Government shoots itself in the foot by attacking Coca-Cola stadium deal

Located in the London Borough of Islington, a new 60,000 seater stadium has served as the home of Arsenal Football Club since 2006.

Emirates Stadium, the fifth largest in Britain, was initially known as Ashburton Groove before a naming rights deal with Dubai based international airliner Emirates was signed in 2004. The new facility is an example of how conglomerates have moved into sports facilities to further their brands.

And in the southern side of Nairobi, there is a 27-year-old sports facility that was recently renamed Coca-Cola National Stadium after a naming rights deal was coined with the beverage giant.

Formerly known as Nyayo National Stadium, it is currently the subject of controversy between the government and trade unions on one side and a state corporation, the Sports Stadia Management Board (SSMB) on the other side.

Two months ago, Nyayo National stadium started getting a new coat of red and white paint to transform it into Coca Cola National Stadium. But before the paint dried on the walls of the 30,000 seater facility, a war of words broke out between the Ministry of Youth affairs and SSMB.

The bone of contention is the changing of the stadium’s long established name into the name of a multinational. Workers umbrella trade union COTU soon joined the controversy asking the government to revoke the agreement.

Secretary General Francis Atwoli said awarding the naming rights to Coca-Cola went against the country’s interest of preserving historic sites.

Coca Cola East and Central Africa is slowly entering Kenya’s sport arena after staying on the peripheries, for a long time only offering relief to poor families in some impoverished parts of the country.

But the beverages maker is quickly realizing that it’s not all that easy to break into Kenya’s disorganised sports turf.

In its attempt to sprinkle good money into Kenya’s football, Coca Cola has invested approximately Sh40 million in a youth tournament dubbed Copa Coca Cola. The firm also paid Sh120 million to buy the rights to renovate Nyayo National Stadium. It is the latter that has made the company look bad in the eyes of the government and trade unions.

Contentious issues
So why is the change-over to Coca Cola National Stadium so contentious? Why does this provoke the ire of the government and trade unions?

The Minister of Youth affairs and Sports, Prof Hellen Sambili, says the name ‘Nyayo’ is historic and as such, a national treasure which should not be interfered with.

But Coca-Cola says it could not include the name ‘Nyayo’ in the new name because the word is protected under the laws of Kenya and cannot be used by commercial entities.

“Our view is that the naming rights concept actually enhances the value of the legacy and that the legacy is embedded in the facility that is the stadium. That cannot be taken away,” says Norah Odwesso, the Public Affairs & Communication Director for Coca-Cola East and Central Africa.  

“We must be careful to note that the ‘Nyayo’ legacy is protected under The National Flag, Emblems and Names Act (Cap. 99 of the Laws of Kenya) which expressly prohibits the commercial use of the national flag as well as certain words, names and emblems of national significance specified in the Act including the word ‘Nyayo’.  

“In compliance with the provisions of this law, SSMB approved The Coca-Cola National Stadium as the legally conforming name for the initiative,” says Ms Odwesso.

The beverages maker has consequently walked out of the deal saying it is no longer tenable.

“The proposal to co-brand the stadium with its current and former names is against the spirit of granting exclusive naming rights to a sponsor. This deal is not tenable” said Alex Maditsi, the country manager of Coca-Cola East Africa.

Parliament waded into the debate with Gem MP Jakoyo Midiwo asking the government to reconsider its demands. “This move by the government will affect corporates who are interested in sponsoring sports in Kenya,” he said.

The Sports minister is also reading impropriety during the award of the naming rights. But Coca-Cola has discounted this saying it played above board to acquire the naming rights.

“As far as we are concerned, due process and global best practice were followed and the rights were granted lawfully and transparently. This follows the publication of a notice to tender placed in media advertisements in September 2008 by Sports Stadia Management Board. Coca-Cola, among several other interested corporate entities, responded by bidding and our company was announced the winner,” says Ms Odwesso.

Prof Sambili went ahead and revoked the appointment of Mr Paul Thuita Maina, as a member of the Sports Stadia Management Board that signed the naming rights deal with the soft drinks giant.

She then appointed Benjamin Sogomo as a director of the Sports Stadia Management Board for a period of three years beginning May 1. Mr Sogomo is a former secretary of the Teachers Service Commission.

This venture — although the first of its kind in Kenya — was not new to Coca-Cola, or other corporate bodies and sporting facilities, around the world.

In South Africa, Coca-Cola holds the naming rights to The Coca-Cola Dome, an international conferencing, exhibition and banqueting facility, and the Coca-Cola Park, a rugby union park formerly known as Ellis Park Stadium (named after Mr J.D. Ellis who availed the area for the stadium).

The naming rights stadium opened a new revenue stream for the Sports Stadia Management Board which largely depended on Treasury for its upkeep. Treasury has issued a circular to all state corporation advising them to innovate ways to be financially independent.

SSMB — a state corporation established six years ago — was meant to turn around the fortunes of the sports facilities which were in poor state, but the parastatal has struggled to come up with new ideas to generate revenue from the facilities. The Sh120 million naming rights deal it signed with Coca-Cola was intended to boost the parastatal’s position.

Prof Sambili has said the government will revoke the naming rights deal, but this could expose the government to litigations since Coca-Cola says it legally won the right to name the stadium.

Coca-Cola has a long history of supporting sports, having sponsored the Olympic Games since 1928 and supported football since 1930.
The soft drinks maker has had a formal association with Federation Internationale de Football Association (FIFA) since 1974.

Controversy
“Coca-Cola is committed to the development of sports in Kenya and the insight we have gained from running Copa Coca Cola for the past three years shows that Kenya’s football future is bright.  Every year since 2007, Copa Coca-Cola has uncovered promising footballers who can form a talent pool for the national team.

“The current state of soccer in Kenya should not deter any serious corporate that wants to make a difference in soccer in the long run” says the beverages firm.

This is not the first time Coca Cola is running into controversy with a government. The soft drinks maker crossed paths with Indian authorities who accused it of depleting ground water and selling contaminated beverages.

Some states in India banned products made by Coke and rival Pepsi after the country’s Centre for Science and Environment said they contained unsafe levels of pesticides.

The firm responded by launching water channels so as to bring clean drinking water to some Indian states.