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The trials and tribulations of sports investments in Egypt: Exclusive with Saif Al Assiouty


Football in Egypt is tricky business. Scratch that, football in Egypt is actually rarely seen as a business whatsoever. Most big football teams either rely on budgets that are supported by big companies or institutions, or are owned by entities that integrate their football teams within other streams of revenue, making it hard to focus on making such teams profitable all on their own.

In 2008, one Egyptian businessman, Saif Al Assiouty, decided to take a different approach. After much exposure to how football teams are run and managed in European countries, more particularly Austria where he holds a nationality, he decided to bring that mindset to Egypt, launching Al Assiouty football team (later Pyramids team), setting in motion a story that is set to be like no other in Egyptian football history.

What came before?

A year before launching the team, Al Assiouty had opened one of Egypt’s first sport resorts, Al Assiouty Resort, in an area close to Beni Suef. The camp mostly aimed at providing the location and facilities to attract sports camps by teams from all around the world, capitalizing on the location’s good weather and detachment from city life, a quality that is usually sought after by many coaches for such camps.

“In winter, most football teams look for locations with good weather to set up their camps, and they usually go to Turkey. So we were like why can’t we have facilities to host that?” says Al Assiouty to Business Forward. “It has state-of-the-art football fields and hotels, along with latest medical and recovery equipment. In short, we brought all the elements that would help any team to achieve their goals from the camp.”

After successfully launching the resort and hosting many football teams from across the Middle East and Africa, Al Assiouty decided to further capitalize on the resort’s facilities by launching a football team that will be permanently based in the resort. And in came to life Al Assiouty football team.

Management is key

Beginning in the Egyptian fourth division, it was a long way to go for the team to get to the much desired Egyptian Premier League. Al Assiouty realized that to get there, he would to shift his focus on the administration.

“We decided to adapt a different mindset than what’s in the market,” explains Al Assiouty. “When we got to the third division, we hired a German coach, which made us the first in Egypt to have a German coach in that division. He took us to the second division, and then we hired a Hungarian coach to help us get to the Premier League.”

What helped Al Assiouty team’s quick ascendance to the Premier League- which happened over four years, the shortest time for such ascendance of a team in Egyptian history- was a scouting team that toured different Egyptian ultra-local football teams and clubs, searching for diamonds in the rough.

“If we were looking for already established players in the second or third division, we had much competition from bigger football teams who had unlimited budgets, unlike us who are spending out of pocket. And these big names were also more attractive to the players. So we went looking for talents in much smaller teams, in villages and small towns, and successfully contracted players that proved to have massive return on investment.”

One of such success stories was Antar, a talented young player Al Assiouty had contracted from a small football team for EGP 15 thousand, and ended up transferring him to Zamalek for a staggering EGP 15 million.

“Another example is Donga, now a player in Pyramids, who we contracted for EGP 30k, and is now worth more than EGP 100 million.”

Unlike bigger teams, each decision made by Al Assiouty had to be meticulously calculated.

“We had one of the smallest budgets in the premier league, seeing that we were in competition with big clubs and big companies, not private capital. You’re talking petroleum companies, Arab Contractors, Ahly and Zamalek, etc, so we were spending from our own pockets unlike our competition, and hence didn’t have the luxury to have a massive budget that doesn’t bring in a big return on investment. It was out of pocket, so we had to be 100% sure that it was going to have a return. So we focused on good management to make up for that.”

Al Assiouty also knew, despite ages-old wisdom, that appearance matters to a big extent.

“We really focused on little details that other teams didn’t pay much attention to, like we focused on having the best imported gear and jerseys for our players, unlike many teams on the premier league. Even players on big premier league teams wanted to dress like Al Assiouty team, and that brought a lot of attention to us.”

In 2014, all these factors combined to make Al Assiouty team rise to greatness, aka the Premier League. It was a short time at the top before once again falling to the second division. Lessons learned, the team once again made it to the Premier League in 2017, managing to get to the 9th spot and keeping Al Ahly from competing in the Cup of Egypt, a major feat for a club which hadn’t existed a decade earlier. It was at this point that the team once again attracted attention; this time from beyond the borders.

Money is the name of the game

After achieving national recognition in 2017, Al Assiouty sought to sell the brand of the team to a company that would finance its activities for the sake of naming the team after its own and having earning visibility and media mentions. It was then that they got an unexpected offer, namely from the controversial Saudi sports minister Turki Al Shaikh, who at the time was seeking to own a football team in Egypt.

“Through communication with a Saudi company named ‘Sela’ (Arabic for connection), we got an investment offer from a then anonymous investor – we later learned that it’s Turki Al Shaikh, and off to Switzerland we took to finalize the deal, in which it was agreed to change the club’s name to Pyramids.”

The EGP 90 million deal was the first of its kind in Egyptian football history, giving a real-life, practical example of how to lure in global investors to the sports sector for the first time in Egypt. With his total investment in the team over the previous decade amounting to EGP 30 million, Al Assiouty had made tremendous profit with such deal, but not only that.

“Up to the point of sale, we had already generated a lot of profit from the team,” clarifies Al Assiouty. “For example, when we sold Antar to Zamalek and other similar deals. The Antar deal, at the time, was the biggest deal of its kind in Egyptian football.”

The takeaways from the experience

“The most foremost factor is that we need to change the mindset (of football clubs) to an investor mindset. Football teams all over the world are now separate from any other entity; they’re their own companies, away from any social club or anything of that sort.

“Until now, the budgets of the two biggest football teams in Egypt are still part of the bigger budget for the club, so at the end of the year, when there’s a surplus from membership fees, it gets spent on football teams; this is not right. They are separate projects. So at the end of the year, the football team budget could be losing, but an overall profit would be reported. You didn’t win from the football team; it’s actually a (financial) burden if anything.

“For you to be able to actually measure it well, and assess if this team could actually bring in profit, is by separating the football team and making it its own company. This is actually in the new sports law but it’s yet to be implemented. This will force administrations to think of how to make the teams profitable and further restrict their budgets to what’s necessary and be able to assess the return on any investment they make.”

Football factory and other projects

Al Assiouty’s journey with investment in the sports sector didn’t stop with the sale; rather it was only getting started. In late 2019, he launched the first football factory in Egypt and the region, manufacturing Tempo footballs, a sportswear brand he had earlier launched and trademarked in Austria. Additionally, he added La Viena resort, a health resort and spa adjacent to Al Assiouty sports resort, to his portfolio of sports-related investment.

“For the first time in Egypt, we got Fifa-approval for our footballs,  which is a very lengthy and complicated process in which the balls go through a lot of tests to ensure the quality of the footballs. They are very precise with the process, because they give you Fifa-Quality Pro approval, which means that basically Tempo balls can now be used in the Fifa World Cup.”

Initially producing in Egypt, Al Assiouty later moved the main production line to Pakistan.

“The biggest factor behind the move was that the raw materials of the balls are all imported, 100% of it. Everything. So that was the biggest obstacle, we have the affordable labor, the big market, and everything that could make Egypt compete with Pakistan, but not the raw material which is so crucial. In Pakistan, all the raw material is sourced locally, making it particularly attractive. Producing in Pakistan and importing to Egypt makes it cheaper than fully producing in Egypt.”

Despite not locally-producing, Tempo has already achieved considerable success in the local market, and even went international.

“The Spanish team, UD Almería, which is owned by Turki Al Shaikh, was one of our first clients to sign a deal for Tempo footballs. Now Tempo is the official football supplier of about 80% of Egyptian premier league teams, including Zamalek, Wadi Degla, Smouha, Etihad Al Sakandry. We introduced the concept of the official ball supplier, because before that clubs would simply purchase those footballs from global brands. But now we sign deals where they get a lot of benefits, customized balls, after-sale services, and many other benefits they don’t get by simply purchasing a ball. We started selling Tempo balls after getting our Fifa approval, which was three months ago.”

What’s standing in the way?

“The first and foremost factor is protecting trademarks. You could walk into the biggest malls in Egypt and find counterfeit products and that is a colossal disaster. This is a crucial point. You make global brands unwilling to invest in Egypt because of that. Why would they invest here if they know their brand wouldn’t be protected and counterfeit products will be sold everywhere? For instance, Zamalek purchase its gear from Puma, which shouldn’t happen; Puma should actually sponsor Zamalek because of its huge fan base, why don’t they do that? Because they know the very next day counterfeit products of the gear will be available and unmonitored in the market. This is a massive lost opportunity.

“Tempo’s most expensive ball is for EGP 1750. The Nike ball of the same standard is for EGP 3600, so we can really compete with them in local and regional markets, only if brands and trademarks were more protected and people couldn’t get the counterfeit Nike ball for EGP 150 anywhere.”

 

 

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