Of investments and prospects for vibrant football economy
By Martin Ike-Muonso
Nigerians’ fanatic love for football is not debatable. Of all sports played in Nigeria, football enjoys the most widespread acceptance. In the streets, at the school and professional levels, football playing in Nigeria has been at crescendo heights and served as a means of social cohesion and the building of communities. In sum, evidence that Nigeria is a huge pro-football country abound. As at 2012 about 43 million Nigerian youths were actively involved in sports generally. That noted, unofficial statistics suggest that about 93 percent of this number were involved largely in football; 3.53 percent of this number were professional, while the rest were involved solely for recreational purposes as fans. This is consistent with a 2014 Repucom world football report, which equally found out that about 85 percent of Nigerians, chose football as the favourite sports to watch on TV. In the same report, it seemed that Nigeria is atop with a stupefying 83 percent of the population saying they are interested in football, with a 65 percent participation rate in the game.
The contribution of football to Nigeria’s real output is unknown. Nevertheless, there are evidences of sub-optimal sub-sector performance. This is more worrisome when viewed from the prism of the entire sector’s contribution to Nigeria’s GDP. The underlying reasons are equally not farfetched. The entire sector is alarmingly crippled by financial deprivation. For instance, in 2016 the federal government budget allocated a paltry N1.3 billion to the Nigerian Football Federation. Out of this amount, N184 million made up the total capital vote. With this level of fiscal support, the sub-sector is unarguably trapped in ominous mire of bads.
The bads notwithstanding, there seems to be a lot of solutions, as far as the financial deprivation is concerned, in the hands of investment bankers, who ordinarily should lead the way in channelling investment into the sub-sector. Limited participation in the sub-sector has resulted in the non-existence of a vibrant football economy in Nigeria as it exists in many other countries of the world. That also accounts for the high level of the exit of our players to foreign clubs. As at today, Nigerians playing football in well-known football clubs overseas are more than 653. About 40 percent of this number is spread out around Portugal, Finland, England, Sweden, Belgium, Turkey, Malta, Norway, and Israel; even India.
This unhealthy situation further gains fillip from the absence of transparent and clarified policy and legislative frameworks to properly govern what is regarded as the beautiful game. Government’s commitment is, therefore, of utmost importance for this hoped-for renaissance to become a reality. The Chinese football development strategy demonstrates how well a country plans for the actualization of its football excellence goals. China recently set a goal for itself of joining the “elite football club” and belonging to the world’s top-class soccer nation category. To realize this goal, it outlined series of plans spanning four decades from 2016 to 2050. The targets set were in three categories. The first is the soccer pitch construction for per capita allotment. The second is the allowance of favourable financial and taxation policies to support football clubs. Lastly are the calls by government for the cultivation of soccer culture nationwide. Our governments need to take a cue from China on this.
The English Premier League (EPL) equally presents a fantastic example of the prospects held by the football economy. Ernst and Young’s (2014) dissection of the League’s economic impact to the UK economy shows that it improves UK’s national economic output by £6.2billion; domestic output by £3.4billion and £2.4billion in taxes. Over 6000 jobs are directly provided by the League while it supports the provision of more than 103 thousand jobs across the UK through its clubs. Similarly, a KPMG report put the contribution of football to the economy of Spain in 2013 at 75 billion euros, which was about 0.75 percent of the country’s GDP same year; a contribution that has grown at an annual rate of 2.7 percent since 2011. The morale here is that when made more efficient, the football sub-sector, like many other sports, sustains a robust value chain that delivers solid positive economic results. At the heart of it is expected significant contribution to employment. Others are the sports materials-based manufacturing, football real estate such as stadia, tourism and advertising receipts, tax receipts and so on.
Unarguably, with the right dosage of investments in the football sub-sector, a strong and relatively comparable league can emerge from the to-be-created football ecosystem. The passion for football is incredibly wild in the Nigerian blood. It is equally the galvanization of requisite momentum around this mammoth fan base that will ultimately present the attractive portals through which investments will flow into the sub-sector. Investment in sponsorships are also a consequence of this; the fan base. The challenges over the years have been government’s erroneous treatment of sports in its policy design strictly as a recreation, rather than a combination of recreation and business. It is the realization and development of the business arm of this endeavour that will lead to the birthing of a vibrant football economy and all the fortunes that it brings.
Major restructuring of the sub-sector in line with best practices is equally a necessity. The restructuring agenda must be driven by the goal to create a vibrant football economy. A critical step towards the realization of this is to ensure that successful business managers are wooed to manage football activities. The engines of a robust football economy are inevitably and sustainably oiled by strategy, by finance, recruitment and human resources, business partnerships, training, competition as well as efficient management. These ingredients fall within the ambits of business. The role expectations of football managers are stretched and require to be manned by persons with good business management skills. This category of managers will be able to give professional guarantees to players.
Perhaps a mutual fund type investment vehicle that focuses exclusively on establishing a vibrant football ecosystem may be a good stimulator of these initiatives. Such a vehicle should be able to use the extant tremendous support base to translate the value-chains in the sub-sector into vibrant generators of surplus values. A vibrant ecosystem will naturally in turn hold prospects for the upgrade of football infrastructure and for the stakeholders which is inclusive of retired players. Substantial parts of the fund should be invested in the upgrade of football infrastructure and real estate’s such as stadia. It should also support the emergence of vibrant clubs and eventually a private sector driven league. It should also support the construction and implementation of adequate safety nets for current and past players (where possible).
Some countries have toed this path with satisfying results. The Portuguese Soccer Invest Fund is a private investment fund of the Portuguese football associationl. That is the second Portuguese football fund after Benfica Stars Fund relaunched the industry. Another good case study is the Royal Football Fund; a sports investment company based in Dubai, United Arab Emirates. The Fund is associated with the United Investment Bank Limited. There is also the Football Talent Fund which was floated primarily to develop young footballers from Europe, Africa, and South America. Similarly, Emirates NBD, the largest banking group in the Middle East in terms of assets, launched a new investment fund to target the football industry and invest in local and international football players. Again, there is the Football Stadia Improvement Fund floated to provide grants to football clubs to improve their stadium facilities for players, officials, and spectators. The list goes on.
This entire gyration is to rehash what is already well known: we need bold investments into the football sector. The government that has played dominant roles in the subsector seem to have a very narrow view of the potentials inherent in the sport. The result is that the business leg of the sporting activity which is needed for the activation and eventual emergence of the football economy is neglected. But with private sector involvement in the financing; the attraction of huge foreign and domestic private investments, the sub-sector will not only reap the benefits of maximum professionalization but shall also cause a revolution that will recalibrate the value-chains in the emergent football ecosystem. The potentials are huge and permeate virtually all other sectors, either directly or otherwise. Now is the time. Again, let us leverage our passion to create an economy that will guarantee our citizens reasonable prosperity.
Professor Ike- Muonso is country director of Baywood Foundation. He leads strategic transformation at the GTI investment banking group