Pot of gold at rainbow’s end: NFF and the Aiteo Group

The Nigerian Football Federation recently signed a 5-year N2.5b sponsorship deal with The Aiteo Group. If you are not already aware of this good news, please read the official statement of the Federation from this link:http://www.thenff.com/2017/04/aiteo-group-splashes-n2-5billion-on-nigerian-football/

So far so good. But knowing the antecedents of this and previous NFF, I worry about this deal. I worry very much.

The Official statement indicates that the sponsorship agreement starts in May 2017 and “has an initial option of one – year extension”. It is unclear if the “initial option” makes this agreement between The Aiteo Group & NFF a 6-year deal or a 1-year deal with another year as an option initially. As usual with everything NFF, this one has lots of smokes and mirrors, conjectures and a lot of ‘here is a huge gap folks, fill it in yourself’.  That’s my first worry.

NFF’s statement further goes on to say that “the financial obligation to Aiteo Group is valued at N2.5 Billion in support to NFF and activation of the partnership agreement” while not trying to split hairs, I balk at the language used here.

Why the term financial obligation? Why has a very simple sponsorship deal, a primary plank of which is to help pay salaries of Nigerian football coaches been couched in such terms?

What happened to “Aiteo Group will pay the NFF / salaries & allowances of NFF designated Coaches & Technical Staff to a maximum of N2.5b during the term of this agreement”.

To be fair NFF’s President’s statement did acknowledge that “a critical area of our expenditure is being taken care of by this agreement” and the organization’s  Director of Media and Communications, Ademola Olajire said that “this is a long –awaited injection of funds the NFF”.

Hopefully, some funds will be coming NFF’s way. But how much? N500m per annum? N500m per annum less consultants’ fees? Or any amount The Aiteo Group decides to give when the Chairman is in a good mood?

If this agreement is primarily about coaches and technical staff, which coaches exactly will these agreement cover? What is the NFF’s current salary & allowances budget / expenditure for coaches & technical staff? Will there be spare funds after the N500m is spent on Coaches salary? What will the spares be deployed towards?

If you have now read the statement, you will notice it implies that the N2.5b covers the cost of activating the partnership. What specifically is this referring to? Is it similar to me buying a SIM card from MTN and then having to incur costs to activate the SIM card? Or by activation, is the NFF acknowledging that the N2.5b includes the fees of consultants. If indeed it includes consultants’ fees, I should imagine we are allowed to know if consultants are earning a reasonable and proportionate fee. But I am not holding my breath.

I found it curious that the official statement further refers to “the marketing agency is Mediterranean”. A well deserved round of applause to the NFF here. They need a marketing agency to market a sponsorship deal or was it to help find the sponsor? So Mediterranean ‘markets’ for the sponsor and Financial Derivatives Company Limited (FDC) consults on this sponsor? ‘I think I am following in the front of their back now’.

I am not the best hand at Google but I have tried to find this very important marketing agency in the new frontier that is the internet but it appears they are so super discreet, they do not have an online footprint. I understand football is not played online so this might account for the lack of an online presence for a marketing agency!!!! or maybe the Web Engineer building their website is waiting for Aiteo Group’s ‘alert’ before finalizing the website. Just a word of advice to the marketing agency, with the recently completed Ease of Doing Business Initiatives of the Federal Government, any business can be registered within 24 hours ONLINE.

While trying very hard (and failing) to be fair to the NFF, I noticed sponsorship deals between the England FA & its Commercial Partners rarely refer to the value of the deal. Most likely this is for commercial reasons as the FA might try to earn more from its deal with say Emirates Airline while allowing Vauxhall a bit more leeway. But in England we are talking about strong compliance teams on both sides of the deal, we are talking independent auditors and we are talking a reasonably effective Tax authority. So the minutiae of any contract the England FA signs will be scrutinized till thy kingdom come while the English media is also  waiting like terrier dogs, looking for every single opportunity to leak the details of such a deal. But not in Nigeria. We do love our lapdogs. What is the business of a lapdog if the goat is eating yams. Apologies to you know who.

While I can bet my last kobo that the Communications Director of the England FA has a copy or has access to a copy of any England FA sponsorship deal, I am uncertain that the NFF’s Director of Media and Communications can beat his chest that he has read the contents of The Aiteo Group / NFF sponsorship deal. I will be stunned if anybody outside of President General Amaju Pinnick, NFF’s Legal Department Head, Bismarck Rewane and The Aiteo Group can come out and boldly claim they have read this contract.

Further reading of the NFF’s statement shows that it outlines the fact the agreement confers on The Aiteo Group “the title of Official Optimum Partner of the NFF”. As at the time of writing this article, there is no indication on the NFF’s website of what you need to do to become a Partner / Corporate Sponsor. So you can imagine that this Optimum Partner ‘minini’ has been created specially (dare I say off the cuff) for this deal? Did we offer similar or better terms to other sponsors? Was N2.5b (or illusions of) the best deal in the market place? Was the sponsorship opportunity made available to all big corporates in Nigeria? Have we potentially left money on the table?

Vauxhall alone is reported to pay the England FA the GBP equivalent of approximately N3 billion per annum and the FA has several deals on the go with many other partners / sponsors. Yes we are not England but was N500m per annum the best possible deal?

The involvement of Bismarck Rewane & his company Financial Derivatives Company Limited (FDC) as consultants on this deal allows for some faint comfort. I hope FDC’s involvement goes beyond matching a willing sponsor with a desperate ‘sponsored’ and collecting a ‘matching’ fee?

I hope sufficient due diligence has been conducted on all parties to ensure the sustainability of this deal as a simple Google search on the sponsor suggests there are a few governance trip wires on the path of this agreement. Also Does The Aiteo Group have the financial wherewithal to sign a N2.5b sponsorship deal?

I will imagine FDC have reviewed the financial accounts of The Aiteo Group and can confirm that the business generates sufficient spare cash after its normal activities to shell out N500m for what I assume is one aspect of its social responsibility program. In comparison, I doubt the Mighty NNPC spends N500m per annum  sponsoring sports.

To reference this back to the England FA, they will NEVER, ok maybe unlikely to EVER do a deal with a tin pot ‘here today gone tomorrow’ company and if they can skirt around the reputational risks and do strike such a deal, you can bet your last naira that the value of the deal will be tied to a performance guarantee bond from a financial institution or the funds will be hypothecated in a bank account untouchable by either parties and released in pre agreed tranches & schedule.  Have FDC done the same here to protect Nigeria and the NFF’s coaches?

I have quickly reviewed the Consolidated Balance Sheet of General Motors (the Group company) and from page 51 on this link: http://www.gm.com/content/dam/gm/en_us/english/Group4/InvestorsPDFDocuments/2015AnnualReport.pdf  you can see the value of General Motors’ contractual commitments as it relates to Marketing. The FA Finance Team will look at this balance sheet and go to sleep confident in the belief that Vauxhall will never default on their sponsorship agreement. And if the business of Vauxhall in the UK ever goes up in smoke, or a new Prime Minister decides to cancel their ‘oil swipe’ agreement (sorry I forgot they don’t do oil), General Motors Europe will step in and either pay the hefty cancellation clause within the contract or honour the contract 100%.

Sadly, I can’t find the The Aiteo Group’s balance sheet. I am sure FDC have seen it and have cross-referenced it with a copy lodged with the regulator or tax authorities. At the end of the day, either one of Mr. Ayodele Subair of Lagos State Inland Revenue Service or Mr. Babatunde Fowler of the Federal version must be licking their chops as I write, calculating how much from the value of this sponsorship deal is collectable for tax purposes.

I have searched The Aiteo Group’s website and while the 2 Page!!! Corporate Governance Report is very beautiful, it tells me nothing about their group structure or financial standing. I assume everybody in FDC & NFF knows that The Aiteo Group is different from Aiteo Energy or Aiteo Eastern. The latter 2  might be subsidiaries  but they are not the same legal entity. The assets, the cash, the liabilities might be in different parts of the organization and can be dissipated easily. If you ever reach a stage where you need to enforce your sponsorship deal in the law courts, you might discover that the organization’s assets have been pledged to a financial institution or that the organization you are taking enforcement actions against has no assets. So please, DON’T DULL.

Enough for the sponsor. What about the sponsored? What failsafe mechanisms are in place by FDC and, or The Aiteo Group to ensure Nigeria is never in a similar embarrassing situation as we have recently witnessed with the female football team & the Olympic male football team. Both of these are very much in the public domain. Little known to the general public is the contentious issue of the Super Eagles allowance for their recent camp in London.

So I hope to God for the sake of Nigeria the country, Nigerian football fans, NFF’s coaches, that the FDC have done a proper job here. Uncle Amaju will be fine in Cairo. Don’t worry too much about him.

On a slightly different tangent, I found it curious that many of the NFF’s apologists went online & claimed that the NFF wasn’t owing the Super Eagles manager. Please, ‘bia, coman’ & tell us if they paid him with monopoly money as we are now aware that Aiteo’s money is the ATM, NFF have been waiting  for to pay Rohr’s salary.

Also please, NFF ‘epp’ clarify. When you told the Sports Ministry in 2016 that you can afford to pay the salary of a foreign manager. What / who were you CAPITALising on? Or is it that the Aiteo deal has taken almost a year to finalise? Or is that you love Oily companies?  Please also let us know why big & reputable Nigerian organisations don’t want to dine with you even with long spoons.

In conclusion and as far as I can tell. Our football administration in Nigeria from top to bottom is broken. We can’t do simple things. Where can I buy replica kit for Super Eagles? Where can I buy merchandise of Nigerian Football? Super Eagles are reportedly playing 2 friendlies in France in 6 or 7 weeks time. Where are the details for location & tickets? Your fans who might want to travel from all over Europe will save money by booking flight / ferry, train tickets early and help with attendance and your finances. But I am not holding my breath.

The NFF will do no wrong if it outsources its entire operations to a company like FDC or similar. At least FDC have demonstrated the ability as a consultant to tie down a deal for Nigerian football even if it is an opaque deal.

Baba Grumpy works in Financial Services in the United Kingdom. He blogs mostly about football at http://babagrumpy.blogspot.co.uk. His Twitter handle is @BabaGrumpy