, its Premier League is operated and run as a private limited company incorporated in October 2003 under the Companies Act of Kenya. The League is fully owned and managed by the 16 member clubs. This

has enabled the league to tap into the promotional budgets of several companies such as East African Breweries, which recently sponsored the league with 2.02 million dollars as title sponsor of the Tusker Premier League. Several other companies are also working with the League.

The need to reinvent the Ethiopian Football Federation

For a country whose football team has qualified for the African Cup of Nations, its football federation does not even have a website. The federation also lacks the system of maintaining an effective information flow. It seems nobody in the Federation knows who is responsible to get this done. Shifting blames on one another is what the people working there prefer every time they are challenged by a third party such as the media. The Ethiopian Business Review has observed this while collecting information for this article. ‘‘It is no one’s organization’’ an insider said on conditions of anonymity. “It will be very difficult for clubs in the country to achieve professionalism while the federation is weak ’’, the source added.

One of the problems of the federation is the lack of professional staff. The need to have a paid professional staff at the EFF is a timely issue. Very surprisingly, most of the executives including the president are unpaid and part time workers. So the executive donot have the incentive to take any initiatives, it is just a volunteer work. That is why the federation was not even ready to take advantage of the favorable situation that was created after the national team qualified for the African Cup of Nations. The Ethiopian Business Review has established that it was Heineken, through Bedele Breweries, which initiated the 24 million birr worth sponsorship deal. In fact, insiders at the federation says that the EFF had been struggling to live up to its commitment of facilitating basic promotional tools for the sponsor such as arranging Photo shots of the national team for commercials of the sponsors.

While it has become common for footballers in the country to move from one club to another with contract signing fee of up to one million birr, the EFF has so far arranged no means of monitoring the transfer. The issue of tax in the industry is apparently missing. At present, it is very difficult to get a readily available data of any sort in the Federation even at the best of luck where you happen to get a very cooperative staff.

In a nutshell, EFF needs to fundamentally reinvent itself. So many institutions in the country, even Kebeles, the lowest hierarchy of government administrations, have these days improved the quality of their services tremendously. The federation doesn’t seem ready to overhaul and equip itself with the attributes it needs to fundamentally transform the nation’s football industry.

International experience

National Football League (NFL) of USA is the most attended domestic sports league in the world with average attendance per game of 67,394 fans in 2011/12, according to sportingintelligence.com. The Germany Bundesliga and English Premier League were the second and third with average attendance per game of 45116 and 34,602 respectively.

The NFL generates revenue of 11.5 billion dollars to 14.7 billion dollars a year depending on which team goes to the super bowl. It made the biggest money when the New England patriots went to the super bowl their first year which was 14.7 billion dollars. According to information posted in the official webpage of the league, the revenue comes from advertisement and broadcasting on television and radio and income from merchandise sales.

The Barclay’s English Premier League is the most-watched football league in the world. It is broadcasted in 212 territories. The Premier League is operated as a corporation and is owned by the 20 member clubs. Each club is a shareholder, having a single vote on issues such as rule changes and contracts. The clubs elect a chairman, chief executive, and board of directors to oversee the daily operations of the league. The Premier League has the highest revenue of any football league in the world, with total club revenues of 2.479 billion pound in 2009/10 and is the second most profitable after the German Bundesliga.

When we come to Africa, the South African and Egyptian football leagues are the strongest. Al Ahly, the most successful Egyptian club, was named club of the century by the continental football body, CAF. This club competes in the Egyptian Premier League. The League has been sponsored by two telecom companies since 2005. From 2005–2007 it was Vodafone Egyptian Premier League as it was sponsored by Vodafone and from 2007–present it is Etisalat Egyptian Premier League, as it is sponsored by Etisalat. Several TV channels transmit the league. This has generated huge revenue for the league and clubs. Ethiopia Bunna had last year received 65,000 dollar for its match with Al Ahly in the African Champions League fixture was transmitted live. The Ethiopian Football Federation also got 35,000 dollar.

The way forward

According to the sport policy of the nation, organizational and attitudinal problems are stated as the main reasons for the underdevelopment of the sport industry in the nation. It also goes further to say “the limited role of the community in sports, the decline of sports in schools; the shortage of sport facilities, sportswear and equipment as well as the lack of trained personnel in the sphere have made the problem more complex.” It proposes a different direction with a new outlook: community centered movement. It also highlights the role of the private sector in managing and financing sport organizations.

A lot is expected from all stakeholders. Sport commission, as the responsible government body should play a leading role and work to create a favorable situation for private investors and satisfy the immense need for football infrastructure. Business people should also take notice of the changing trend in the sport and should take advantage of the situation and invest to make it a business. It is already a profitable venture.

To build the capacity of clubs, the government should involve itself strategically. It should help them to be independent and profit making entities. That will ensure the growth and sustainability of the industry. It will also give actors incentive for extra effort.

Professionalism in sport drives participants to a new height of excellence. Often this involves television and advertisers. Sport is an important part of human experience and television is a powerful medium. Sport and mass media enjoy a very symbolic relationship, as both reach a wide circle of people. If the sport is managed with visionary leadership, and the media is actively involved, sponsors will come. It is just a symbiotic relationship. For this to happen the federation should reinvent itself and market its potentials to the fullest.‘‘But before all this, the clubs must be restructured as a corporate entity following a profit making business model” says Mulugeta, the marketing expert. “Football business can be part of the entertainment industry, and if properly utilized it can be used to build brand equity.”

In a country with more than 90 million populations, a large portion of which are football fanatic, the sport can really be a big business. Mulugeta suggests the service marketing model as a theoretical framework to commercialize it. The model refers to the marketing of services which are inherently intangible, consumed simultaneously at the time of their production, and cannot be stored, saved or resold.

In addition to this he recommends the presence of a strong and efficient professional regulatory body. According to FIFA, the global governing body of the sport, establishment of an appropriate administration with qualified staff with, clear, democratic and transparent way of doing things that can gain trust of all the stakeholders involved will be a prerequisite for the health of a nation’s football. This is especially essential for countries like Ethiopia whose football is just showing the sign of joining the professional world. Abiy Wendifraw has contributed to this article.

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