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How Rwanda Could Reap US$200M From Arsenal Deal

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Rwanda could earn assorted returns worth an estimated US$200 million from the originally invested sum of US$40 million as proceeds of the ground breaking deal with English soccer team,  Arsenal FC.

Our estimates indicate Rwanda’s return on its investment represents a 5 times multiplier effect highlighting what Rwanda Development Board (RDB) terms as a “great value for money”, despite skepticisms.

The assorted returns are in the form of quantum jump in visitations to Rwanda from United Kingdom (UK), and other destinations.

There is also the “Rwanda Brand” association accrued from the partnership with the team as well as TV viewership, mainstream media and social media interactions.

Two years ago, Rwanda surprised her citizens and partners by doing the unthinkable in the world of East African tourism marketing at a global level.

The country signed a deal with a top English football club, Arsenal FC, some good chunk of its scarce promotional money for the club to do marketing for her fledging tourism products.

Since it was the very first time an African country was giving money to a highly successful English soccer team for the team to market her goods and services the transaction has since generated a lot of heat.

Rwanda committed to spend almost US$40 million over a 3-year period on Arsenal FC in the UK to promote tourism and her general development.

https://twitter.com/Curate_Angola1/status/1202473715759489024?s=19

Even people with very little understanding of how sponsorship works as a pure commercial deal, threw in their weight and went on attack mode.

Critics of Rwanda in their thousands jumped into the debate as they found fodder to engage in their rabid attacks.

They threw in dirty politics in the works in what is essentially a purely commercial transaction.

They disregarded the fact that the deal involved one of the best commercial platforms that Western businesses can offer an East African tourism destination hungry for better visibility.

Their logic and reasoning trashed the deal and forgot that tourism is a cut throat business.

To put things into proper commercial context at the global levels, Rwanda had built, from scratch, over a 10-year stretch, a niche tourism product that needed visibility befitting its invested dollars on the ground.

A conservative estimate of the entire value chain that Rwanda was marketing under  “the visit Rwanda” deal comes to more than US$1 billion in form of both hard and soft infrastructure.

This includes a relatively good number of high end hotels and lodges, the air transit system comprising the national carrier RwandAir and its associated services such as Kanombe International Airport, tours and travel services as well as a diversified menu known as MICE (Meetings, Incentives, Conferences and Exhibitions).In terms of strict marketing at that global level, the product needed a very good commercial platform to reach the targeted visitors from around the world, especially the European market.

European economies constitute a major source for East Africa’s tourism industry.

The sector generates conservative receipts to East African economies such as Kenya, Uganda, Rwanda, Tanzania and Burundian destinations worth more than US$5 billion annually.

Rwanda earns more than US$500 million annually from the proceeds.

It is a very lucrative, but highly competitive market, according to the council on travel and tourism in Africa.

The council estimates that the sector grows at more than 5.6% annually, thereby highlighting what amounts to a boom, placing Africa as the second fastest sector in the world behind the Asia-Pacific region.

In addition, the East Africa and Central African regions have strongest growth rates at more than 8% annually.

Therefore attaining visitations from UK  to Rwanda by over 20% annually, as a result of the deal, represents real value for money.

This means that the deal helped Rwanda to attract an additional 20,000 out of more than 1.2 million arrivals by the year 2019.

This was made possible through a thrice weekly direct flight by RwandAir between London and Kigali.Official statistics indicate that in 2018, over  1.7 million people visited Rwanda, an increment of 8% from 2017.

Out of this number of people visiting Rwanda for leisure increased by 38%, while MICE revenues jumped by 31%.

So, Rwanda stuck to her guns that the Arsenal “Visit Rwanda” deal would go on as anticipated.

As if not cowered by the heat generated, Rwanda announced a second similar deal this time around with Paris St-Germain FC worth US$11 million. 

The second deal added more fire into an already stoked debate on Rwanda’s priorities.

Dirty politics aside, Rwanda’s football sponsorship deals are therefore instrumental from a strict commercial perspective in a number of ways. 

First, let us give credit where it is due.

Rwanda, tiny as it is percieved, is the first African economy to link the region’s tourism destination with the lucrative source markets of Europe using football as a commercial medium.

Second is the unique business model at play.

Rwanda is paying top dollar just like any other advertiser would be asked to pay.

It is entitled to get high marketing returns.

In the world of corporate sponsorship, leading companies of the world pay through their noses to get similar slots that was offered to Rwanda by Arsenal FC.Thirdly, football is very big business in Europe.

Most leading European teams are owned and run by highly successful business leaders.

Top flight football games are patronized by some of the most successful business leaders and their hangers-on.

Let us mention a few.

Arsenal FC is owned by American investor Enos Stan Kroenke with assets in excess of US$8 billion.

The Glazer family with assets in excess of US$4 billion owns Manchester United, Russian-Israeli tycoon Roman Abromavich with assets in excess of US$12 billion, owns Chelsea FC.

On the other hand, the state of Qatar,  with assets under management worth US$335 billion owns Paris St Germain FC, while Spanish business man Florentino Perez Rodriguez with assets in excess of US$2 billion owns Real Madrid FC.

Therefore, associating with a highly successful English soccer club such as Arsenal FC,  with a brand value of more than US$900 million by an East African country is one of the best positioning statements to make in tourism promotion at that global level.

Fourthly, the pay per view deals for teams in the Western football leagues is very massive advertising business.

Arsenal FC has almost 100 million fans worldwide.

When the deal was announced Vinai Venkatesham Arsenl FC’s Chief Commercial Officer stated that, “The Arsenal shirt is seen 35 million times a day globally and we are one of the most viewed teams around the world. We look forward to working with the ‘Visit Rwanda’ team to further establish the country as a leading tourist destination.”

RDB CEO Clare Akamanzi  says that the projected returns forms real value for money for Rwanda’s investment into sponsorship with Arsenal FC.

 “It is a great return on investment by any measure, despite the skepticisms from certain quarters.”In addition, RDB CEO says that, “over 30 percent of Arsenal FC fans are now considering Rwanda as a very potential travel destination courtesy of the deal, adding that: “In terms of awareness the deal is supporting Rwanda reach out to a target audience cost effectively in a way that  ordinarily would cost much more if we were to consider traditional sources of advertising.”

She chips in by explaining further: “It is one way of saying Rwanda is spending less to get much more than it is paying for.”

Independent research findings estimate an empirical way of projecting returns to the sponsorship investment by way TV viewership.

Nielsem Blinfire Analytics and research agency Hall and Partners are estimating that Rwanda will attain through the deal an estimated US$40 million worth of TV viewership and social media engagement.

Google search for “Rwanda” for first two weeks of the deal yielded a 1,000% increment while the official Visit Rwanda social media channels saw a huge growth with instagram registering over 577% jump, Twitter by over 77% growth and Facebook registering over 44% growth.From metrics calculated using digital advertising tools such as Raka as indicated above, if Rwanda had decided to use traditional advertising approaches such as paid ads on Google, Facebook, Instagram and so on, the return on US$40m or about US$800,000 per medium annuallly, would have yielded a mere paltry as indicated below.

Calculations using the tools show that Rwanda could have earned less than five million clicks via
advertising efforts in three years.

Before the announcement of the deal, a survey of 20,000 Arsenal FC fans showed that over 70% did not think of Rwanda as a tourist destination.

A year later, over 50% of respondents stated that the deal made them more likely to consider Rwanda as a tourist destination.

This is by far the best clincher of what Rwanda is getting after investing the sponsorship money endorsed by President Paul Kagame, an avid fan of Arsenal FC.

Kagame said, “Critics say that this is not how we should invest our money. In a very short time, I want to tell you that we have more or less made what we have spent and that we expect much more.”

A conservative estimation of the return of US$40 million of public spending comes to a multiplier of 5 times.

This return is broken down into three components of tourism revenue receipt increments from UK, TV viewership and brand association.

It comes to US$200 million return by the year 2021 from investing US$40 million in the year 2018.

According to Ariella Kageruka, Head of Tourism and Conservationat RDB,  sports tourism, benefits from these partnerships with global sports brands have exceeded expectations.

For instance, she says, “the media value we made from the first year of the Arsenal deal was over £33m yet we had projected £28m.”

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