Two simple pieces of advice I would offer entrepreneurs for 2015

It’s been some while. As always, your posts are just so refreshing.

rochemamabolo

The following are two pieces of advice I would share with entrepreneurs based on my entrepreneurial journey in 2014:

1. Focus on high value

It’s important to focus on something that you think will have high value to someone else. Be rigorous in making that assessment, because people tend to think they know what people want. The natural human tendency is wishful thinking, entrepreneurs think they know what customers want based on what they wish they will want.

The challenge for entrepreneurs is to ask yourself:

What is the difference between really believing in your ideas and sticking to them versus pursuing some unrealistic wishful dream that doesn’t actually have merit. The difficult thing is telling the difference between the two.

It’s important to be rigorous in your self-analysis.

2. Work like hell.

You just have to put in 80 to 100 work hour weeks, every week consistently.

If other…

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What impact will banning of alcohol sponsorship have on South African domestic soccer?

The current developments relating to possible ban of alcohol advertising by the South African government, and the intended complete ban of alcohol’s sport sponsorship that will go with it, inspired this post.

There are two other important events worth noting. I am publishing this post less than 2 weeks after the South African Sports Awards 2011 – a fitting celebration of recent achievements in the various sporting codes by my countrymen and women. It is also on the back of the signing of an historic 5-year broadcasting rights deal by Supersport, worth an estimated R2 billion to the South African Premier Soccer League (PSL). The previous deal, signed in 2007 and worth R1.6 billion, already made PSL the richest association on the African Continent.

This post is restricted to South African domestic premier soccer. All other soccer divisions will not be considered. However, it is acknowledged that some of the observations to be shared in here apply to the excluded soccer division in varying degrees.

Revenues of Sport associations

The 2 main revenue sources for most developing domestic sport associations are sponsorships and broadcasting rights. The trend tends to be that when the association is new, sponsorship revenue contributes the largest chunk to the coffers. Broadcasting rights revenue may increase in proportion with increasing popularity of the sport, as measured by match attendances and other tools such as TV viewership.

As far back as 1971 when the defunct National Professional Soccer League (NPSL) was founded in South Africa, the association relied heavily on Castle Lager sponsorship to get off the ground and employ administrators who had to run the sport, and this hardly covered financial support for the affiliated clubs at the time. It took close to 30 years for professional soccer to attract lucrative sponsorships, and at least 35 years to realize markedly improved broadcasting rights revenues. There are 3 key events that marked a change in the sport’s fortunes:

• the dawn of democracy in 1994;
• the successful hosting and winning of the Africa Cup of Nations in 1996; and
• announcement of South Africa on the 15th of May 2004 as the destination for 2010 Fifa World Cup, and the successful hosting thereof.

The changing fortunes will be illustrated later in this post.

Domestic soccer sponsorship

There is an assertion that lucrative soccer sponsorship is generally hard to come by in Africa. South Africa was no exception in the beginning of professionalising this sport. As indicated above,  the National Professional Soccer League (NPSL) was founded in 1971. This is a key event in the history of what started as a Blacks-only professional soccer organisation in South Africa. The PSL as we know it today was formed as recently as 1996.

Desk-top research of domestic soccer sponsorships since 1971 yielded the following outcomes:

South African Domestic Soccer Sponsorships: 1971 – 2011

NOTE: Information in the table above was compiled from different sources including Wikipedia, the PSL site, selected soccer club sites, various soccer news sites and other related online sources. I have done my best to ensure the accuracy of such information, but this cannot be guaranteed as this is totally dependent on the sources used. I avoided making any assumptions about any of the missing information, thus some cells are blank in the table (indicated by ??)

A quick look at the soccer sponsorship table reveals that financial support for premier soccer has not been widespread. A few business sectors – beverages, cigarettes, banks and telecoms – have played a major role in the development of this sport of the masses over the last 40 years. The Chronology column indicates that these few sectors have also evolved over time. The Johnny’s-come-lately, mobile telecoms, are also involved in sponsoring the following premiership teams:

• Vodacom sponsors the 2 biggest clubs in PSL – Orlando Pirates and Kaizer Chiefs.
• MTN sponsors Golden Arrows, Bloemfontein Celtics, Ajax Cape Town and Black Leopards.

As a passing comment, Vodacom and MTN also sponsor other soccer divisions both domestically and nationally.

While alcohol sponsorship was by no means key in the first 35 years of domestic soccer in South Africa, other sectors and notably mobile telecoms have taken over. This suggests that domestic soccer will not be adversely affected by government’s banning of alcohol sponsorship.

Broadcasting rights

The initial 3-year broadcasting deal with Supersport in 2007 had a fundamental impact on PSL’s financials, as shown by the Revenue graph below:

Source: PSL Annual Report

The PSL Revenue graph shows that contribution by broadcasting rights made a huge leap from 2008. This also lead to overall growth in the association’s total revenue for the period to 2010. While I do not have the statistics for the years before 2007, it is my considered view that broadcasting rights’ contribution to total revenue was lower than sponsorships, and in line with 2007’s revenue contribution structure.

It is clear from the Total Revenue graph above that PSL is in financial pound seat, an enviable position in Africa.

Brighter future in store for domestic soccer

The changing soccer fan demographics

As one can expect, the more money the PSL has, the better position it will be in to run domestic soccer more efficiently. The past nail-biting season due to generally improved field performances, and the recent hiring of more competent administrators, are all positive indications that South African soccer is heading in the direction. As this virtuous cycle gains momentum, the interest in sport will grow, thereby making it more attractive to more prospective sponsors.

The verdict 

It is thus clear that the new 5-year broadcasting deal is going to take PSL’s financials to new heights. This emphasizes yet again that premier soccer will not be adversely affected by the banning of alcohol sponsorship, as PSL’s highly positive financial health state now makes it an attractive proposition to new brands looking to leverage soccer’s burgeoning fan base.

Sources:

http://www.southafrica.info/about/sport/soccer.htm

http://en.wikipedia.org/wiki/National_Premier_Soccer_League_(South_Africa)

http://www.sahistory.org.za/arts-and-culture/timeline-sa-soccer

http://en.wikipedia.org/wiki/Nedbank_Cup

http://en.wikipedia.org/wiki/vodacom

http://en.wikipedia.org/wiki/Telkom_Charity_Cup

What’s in the name “Bafana Bafana” for SAFA and South Africa?

Recent developments relating to Bafana Bafana’s naming rights inspired this post. While researching the material for the post, some issues were clarified, and I also discovered great insights that are shared in the content here below. I hope you find it to be as engaging as I do.

CONTROVERSY AROUND THE NAME

Bafana Bafana, name of the South African senior national soccer squad that was coined by some Sowetan journos in 1992, sparked a national debate leading up to 2010 Fifa World Cup. Even the former President, Thabo Mbeki, felt that it does not befit a national team that was going to be hosting the biggest sporting event in the world – for the first time in Africa nogal – both because its loose English translation is Boys (what the friekadel) and that it does not have any African symbolism about it (this is understandable coming from the author of the most popular poem – I’m an African). However, the soccer public continue to use the name to this day, effectively exercising their vote for it, and the national soccer body has listened.

RIGHTS TO THE BAFANA BAFANA NAME 

After years of hard negotiations, followed by many months of speculation surrounding the decision to keep or change Bafana Bafana’s name, the South African Football Association (SAFA) has finally agreed to pay R5 million for transfer of class 25 trademark that was owned by Stanton Woodrush (Pty) Ltd.

By the way, I cannot remember SAFA taking the soccer public into confidence on this matter. Can any Bafana Bafana fan confirm if they were asked for input on the trademark debate?

Trademarking, like all other legal jargon, is a complex subject. As reported in Bizzcommunity (and assuming this is factually accurate), Stanton Woodrush stated that they did not own the Bafana Bafana name, but only the rights to Bafana Bafana apparel, headgear and footwear (this falls under class 25 trademark). In essence, SAFA owned the name but not all the merchandising rights. When I thought the Bizzcommunity article clarified the key matters relating to this trademark saga, the I-Net article threw me back into a sea of confusion regarding the mystery about shareholders involved in the ownership of the merchandising rights. However, for purposes of this post it is sufficient to know that Stanton Woodrush owned class 25 trademark only and not the name.

Despite my contention that the soccer public were not actively involved, I fully support SAFA’s decision to keep the Bafana Bafana name and buy the merchandising rights from Stanton Woodrush, which is based on a combination of sentiment and fact. I made a concerted effort to cover the latter in this post, and it will be done in two parts.

1. VALUE OF A BRAND NAME

What’s in a name “Bafana Bafana“, I hear you ask? A simple answer is that a name is a key audio-visual brand identifier, and is intrinsic to the value of the brand.

MTN’s latest brand valuation provides the best case study, and it is relevant in this discussion. According to Brand Finance, MTN is in the top 200 most valuable brands in the world!

MTN Brand Performance (Millions)

MTN's 2010 Brand Valuation

MTN’s brand value grew by more than 50% since 2008, and I was hoping there would be a clear explanation for the upsurge. But, too much marketing fluff is used by the company and does not get to the point. As a result, I decided to formulate my own opinion based on key soccer-related happenings of the last 2 years in South Africa and the world.

MTN reportedly paid $65 million (R446 million) to become the first African brand that was part of any Fifa World Cup (remember that the 2010 campaign effectively started with the 2009 Fifa Confederations Cup). In support of its participation in the world’s biggest event by any measure, MTN launched Ayoba advertising campaign in November 2009 and spent R29 million to run this most successful advertising campaign in recent memory.

In my assessment, the Fifa World Cup sponsorship and full leverage using an effective advertising campaign are the two main contributors to MTN’s increase in brand value. If this telecoms company decided to replace its current name now, this would put $5 billion (or R34 billion) worth of brand value at risk.

Brand Finance also does valuation for 25 most successful domestic soccer brands, of which Top 10 are shown in the table below:

World's Top 10 Soccer Clubs

I could not find a record of valuation for any national soccer brands. But, there is no doubt that Bafana Bafana’s brand gained massive goodwill in the last 2 years due mainly to the Fifa World Cup campaign. Needless to say that the Boys‘ performance was not shabby in the tournament itself, what with an uplifting win against France on the 23rd of June 2010!

Thus, SAFA cannot afford to change Bafana Bafana’s name, the key brand icon, after the 2010 World Cup without the risk of losing the hard-earned goodwill that is directly linked to the name. As they say, the horse has already bolted.

2. SOURCES OF REVENUE IN THE SOCCER BUSINESS

Ok, now that the Bafana Bafana name issue is settled, the follow-up question is whether the agreed price of R5 million for class 25 rights is a fair value.

According to Brand Armour, the basic cost of registering a trademark is R2,985. It is estimated that, if Stanton Woodrush had used this service 18 years ago to register Bafana Bafana’s class 25 trademark, they would have spent less than this amount if one takes inflation into account. Thus on the face of it, the agreed price of R5 million for selling the trademark is daylight robbery.

Nike's Soccer Shirt Sales

However, Nike’s soccer shirt revenues earned by the world’s top 5 soccer clubs clearly indicate the potential upside of owning merchandising rights. A similar picture applies for Adidas shirt sales by Real, Liverpool, Chelsea, Bayern and AC Milan.

The Deloitte’s Football Money League report for 2010 indicates that Bayern Munich made €39 million (or R381 million) from sale of merchandise in 2010. Let us put this into context:

Bayern Munich's Revenue Graph

Bayern Munich’s revenue graph above indicates that commercial rights for 2009/10 season contributed largest share to the club’s revenue base, and these rights are made up of sponsorship and marketing (€83 mil or 26% of total revenue), merchandise (€39 mil or 12%) and other stadia revenues (€38 mil or 12%). In case you want to know:

• Bayern is the 4th largest club in the world by total revenue, preceded by Real Madrid ( €439 mil), Barcelona ( €398 mil) and Manchester United (€350 mil).
• On average, commercial rights contribute 30% to Top 10 clubs’ revenues. Bayern’s commercial revenues (€172 mil) put the club at the top of this category’s pile in the world.
• It is estimated that Bayern sells between 700 000 and 900 000 Adidas shirts per season.

I could not find conclusive 2010 revenue stats for Bafana Bafana, but it is worth bearing in mind that the Boys are doing well in their current 2012 African Cup of nations (ACN) qualification campaign that will be closely followed by the 2013 ACN, buoyed by improved Fifa rankings and the new Puma sponsorship (notwithstanding issues to do with the fan-rejected launch shirt design and unaffordable price points). These good fortunes have resulted in soccer fans feeling upbeat, and they will certainly buy the squad’s merchandise to express their support. It is fair to predicting that merchandise revenues will increase in the near future and more than offset the R5 million paid for the class 25 rights.

IN CLOSING

Soccer is more than sport, it is big business. Thus, I commend SAFA for making a sound business decision by keeping the name Bafana Bafana and buying the class 25 trademark from Stanton Woodrush.

MY BUSINESS LINKS

Company profiles: eNitiate Integrated Solutions, Nuffdotty and Diski4life.

Other blogs: InMarketingSpeak and Nuffdotty 

The changing profile of a soccer fan in South Africa

This is my first post in this newly-established blog, and I am excited about it. The post will be setting the tone regarding the direction that the blog will be taking. Hoping that there will be inspiration for more posts to follow.

In my younger days, soccer was a sport followed mainly by Black older men who treated it like religion and were die-hard followers (like, for real) of their chosen clubs. Exposure to clubs within the African continent and beyond was virtually nonexistent. These men would never allow their direct families to follow any other club but theirs, otherwise there would be ever-lasting unhappiness at home during soccer games of especially the favored opposing sides.

While soccer continues to be a religion in South Africa, it has become broad church with a changing profile of a soccer follower, thanks to 5 main factors.

• Supersport’s broadcasting of European soccer – The era of delayed broadcasts and limited number of international games is a thing of the past with DSTV’s numerous dedicated sport channels. This has brought to our screens, and to our other media platforms, a mix of talent, good looks, lifestyle and theatrics displayed by soccer stars such as Beckham, Messi, Ronaldo and Mourinho (even coaches are becoming celebs in their own right). This has lead to an increasing local fan base of younger and female soccer followers. Foreign clubs that have gained the most South African fans include Real Madrid, Barcelona, Arsenal and Manchester United.
• Sponsorships – The likes of Castle Lager, Absa, Vodacom, MTN, Nedbank and now Carling black Label have deliberately been making soccer a fashionable sport through increased consumer participation, appealing promotions and clever advertising, all with a view to use this to access a broader profile of their respective target markets. In addition, Vodacom has done well by staging off-season annual soccer challenge where Orlando Pirates and Kaizer Chiefs are pitted against some of the best clubs in the world coming out of Britain.
• 

  New Age Soccer Fan

  The 2010 Fifa world cup – This event has helped to popularize African soccer globally, and Bafana Bafana became the biggest beneficiary. As more South Africans who were previously ignorant of local soccer got exposed to talented individual Bafana Bafana players such as Siphiwe Shabalala, the relevant local clubs from which these players come subsequently earned themselves new fans.

• Progressive local clubs have also done well to grow a racially diverse base of fans. The specific clubs worth mentioning are Ajax Cape Town, Supersport United, Mamelodi Sundowns, Orlando Pirates and Kaizer Chiefs. These clubs put soccer on the spotlight due to their pedigrees, distinguished profiles of their owners, lucrative sponsorships that allow them to market their brands better, and their ability to reach out to a new and more broader franchise of fans.
• Digital media – New technologies have “shrunk the world”. Global communities are formed on the Internet and social networks everyday. Geography is not an impediment for building of multi-cultural fan clubs that share a common interest in soccer anymore, and Man U is taking full advantage of this. Social media are helping soccer attract younger and more racially diverse consumer base than was ever the case before in South Africa, thanks to Facebook and Twitter.

It is highly likely that the new-age soccer fan will not follow the same club as his/her father, is highly opinionated, follows at least one foreign-based soccer club in addition to the local one, may follow individual players who are not part of their favorite soccer club (this mainly due to such players being part of Bafana Bafana), and openly embraces fans of opposing clubs as shown by free-flowing discussions on social networks.

Having noted this exciting trend, I could not help but wonder whether the South African soccer establishment, including the administration, soccer clubs, fan clubs and media, are also getting with the program.

ABOUT ME

I am the founder of eNitiate Integrated Solutions, a digital marketing company. I am also co-founder of Nuffdotty and Diski4life.  I am an infopreneur, digital strategist, avid marketer, and an eternal student.

You can also check out my latest posts on InMarketingSpeak and Nuffdotty, a blog about Marketers’ relationship with digital marketing.