Football Partnerships

By Jérôme Osselaer

According to the United Nations, two thirds of the world’s cell phone subscriptions are in developing nations, with the highest growth rate in Africa. By the end of 2008, the continent had 246 million mobile subscriptions and mobile penetration has risen from just 5% in 2003 to well over 30%.

However, despite rapid growth, Africa’s information and communication technologies’ (ICT) penetration levels in 2009 are still far behind the rest of the world. The top 10 countries on a United Nations ICT index are all in Europe (save South Korea). The bottom 10 are all in Africa. Less than 5% of Africans use the Internet and the limited number of fixed telephone lines constrains the deployment of broadband access via asymmetric digital subscriber lines (ADSL).

Compared to fixed broadband, 3G mobile cellular networks seem to be holding greater potential for Africa. New promising applications have emerged in the area of e-government and mobile-banking, bringing access to micro-payment, micro-finance and other banking services to a population largely excluded from the classic circuits of banking and finance.

Consequently, even if African countries are facing a number of challenges in increasing ICT levels, including the lack of full liberalization of markets and the limited availability of infrastructure, such as shortage of international Internet bandwidth, the top five mobile operators in Africa have invested heavily in these emerging markets.

These consist of the UK’s Vodafone and France’s Orange, as well as South Africa’s MTN, Kuwait’s Zain and Nigeria’s Glo.

The sponsorship of football: A natural extension
In order to raise brand awareness, MTN, Orange and to a lesser extent, Glo (the vast majority of its subscribers being in Nigeria, the rest in Ghana and Benin), have decided to sponsor football. MTN announced that the company is focused on “delivering communication services, and [the] sponsorship of football on the continent is a natural extension of this commitment”.

In 2004, MTN signed the biggest sponsorship deal in African sport’s history worth USD 12.5 million with the Confederation of African Football (CAF), replacing mobile manufacturer Nokia as the title sponsor of the African Cup of Nations (ACN), and becoming the first title sponsor of the African Champions League. The agreement covered both the ACN 2006 hosted in Egypt and 2008 in Ghana.

Meanwhile, Glo established strong links with CAF through its sponsorship of the Glo-CAF Awards, the annual gala ceremony where the African Player of the Year, among other key awards, is announced.

CAF’s confusing sponsorship strategy
The Glo-CAF Awards ceremony was heavily criticized because it happened at the same time as the African Cup of Nations and players had to move from Ghana to Togo to receive prizes – which was one reason that Frédéric Kanouté won over Didier Drogba, because the latter refused to go to Togo. In fact, a conflict of interest was born between Glo, official sponsor of both Ghanaian and Nigerian Premier Leagues and national teams, and MTN, which denied Glo the right to print its logo on the shirts of both teams during the ACN.

Thus, Glo retaliated by moving the CAF Awards during the competition. Glo was able to do so because it was one of the two CAF sponsors in the same category with MTN, hence no total exclusivity could possibly be granted. The same story could happen again during next year’s ACN in Angola, as MTN has been replaced by Orange, which signed a groundbreaking deal last July to sponsor all major competitions organized by CAF over the next eight years.

Terms of the deal were not disclosed but CAF last year put a value of EUR 100 million for a comprehensive and long-term package of its competitions when it opened tenders for a new sponsor. Orange will of course title sponsor CAF’s flagship competition, but also receive TV and mobile rights in France for CAF competitions, and broadcast CAF events on mobile in 55 African countries. The new partnership begins with the 2009 CAF Champions League.

MTN is playing home next year
Orange is also an official sponsor of FECAFOOT (The Football Association of Cameroon). This agreement, together with a deal with its major sponsor and another 5-year deal worth USD 5 million with English Pay-TV Gateway TV, paved the way for professionalism, as local players have signed contracts with clubs since the 2008-2009 season. The curious thing, again, is that MTN is a major sponsor of FECAFOOT.

Having lost the ACN sponsorship to Orange, MTN still has a large football sponsorship portfolio, including Africa’s biggest football website, MTNfootball.com, the African Soccer Show, which is televised in five African countries, Uganda’s and Swaziland’s FAs, and three club sponsorships in South Africa.

But MTN’s crown jewel dates back to 2006, when the company signed a deal as the first ever global African sponsor of a FIFA World Cup (WC). The agreement, reported to be worth USD 65 million, has given MTN global marketing rights for the 2010 FIFA WC as well as for the 2009 Confederations Cup.

MTN active during the next transfer window?
In addition to the standard marketing rights and exclusive commercial use of the official marks of the 2010 FIFA WC and the 2009 Confederations Cup, MTN has acquired significant mobile content rights for a defined set of territories mainly in Africa and the Middle East, including features such as video highlights of all matches played during these two tournaments.

While enjoying various exclusive category rights, MTN has expressed little or no concern about mobile manufacturer Sony Ericsson, which agreed a new 2-year deal with FIFA to become the Official Mobile Phone Handset of the next WC.

Facing a strong competition with Vodafone (total customers : 315 million / consolidated revenues : USD 66.8 billion), Orange (186 million / USD 78.7 billion), Zain (70 million / USD 7.4 billion), and Glo in western Africa (22 million customers), MTN (103 million / USD 13.9 billion) has recently reached a USD 24 billion preliminary accord with Bharti Airtel, India’s biggest mobile operator which signed a 5-year deal last May with Manchester United worth an estimated GBP 100 million, to buy each other’s shares, the first step in a planned merger.

The world’s biggest cross-border deal this year would create a mobile operator with annual sales of USD 20 billion and 200 million wireless subscribers from Johannesburg to Mumbai. In other words, the third largest operator worldwide (behind Vodafone and China Mobile), with a significant presence in India and Africa, two markets with strong growth.

Jérôme Osselaer is a football consultant based in Paris. His column appears regularly in Offsides. Email him at josselaer@gmail.com.