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Kenyan club crisis as SportPesa confirms it is pulling out of sponsorships

January 3 – SportPesa are withdrawing from all Kenyan football sponsorships after failing to win a legal case that would have halted the Kenyan government’s move to increase the tax rate on gross profit on all gambling activities to 35%.

SportPesa CEO Ronald Karauri confirmed the decision, which was initially announced in June 2017, at a press conference in Nairobi yesterday, saying that the government had failed to reach out to him to negotiate a solution.

According to Karauri: “To end all speculation, we have effectively cancelled all sponsorships with Football Kenya Federation, (Harambee Stars coach) Paul Put, (assistant coach) Andreas Spiers, Kenya Premier League, Kenya Rugby Union, Gor Mahia, AFC Leopards, Nakuru All Stars, Boxing Federation and the Super 8 grassroots tournament.”

The knock-on effect has led to reports Kenyan clubs Gor Mahia and AFC Leopards are pulling out of the 2018 African Champions League competitions due to financial constraints.

Gor Mahia chairman Ambrose Rachier  said his club would not be able to afford travel costs and that the withdrawal of sponsorship would be “tantamount to killing football” in the country.

His Leopards counterpart, Dan Mule, added: “We have no sponsors right now. We are going to withdraw from CAF assignments. We are urging other like-minded corporates to emulate SportPesa and support community clubs in Kenya. I don’t know how we will pay the 10 international players we have signed ahead of the season.”

Karauri said they were left with no choice but to cut costs in order to survive. “All we will have to do is manage our expenditure in terms of our marketing expenses,” he told Reuters.  “We had really committed ourselves to sports in the country so it is a very huge burden for us as a cost.”

The SporPesa brand, owned and operated by Pevans East Africa, was first launched in Kenya and according the company’s web site, is “fast becoming a globally recognised one, but it has its roots in local success and commitment to community grassroots, sports development.”

The company has backing from Kenyan and Bulgarian financiers and has recently been increasing its presence in Europe, setting up an office in Liverpool and sponsoring Hull City, Arsenal, Southampton and Everton. The company also has a deal with LaLiga.

Kenyan media coverage of yesterday’s press conference focused on questions about the amount of money the company is making in Kenya including claims it has been making “obscene profits.”

Although a High Court ruling upheld the new 35% tax laws, SportPesa still intends to appeal that ruling claiming it is a breach of Article 201 of the Constitution which requires the tax burden to be shared fairly.

According to Karauri “The Sports Fund is a good idea, but in no country in the world has a government been able to support sports entirely. We hope the government will sufficiently manage the funds and propel sports to the next level.

“I still believe there is hope, and as the chairman of the Association of Gaming Operators in Kenya, I request government to sit down with me so that we can come up with a more amicable solution.”

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