The next frontier: Sports and Entertainment Series

December 4, 2020 - 5 minutes read

Youth unemployment continues to rise globally and is a significant policy pain point for many Governments. However, in Africa the youth unemployment rate is the lowest in the world compared to other regions, mainly reflecting the fact that unemployment is not a good measure of the state of the labour market in economies with high informality and poor social protection schemes. According to the Global Employment Trends for Youth 2020: Africa report by the International Labour Organization (ILO), unemployment rates are on a general decline since 2012 from 11.7 percent to a projected 10.7 and 10.6 per cent in 2020 and 2021 respectively. The low rates mask high differences between the sub-regions. Northern Africa exhibits the highest unemployment rates in the world at over 30 percent in 2019, projected to decline slightly to 29.6 percent in 2021. The rates for Sub-Saharan Africa are low and stable at 8.7 percent.

However, these are estimates drawn prior to the COVID pandemic of 2020  will need to be reviewed. Nonetheless, in light of the foregoing, measures have been taken to ensure the youth are gainfully employed and/or trained to ensure their participation in socio-economic development of their countries.

However, an area that has not been critically looked into as an opportunity for youth engagement and as an investment opportunity, especially in countries such as Kenya, is sports and entertainment.

In a new Vellum Weekly series, we aim to debunk the myths about the sports industry, analyse emergence of key issues as well as highlight the investment opportunities therein pitting it as the next frontier not only for investment, but also as a solution to youth unemployment. In this regard, we have partnered with SNOLEGAL Sports & Entertainment Law is a Cyber Legal Firm with a fully digital practice which focuses on emerging & cutting edge areas of law. Their expertise covers the Sports Sector, Creative Enterprises (Film, Theater, Music, Literature, Art, Fashion), Consumer Industries (Beauty, Advertising, E-Commerce, Anti-Counterfeiting), Hospitality (Leisure, Travel, Tourism), and Alternative Dispute Resolution. 

PART 1: DEBUNKING THE MYTHS ABOUT THE SPORTS INDUSTRY

By Sarah Ochwada[1] – Principal Counsel at SNOLEGAL Sports & Entertainment Law

A good number of people think that sport (be it indigenous, association, professional, amateur sports, elite sports, or even esports) is owned and run by the government. This is a myth, and this article explains why.

Pyramid structure of Sports & the Principle Ein Platz Prinzip

International Federations (IFs) are global, stateless, non-governmental organisations administering one or several sports at the global level and having a membership of organisations administering their respective sports at continental, regional or national level. Each National Federation (NF) which is affiliated to an IF then draws membership from Clubs within its territory, and at the bottom of the pyramid are the Players or Athletes who sign up to the clubs.

For example: FIFA is the global body governing football world-wide. FIFA is the primary custodian of laws and regulations dealing with football but has affiliates in form of continental bodies such as the Confederation of African Football (CAF), regional bodies such as The Council for East and Central Africa Football Associations (CECAFA) –  an association of the football playing nations in mostly East Africa and a bit of Central Africa, and national bodies such as the Football Kenya Federation (FKF).  FKF then has the authority to register Kenyan clubs and players to its organization through branches and sub-branches. 

International sports follow this organizational structure of association in order to create sanctioned competitions and legitimate pathways for players and athletes to participate in and progress from the grassroots to the global stage.

Ein-Platz-Prinzip is a distinguishing feature of sports organizations. According to this principle only one organisation can control a particular sports discipline over a specified territory. The Ein-Platz-Prinzip is embodied in the statutes of the sports federations. Thus, most sports associations, national and international ones alike, have a monopoly as regards both the territory they cover and their respective sport which helps avoid conflicts of competence – for example concerning the organisation of championships.

Where more than one body claims to have control of a sport discipline over a specific territory then the IF will likely mediate the conflict and cause the disputing parties to reach an amicable governance settlement, or otherwise ban the country from participating in international sport. This happened to be the case when Kenya had the 2 rival factions – Kenya Football Federation (KFF) and Football Kenya Limited (FKL) which eventually resolved to create the Football Kenya Federation (FKF) to run football in the country.

The International Olympic Committee (IOC) has a slightly different governance structure altogether. IOC is the supreme authority of the Olympic Movement – an umbrella organization bringing together a variety of sports disciplines to participate in a quadrennial event – the Olympic Games. The IOC membership constitutes individuals who vote at the IOC General Congress, and represent the IOC and the Olympic Movement in their countries (they are not delegates of their country within the IOC).  The National Olympic Committees (NOCs) are affiliated to the IOC but do not have voting powers. They are in charge of facilitating and preparing teams to participate at the Olympic Games and to develop the Olympic Movement within their territories.

IFs and NFs are typically registered as Societies or Associations, having a non-profit status but carrying out revenue-generating activities which help them implement their objectives. This is usually where conflict arises between Sports & States.

Who owns sports? Autonomy is to Sport what Sovereignty is to State

A fundamental feature of sports is its system of self-regulation. Sports organizations, at both the international and national level, claim the right to individually regulate their sport; to apply and, if necessary, to enforce their own rules.

The Autonomy of Sport is the right of sports organizations to regulate their internal affairs. Sports organizations enjoy:

  • Freedom of association (i.e. freedom to congregate and draw its own membership), 
  • Freedom of establishment (i.e. freedom to determine its own rules of operation), 
  • Freedom of democracy (i.e.  freedom to select or elect its own leaders without external interference) and
  •  Freedom of economy (i.e. freedom to decide how to make revenue and how to spend money without external interference).

The effect of autonomy of sport is that sports organizations have the legal power to enact binding sports rules in their specific disciplines. The co-existence of the sports organizations’ regulations with national and international laws poses a conflict; to what extent can a State intervene to “regulate” sports? Are state courts competent to review the decisions of sports organizations and to arrive at different conclusions?

States are governed by their Constitutions and State Laws. Similarly, Sports organizations are governed by their own Constitutions or Statutes. One sovereign State cannot interfere in the internal affairs of another sovereign State. In the same way, this principle of sovereignty is extended to sporting autonomy.  States cannot interfere in the affairs of an Autonomous organization.

Think of IFs as stateless organizations like the International Committee of the Red Cross (ICRC) or the United Nations (UN) which each have their charters and representatives at global and domestic levels. The respect of their autonomy is important in order for them to independently carry out their missions without fear of being at the whims of politicians and State policies. Stateless bodies are operationally independent but collaborate interdependently with States in order to carry out their work at the grassroots.

Government Divesting from Sport Governance but Investing in Sport Regulation: The Sports Act

For almost a decade prior to the enactment of the Sports Act, 2013, the government of Kenya, through the Department of Sports had been involved in research, policy reform and stakeholder meetings to divest itself from the role of sports governance but to become more of a facilitator in sport regulation. As already highlighted, sport is supposed to be self-regulatory but must make room for cooperation and intervention by the government.

The Sports Act, 2013 established 5 new institutions to aid in Sports regulation: the office of the Sports Registrar (in charge of registering sports organizations, athletes and sports agents), the Sports Academy (in charge of identifying & nurturing sporting talent), the Sports Fund (in charge of running the National Sports Lottery and facilitating Kenyan athletes & teams), Sports Kenya (took over the role of the Sports Stadia Management Board & in charge of maintaining stadia and facilitating Kenyan athletes and teams), and the Sports Disputes Tribunal (in charge of resolving sport-related disputes).

Each of these institutions was established to not only fall in line with the principle of respecting sport autonomy but also to maintain respect for the rule of law within the sport ecosystem. For instance, in order to have transparency and accountability in financing – only those sports organizations which are duly registered under the office of the sports registrar and can show records of bona fide members & record of an international affiliation can benefit from the funds which are set aside by government to develop sports in the country.

Likewise, most sports related disputes are in fact settled by means of self-regulation through a system of Alternative Dispute Resolution (ADR) – which is a private means of resolving conflict either through Arbitration or Mediation. Sports organizations oust the jurisdiction of ordinary courts of law through their Constitutions or Statutes. Their primary reason for doing so is due to specificity of sport – the fact that the rules and regulations governing sport only exist within those particular disciplines and that sport is fast-paced. Going through ordinary courts of law to resolve sports disputes would be lengthy and costly, not to mention would unduly delay competitions and have a ripple effect on team or individual participation. Due to this unique nature of sport it was important to have a tribunal which is distinguishable from the ordinary courts of law. The Sports Disputes Tribunal is empowered to resolve sport-related disputes through ADR mechanisms but using the laws and regulations which are sport-specific.

Of course there have been some set-backs regarding the divestiture of government in sport – for instance, the Sport Amendment Act of 2019 repealed the Sports Fund and bundled sport financing under the Sports, Arts and Culture Fund. This means that sport would no longer have its own pool of funds but instead draw a percentage from a pool shared by creatives. However, there may still be a chance for the Kenyan sports fraternity to lobby for a return of the Sports Fund and National Sports Lottery following a High Court decision (Petition 284 of 2019 – Senate v. National Assembly) which declared null and void all the laws which had been passed by Parliament without the involvement of the Senate.

The High Court has suspended the effect of its Judgement and has given Parliament a 9-month window to rectify the enactment of laws which were irregularly passed without the Senate’s involvement. Within this window, sports federations ought to make a case to keep the Sports Fund purely for the development of sport. This may reduce their woes of constantly seeking sponsorship from the private sector but instead start thinking of long-term means of investing revenues from the Sports Fund to keep sports thriving.


[1] Sarah Ochwada is a retired runway model turned Archer and Sports & Entertainment Lawyer. She is the 1st Black African Woman to attain a Masters’ degree in International Sports Law. She has been appointed as an Arbitrator to resolve sports disputes for Qatar Sports Arbitration Foundation (QSAF), Football Kenya Federation (FKF), Cricket Kenya (CK), and Athletics Kenya (AK).

She has legal experience working at the International Table Tennis Federation (ITTF) and as Legal Counsel for the National Olympic Committee of Kenya (NOCK). She is currently the CEO of the Centre for Sports Law (CSL) – a non-profit organisation representing athletes pro bono in doping and other sports related matters, and has her own private practice, SNO LEGAL Sports & Entertainment Law where she provides legal services for Sports, Creative Enterprises (Film, Music, Art, Literature), & Consumer Industries (Fashion, Beauty, Advertising, E-Commerce, Hospitality).

Sarah is an adjunct member of staff of the Strathmore Law School where she has given lectures in Sports & Entertainment Law, Media Law, Fashion & Beauty Law and Consumer Protection Law and is a visiting lecturer at the ISDE Law & Business School having taught at Wolfson College, Cambridge University and at the ISDE Madrid Campus in Spain. 

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