Tuesday, July 13, 2010

THE ECONOMICS OF SPORT

The sun is out and its summer in the northern hemisphere. Sports seasons have opened or are peaking.

In my other life I am a sports fan. I am a sports fan because sport often serves as a good analogy for life. But more interestingly is the economics/business of sport.

This week tennis world number one Roger Federer became the first man in the sport to earn $50 million (sh102b) in career prize money. This is not counting earnings from the 28-year old Swiss man’s endorsement contracts.

Another 28-year old John Terry of English premiership team Chelsea signed a new five-year contract to stay with the club he has been a member for half of his life. The new contract will see the England captain earn 160,000 British pounds (sh524m) a week.

Our very own Moses Kipsiro earned about 5,500 British pounds (sh18m) for his win at 3000m at the Aviva British Grand Prix that he completed in just over seven-and-a-half minutes.

This is just a snap short of the billions of dollars being claimed by the best in sport, many of whom are men and women barely into their twenties and most of whom have not seen their thirtieth birthdays.

For the average professional plying his trade in Kampala, these figures are so large as to relegated to the realm of fantasy.

For us who are barely one generation from our agrarian roots, hard work is measured in actual perspiration. If you are not sweating at some unpleasurable endevour – not soccer or tennis or jogging, you are just joking.

More advanced economies have evolved away from physical effort – Okwonko in “Things Fall Apart” comes to mind and towards the more intellectual pursuits – read Bill Gates.

With increasing incomes, markets have grown, spawning millions of products jostling for the share of our wallets.

This of course has meant that marketing has been honed into a fine art, which has graduated beyond selling products to selling experiences.

Roger Federer makes millions a year – as of August 31 he had earned $5.4m in prize money, but top investor Warren Buffet adds hundreds of million a year to his net worth. Federer represents the new manual laborer and Buffet the intellectual worker.

It stopped vexing me, the question of why African athletes are not more frequent visitors to the podium at award giving ceremonies.

In his seminal book “The Third Wave,” Alvin Toffler plots the progression of power, defined as the ability to influence one’s environment, from brute force to monetary wealth and now the one who controls the information runs the show.

He wonders, in the book why the least developed countries are intent on following in the footsteps of western and East Asian ecopnomies, which have seen it as mandatory to first have an agrarian then industrial revolution before graduating into the information age.

Toffler suggests we should leap frog the industrial age – in Uganda’s case the agrarian revolution as well, and go straight to the information and now the conceptual age.

An attempt to churn out world class sports men like the way Spain does tennis players or Brazil soccer players and the US basketballers, would suggest a similar leap of faith.

The more advanced economies for the bigger part of the population have resolved the basic questions of food, shelter and clothing. Their surpluses are now used to fund or commercialise their leisure activities.

What if we jettison this clamouring for industrialization, reengineer our education system, bin our traditional thinking about work and rethink our economic incentive systems to leapfrog into the information age?

In fact by gunning for the information age our attempts at industrialisation will be more efficient with the help of our improved ICT skills.

In addition the exponential increase in incomes for Ugandan workers would be such that we can command the surpluses that will allow us to invest in sports and allow us a share of the multi-billion dollar sports industry.

With the coming down of borders around the world it only makes sense to manufacture if you can claim a competitive advantage. China has shown that it can manufacture anything and deliver to any market at a cheaper price than anyone else on the planet.

The momentum against protectionism is so strong that it is ceasing to be an option.

But the reality is our people need work and they need to be competitively paid for their effort. Industrialisation is old school lets churn out sports stars instead.

Published September 2009,

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