Ismail El Shafie, the agent of American Nike in Egypt, the chairperson of the Egyptian Tennis Federation, and member of the International Federation of the game, spoke about the activities of the agency, its sales, selling outlets, future plans, and issues of tennis in Egypt.
Daily News Egypt sat down for an interview with El Shafie, the transcript for which is below, lightly edited for clarity:
First, how did idea to get an agency in Egypt occur to you?
We are a joint-stock company of 10 shareholders. We started out as a small company, and then we specialised in the field of sports equipment. We got the Dunlop agency for tennis and squash rackets. In 1999, we managed to get the Nike agency, and this was our launching point. Then we turned into retail and we moved on to men, women, and children’s fashion. We have retail stores for them.
How much is company’s capital estimated to be?
The capital is not related to the size of the business, because we obtain banking facilitations on which our business is based. For example, we started with EGP 3m capital and currently we reached EGP 10m; however, we are working with a much larger volume.
What about sales?
Sales in Egypt last year were estimated to be EGP 200m. The sales declined by 30%, due to the liberalisation of the exchange rate. The customs rate on shoes increased from 40% to 60%. The prices increased by more than the double; hence, the sales declined.
Why was Nike absent when it came to sponsoring Egyptian teams, clubs’ jerseys?
Nike is specialised in very specific games. As for the most famous game in Egypt, it has a contract with Adidas. Al Ahly club has a contract with Saudi Sporta company. Recently, we started cooperating with Zamalek. The club buys clothes from us. When Nike chooses certain clubs it would be based on which competitions they enter for Nike to sponsor, the decision is usually made by the parent company.
.Are there future plans to sponsor clubs in Egypt?
We are already present in a way, but we would like to stand on a solid ground. The current situation and indicators make us have some reservations. We do not know if the dollar will stand at EGP 18 or not. We expected a decline, but unfortunately that did not happen, so the prices are incredibly high. As for the various games, we will see if there is a tender to take part. All the clubs are subject to laws, and we try to be present in a way that is more suitable for us.
What is reason for absence of Egyptian stars in terms of promoting Nike?
We do not move in this area much since we do not need promotions; however, we had contracts with some players, such as Ahmed Fathy, and we imported shoes specifically made for him from abroad. As for other games, Nike does not have shoes for handball. In basketball, the prices of Nike are very high. The issue requires some calculations and balances. Generally, we could say that the Egyptian market is very difficult.
How do you face issue of counterfeit products?
It is a very irritating issue. Whenever we receive information on this, we report it to the parent company and it takes the necessary measures in terms of filing lawsuits. Intellectual property rights must be protected, and we must protect consumers from these products and make them aware that they are wearing counterfeit products.
Can you inventory losses caused by this?
We cannot inventory the losses; however, the question we always ask is how do these products enter Egypt so easily? Maybe some of them are manufactured in Egypt, but the majority of them are smuggled. On the other hand, we are subject to very complex procedures to import products. These procedures include examination and registration in the General Organisation for Export and Import Control (GOEIC).
There is a famous story before the London Olympics in 2012. The Olympic committee dealt with a sports equipment company that gave the former counterfeit products with Nike’s mark on them to be worn by the Egyptian mission. A player came to us asking to change the size of her outfit, which made us realise the Egyptian mission will be wearing counterfeit products. We warned them that they will be exposed to major penalties and they did not respond. The player then mocked the clothes on Twitter, which made foreign newspapers discuss the issue, and this resulted in a major crisis. They contacted me again, and I negotiated with the parent company. Eventually, I managed to agree with them to send the original products to England. This did happen, and eventually the Egyptian mission wore original clothes and we had to bear the cost of these products, which was EGP 250,000 at the time. We did this to save Egypt’s reputation. There was a decision by the prime minister to open an investigation. I gave my statement before the Public Fund Prosecution and I do not know what happened next, because the country was going through exceptional circumstances at the time.
Is there an idea for Nike’s factory work in Egypt?
It is very difficult. The Egyptian market is unable to accommodate the factory’s production and the company refuses to establish a factory affiliated to it abroad, given that the company produces for itself. If we thought about the factory’s work, we must at least manufacture 1m dozens of tennis balls alone, and Egypt only consumes 8,000 dozens. Full exportation can only be in the parent company.
What do you think of investment in sports equipment?
There is no real investment in sports equipment and wearing. For example, we do not have sports shoes for championships, but we have sneakers for walking. However, taxes have been raised from 40% to 60%. If we considered establishment of a sports shoes factory, we should produce 3m shoes annually at least, and the local market cannot absorb this quantity.
The current size of the market does not require building a factory. For example, we import 200,000 shoes per year, while Adidas imports 200,000-250,000, so all Egypt’s imports of shoes do not exceed 1 million shoes.
What are main obstacles that faced your company in Egypt over last 20 years?
Nike and other companies in Egypt face almost the same obstacles. Importing became very difficult. We can say that there are prohibitive restrictions. These difficulties increase the costs. In other words, there are fixed expenses that are distributed on sales; hence if we sold one item, it would be very expensive, but selling 10,000 items will decrease the costs.
We always communicate with the government through the Franchise and Commercial Centres Division, which includes all importers of international brands and malls that offer a lot of support. We have a close business relation with malls, as each party needs the other. The rents of our shops in malls reach EGP 2.5m-3m annually.
Regarding tennis, why do you think there are no international tennis players in Egypt?
The educational system in Egypt is responsible for the lack of international sports champs. Great athletes should be qualified in a certain life stage (14-17 years of age), and Egyptians rarely succeed in combining between education and sports in that stage. The government should find solutions to facilitate the educational process at this age for athletes or others. Another problem is the lack of funding. There are 28 sports federations affiliated to the Egyptian Olympic Committee, but only one federation—football—has enough funds, while other sports rely on aid from the Ministry of Sports and the Egyptian Olympic committee.
How much is Egyptian Tennis Federation’s budget?
The Egyptian Tennis Federation’s budget reached EGP 5m, while it needs EGP 50m to be able to establish training centres for players, referees, and coaches. It is an integrated system that does not rely on the player alone.
What is Egypt’s ranking in international tennis?
Egyptian Mohammed Safwat was ranked 168th globally—a self-made ranking after a lot of support from his family, and a little from the federation.
How much does it cost to prepare a world-class tennis player?
Preparation of a tennis player requires EGP 1m annually, so that he can compete in world-class championships, and the local federation cannot put any development plans for tennis, due to the lack of required funding.
I presented a memorandum to the former Minister of Youth and Sports Khalid Abdel Aziz, telling him that Mohamed Safwat has made great progress over the last six months and demanded state support so that he could join the top 100 tennis players in the world. He promised me to study the issue, but nothing has happened so far.
What does Egypt need to promote sports investment?
Investors do not support sports for charity. There must be a sports TV channel allocated for all sports so that each federation can promote itself. Also, there is a need for specialised clubs. It is unreasonable to find all 28 games in one club. For example, there should be 10 clubs that specialise in tennis, squash, and table tennis, while others can specialise in combat sports, etc. I frequently talked about this issue, but no one listened to me.
Are there any specialised academies for tennis?
There are about five private tennis academies in Cairo, owned by investors who naturally target making profits, so they do not go outside Cairo. Tennis is an expensive game and coaches cost about EGP 400 per hour.
We negotiated with Wadi Degla to establish a tennis academy financed by the club and the federation will take over the technical management. We are still studying the project. The federation has a large base of young players in Mansoura, Ismailia, Port Said, and Tanta, but we need more time to prepare them to be international players.
How do you see Egyptian Olympic committee’s demand to appoint an acting committee to run tennis federation after recent court verdict that nullified federation’s election?
We have not exhausted all stages of litigation yet. We still can appeal the verdict. The Olympic committee should have waited until the lawsuit was closed. We live in a country of law and we will use all stages of litigation, and if the final verdict came against us, we will abide to the laws and regulations of this matter, not to anyone’s interest.
The story began when the Egyptian Shooting Club authorised its chairperson to choose a delegate in the federation election, while the regulations state that the club’s board council must choose its election delegate. Strangely, the Egyptian Olympic committee approved the delegate at the time, and it was not our fault.
I do not know why some people love to keep their management positions for so long. Esraa Senhoury, who filed the lawsuit against the result of the federation’s election, spent 13 years in the management of the federation, four years as vice-chairperson and nine years as chairperson. It was the time for some change. I do not support the calls for cancelling the clause that limit elected chairperson’s term in office to eight years. In my opinion, we must prevent anyone from running the federation election after spending eight years in office.
omDid you intervene in case of player Karim Hossam, who was suspended after being involved in manipulating match results?
It is very sad. Hossam has been banned for life and fined $15,000 after being convicted of multiple match-fixing offenses. Hossam was found guilty of 16 corruption charges of the Tennis Anti-Corruption Programme on the Futures level between 2013 and 2017, and he was provisionally suspended in June 2017. The player has been removed from the records of the international federation.
I communicated with the player’s father and told him to resort to the Court of Arbitration for Sport (CAS) and provide documents proving his son’s innocence, as it is the only body that can change the decision. Being a member of the International Tennis Federation, I asked about the player’s situation and they said they could do anything because the decision was made by the Anti-Corruption Hearing Officer, which is not affiliated to the federation.
Are there any plans for organising major tennis tournaments in Egypt to promote tourism?
We will meet with the new minister of sports, Ashraf Sobhy, to see what we can do in the future. Then, we will try to communicate with the Association of Tennis Professionals to determine a week in which there are no international championships to hold a local tournament. However, it all depends on the provision of sufficient funding. Sharm El-Sheikh hosts 20 tournaments worth $15,000—the lowest tennis level—organised by Proactive Company, in addition to about 15-20 championships held annually in Solaimaneyah, Giza.
