Kenya: Queries Over Nike’s 12-Year Multi-Million Deal
The East African Standard (Nairobi)
June 4, 2006
Posted to the web June 5, 2006
Kenya’s athletics authorities have committed the nation to a multi-million shilling contract with an American apparel manufacturer, which will last well beyond their tenure in office.
The separate deals between Nike, Athletics Kenya and National Olympic Committee of Kenya (NOCK), sealed in 2003, are each worth an estimated Sh40m a year, a figure which rises at a graded amount annually.
The deal raises troubling questions coming only eight months after this newspaper exclusively revealed a scam in which official Kenya national team Nike apparel was being sold for a song in Nairobi streets. Seven traders were arrested and discharged pending further investigations.
“It is strange that the associations would sign (a long term contract that covers three Olympic Games, including one whose venue was yet to be decided,” remarked a senior Government official, who declined to be named.
The contracts were signed to cover 2004 Olympics in Athens, 2008 Games in Beijing and 2012, to be held in London, but whose venue had not been decided by the time the contracts were signed.
AK Chairman, Isaiah Kiplagat, denied their contract with Nike ends in 2012, insisting that it would end in 2008, although correspondence in our possession clearly show the contract ends in 2012.
Challenged on the issue, Kiplagat said only the NOC-K contract goes to 2012.
Contacted, Tom O’Omwombo, the NOCK Secretary General, played down the issue, saying it did not matter whether the contract ended in 2008, 2012 or 2016 “so long as both parties are happy with the contract.”
He, however, confirmed that both contracts are usually signed simultaneously for a similar period of time. Conventional practice in product endorsement is for deals to be signed for a specific cycle such as one Olympic Games period.
World football governing body, Fifa, caused a storm when it signed a contract to cover 2002 and 2006 World Cup finals with its collapsed marketing partner, International Sport and Leisure.
According to O’Omwombo, athletics is the product they sell to Nike, meaning AK receives more money than the Olympic body.
NOCK received Sh37,039,470 as grant from Nike in 2004, Sh4m more than what they received in 2003.
AK received four quarterly grants of $160,000 from Nike, totalling $640,000 for last year.
AK benefits from extra perks from Nike such as a van and the construction of their headquarters, Riadha House, which cost approximately Sh20m.
Kiplagat, however, said it is NOCK which calls the shots when it comes to Nike contracts because they are tied to the Olympic cycle.
He said part of the money is used to organise weekend meetings, national championships and trials for global championships.
During his visit to Kenya at the Sports Personality of the Year Awards Awards in March, Nike CEO, John Capriotti, declined an interview with the Press.
Kiplagat equally declined to discuss the financial details of the contract and would not be drawn on indications that the American company may be paying some officials extra money, ostensibly to make them available on telephone 24 hours a day.
A confidential memo from a senior Nike official sent to AK and seen by The Sunday Standard outlined some of these perks:
“Being that Nike has recently extended our agreement with Athletics Kenya through December 31, 2012, I wanted to send you a letter outlining our understanding regarding the Honorariums that we pay to Athletics Kenya,” wrote the Nike official.
"I feel that clarification is necessary in order to expedite future payments and in case people who currently understand the Honorarium leave their positions.
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"The Honorarium is an annual payment that Nike makes directly to the Federation in order to ensure that certain Federation members will provide, and will have adequate funding for, certain services that Nike considers critical to maximizing our value from the agreement and our investment.
“These activities include travelling with the national team to events, travelling to meet with Nike at our request, ensuring that top athletes attend and compete at events, and maintaining regular contact with Nike by being available to receive calls 24 hours per day etc.”
“Furthermore, it is Nike’s understanding that these payments are made with the full knowledge of the Federation, and how the Federation chooses to distribute these monies among Federation members is at their sole discretion.”
NEVER MIND WHAT MAY HAPPEN IN 12 YEARS TIME. KENYA ATHLETICS SHOULD BE MORE CONCERNED RIGHT NOW ABOUT THEIR NIKE CLOTHING ARRANGEMENTS. I WAS TALKING RECENTLY WITH CONNECTIONS OF REUBEN KOSGEI, THE GREAT STEEPLECHASER, AFTER IT WAS NOTED HE WON BRONZE AT THE COMMONWEALTH GAMES WEARING REEBOK SHOES. APPARENTLY THIS WAS BECAUSE THE NIKE SHOES NEVER TURNED UP. THE KENYAN VEST HE RAN IN HAD TO BE PASSED ON TO THE GUY IN THE NEXT EVENT BECAUSE THERE WEREN’T ENOUGH UNIFORMS TO GO AROUND IN MELBOURNE, AND THE FIRST TIME HE SAW A KENYAN TRACKSUIT WAS WHEN HE HAD TO BORROW ONE TO RECEIVE HIS MEDAL ON THE PODIUM! SEEMS THERE WAS PLENTY OF NATIONAL TEAM GEAR ON THE STREETS OF KENYA THOUGH. kk