GFA-Startimes deal: Great for Ghana football?

How it happened

Africa’s leading pay-TV operator StarTimes Group signed a ground-breaking media agreement with Ghana Football Association on Tuesday, vowing to promote the Ghana Premier League in sub-Sahara Africa and help in the infrastructural development of the game in the West African country in the coming decade. According to the strategic partnership agreement, StarTimes acquires all media rights of the Ghana Premier League, the Gala, the National Division One League, the MTN FA Cup, the Ghana Women’s League, and the Ghana Juvenile League for the next 10 years.

StarTimes will pay $17,950,000 for the deal, provide ten artificial pitches and a fully equipped modern OB van to the GFA over the next ten years. StarTimes will invest more in the production of programmes on Ghana Premier League and broadcast more matches of the league in Ghana and other African countries.

“StarTimes is a world brand and well-known in the whole of Africa. Ghana football is also a well-known brand and our national team is one of the strongest powers in Africa,” said Kwesi Nyantakyi, President of Ghana Football Association, noting that the partnership between StarTimes and Ghana Football Association is looking forward to improving development of football in Ghana.

Nyantakyi said: “We authorise media rights of all major leagues or tournaments under Ghana Football Association to StarTimes. And StarTimes will deeply involve itself in the production and promotion of these leagues and bring much investment to our country.”

President of StarTimes Group, Pang Xinxing told reporters on the signing ceremony: “The partnership between StarTimes and Ghana Football Association is not only the cooperation between the two sides, but also a starting of cooperation between China and Africa on football industry.”

StarTimes is an experienced TV operator in football broadcasting. In 2015, StarTimes signed an exclusive broadcasting contract with the German Bundesliga and the International Champions Cup (ICC) for five successive years. StarTimes has exclusive rights and got the rights to televise the French Ligue 1 and the Italian Serie A for all sub-Saharan countries. In June 2016, StarTimes also signed an exclusive broadcasting contract with the Chinese Super League for three successive years and acquired media rights to provide extensive coverage in sub-Saharan Africa of the European qualifiers for 2018 FIFA World Cup Russia.

StarTimes attaches great importance to African native sports content and has sponsored SC Villa and KCCA FC clubs in the Ugandan football league. In February 2015, StarTimes signed world football icon and Nigeria legend Kanu Nwankwo as their Continental Brand Ambassador. As StarTimes ambassador, Kanu is engaged in a series of football promotional events in Africa.

ASSESSMENT

So I chanced upon this story on the Ghana FA website a little over 48 hours ago and even before settling down to put my views together, I have read God knows how many views on this particular issue. $17.9M for ten years? Now that would strike any follower of the Premier League. Ghana Premier League, the Gala, the National Division One League, the MTN FA Cup, the Ghana Women’s League and the Ghana Juvenile League, all for $17.9m? The Chinese had some amazing negotiators on their team against that of the Ghanaian side, one might conclude.

So I decided to do a check on what factors to consider in putting figures to the value of a brand.

MEASURING VALUE BY PROFIT

Many organisations look at the sheer profitability of a product to measure its value. One approach is to use the simple equation Value = Benefits / Cost.

The plus side to this approach is that it is concrete and quantifiable. You can measure the profit consistently throughout the life of the product, charting changes in value over time. Profit is also a metric everyone understands, as it is the most common unit of measuring the success of a business.

There are some clear drawbacks to this approach, though:

1. This metric focuses solely on the benefit to the business, not the user.

2. There are many external factors that can impact profitability, which skews the accuracy of this metric in determining value.

3. Not all products generate revenue. Common examples are informational websites, internal collaboration software, and FOSS (free and open source software) projects.

MEASURING VALUE BY MARKET POSITION

A common metric to demonstrate a product’s value is market position. Looking at the sheer volume of the market your product holds over competitors can give a real picture of the way consumers view the product.

As with profitability, a product’s market share does not necessarily translate into high value. Microsoft Windows is a perfect example of this. In the early 2000s, Windows held 97 per cent of the operating system market because there were not many options available. Within the next ten years their market share dropped to about 20 per cent because better, mobile-friendly options were introduced. This decline does not necessarily correlate to a decrease in the value of Windows, however.


MEASURING VALUE BY UTILITY

Consumers stay loyal to products that they can apply in their life in a meaningful way. Utility of a product can be measured through a number of quantitative research methods and competitor comparative studies.

MEASURING VALUE THROUGH CUSTOMER PERCEPTION

Your product is a large part of your brand, so the way customers view your product reflects how they view your organisation. Measuring customer perception of your product, as with measuring utility, gives you a good quantitative metric that can be measured over time and compared to your competitors.

THE ENGLISH PREMIER LEAGUE

So, a top football league naturally comes to my mind herein being the Premier League. The Premier League is an English professional league for men's association football clubs. At the top of the English football league system, it is the country's primary football competition.

The competition, formed as the FA Premier League on 20 February 1992 following the decision of clubs in the Football League First Division to break away from the Football League, which was originally founded in 1888, was to take advantage of a lucrative television rights deal. The deal was worth £1 billion a year domestically as of 2013-14, with BSkyB and BT Group securing the domestic rights to broadcast 116 and 38 games respectively. The league generates €2.2 billion per year in domestic and international television rights. In 2014/15, teams were apportioned revenues of £1.6 billion. Now that is a lot of money for the 20 clubs competing in the Premier League. The other products like the League Cup and the FA Cup also have exclusive media rights who also bring in some money. Comparisons with these products have been made with the Ghanaian products and what could be done to strategically position the brand to raise more money. The honest truth is that we are nowhere near the elite and would thus need to do a lot of strategic positioning.

STARTIMES

Enter StarTimes. StarTimes is the leading digital-TV operator in Africa, covering 90 per cent of the continent's population with a massive distribution network of 200 brand halls, 3,000 convenience stores, and 5,000 distributors. StarTimes owns a featured content platform, with 440 authorised channels consisting of news, movies, series, sports, entertainment, children's programmes, fashion, religion etc. The company's vision is "to enable every African family to afford and enjoy digital TV". StarTimes achieves this by combining satellite and terrestrial DTV systems to provide an open and secure digital wireless platform. The company provides a robust signal transmission service for public and private broadcasters, offers consumers outstanding Pay-TV programs, mobile multimedia, wireless Internet connectivity, and convenient online services including checking TV guide, watching free live football, chatting with celebrities and friends.

Great profile one can say. I have been privileged to enjoy their products including the French Ligue 1, the German Bundesliga and the Italian Serie A and I would have to say I do not have any reason to doubt their capacity to deliver on their promise. The twist though is what they are getting from the Ghanaian football space and the amount involved.

MY OPINION

I would want to believe that the FA would have
• hired a competent valuer to provide them figures on the monetary values of these products

• used this as the starting point or better throughout the negotiation period by the FA team
• considered the implications of entrusting all these products in the care of a single entity

• conducted extensive due diligence on the Chinese owners

• ensured that the figures that were discussed were agreed to by the competing clubs in all these competitions.

Now there are 16 clubs for the GPL, 48 Clubs for Division 1, over 80 clubs competing in the MTN FA Cup, the Gala, the numbers in the Ghana Women’s League and the Ghana Juvenile League. Granted it works out to $1.79m a year divided by all these clubs. I am sure you have done the calculations already. I am obviously not expecting all of them to receive the same amount from the deal. I would want to believe that has been worked out already. The photo attached to the story on the FA’s website tells us who negotiated on our behalf. A millionaire businessman (Frank Nelson) and a brilliant lawyer and FA boss Kwesi Nyantakyi and with others in the background I believe. The negotiations I reckon may have gone on long and hard. I will not be quick to criticise the deal for one simple reason.

Deals are done with several clauses in it. The examples of sports professionals come to my mind. I have seen deals being signed for the long term and renegotiated after only a year for obvious reasons. Performance and stunning as such. Messi has almost two years on his current Barcelona deal but club President Josep Bartomeu is working hard to ensure that a new long term deal with better inducements is signed. Others like Jurgen Klopp, Gareth Bale, Neymar, Toni Kroos, and co who have recently signed new and better deals as a result of their importance to their clubs come to mind.

My understanding from the Deputy General Secretary and Communications Director of the Ghana Football Association, Ibrahim Saanie, is that the $17.9 is minus production costs as compared to the DStv deal. We are also told that five new television channels will be created and dedicated to Ghana football. Now that is loads of leverage for the Ghanaian football space. That would also mean a lot of content from the Ghanaian space away from the games that are going to be played as well as behind the scenes production. Add the ten pitches to be built nationwide and the OB van worth up to $7m and you have to say on face value that it’s a good deal.

I have obviously not seen the details of the deal but I want to believe that a ten year deal would contain several clauses for improvements and even abrogation. The coming days, weeks, months, and years would tell whether the deal will best serve the interest of Ghana football.
Thanks for doing the reading.