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Big Game
SPORTS
Big Game
2008 is going to be a watershed year as sports turns into a full-fledged industry
FEROZ AHMED
04 Jan 2008
Malaika Khan performs at an ICL Twenty20 match (AP)
In 2008, sports will be to indian business what retail was in 2007. The uber billionaires and their companies are on the
drawing boards to work out their strategies in this emerging arena. Those planning to buy their tickets into this field of
fortunes include Mukesh Ambani, Anil Ambani, Sunil Mittal, and Kishore Biyani.
"Sports has become a full-fledged industry in its own right. In India, today, sports is no longer a leisure activity to be
played or watched at one's convenience," notes sports broadcaster R.C. Venkateish, managing director of ESPN
Software India. He points out that media explosion has taken sports into people's homes, workplaces, and even their
mobile phones.
Investing in sports for profit and capital appreciation will be one of the key trends in sports in 2008. The Indian Premier
League (IPL) for 20:20 cricket will be the catalyst. Already, investors have started approaching private equity firms for
funding acquisition of IPL franchises to teams. Infrastructure and sponsorships are other areas of keen interest.
"There are many big business houses, including Reliance, that want to own sports teams and academies now," says
Samir Thapar, owner of JCT Mills Football Club and long-time patron of sportspeople such as ace shooter Jaspal Rana.
Also, global sports brands will come to India to sell their image rights and find sponsors. For instance, Wimbledon has
given a license to Gitanjali Jewellers to use its name to brand the latter's retail stores in the US.
Also, the 'property-fication' of sports, started by the ESPN Star Sports-Indian Hockey Federation combine in the
Premier Hockey League (PHL), and followed by Zee's Indian Cricket League (ICL), will be taken to another level by the
promoter of IPL, the Board of Control for Cricket in India (BCCI). Instead of merely hiring players for different teams
such as ICL, BCCI is selling ownership of the teams themselves to the highest bidders.
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Shah Rukh Khan and
Priyanka Chopra at a Tag Heuer polo match (AP)
Dil Maange More
To meet the needs of the growing sporting market, more sports properties will be created. ICL has announced five
tournaments in 2008. IPL itself will add 44 days of cricket to BCCI's already extensive domestic and international
fixtures. In golf, India will host three new events from the European tour for the first time. European football clubs are
likely to start touring India to play exhibition matches from this year.
Paradoxically, such convergence of sports and entertainment will be accompanied by competition between sports and
entertainment as well. At one level, sports and movie producers will increasingly use each other to promote their own
properties - Kareena Kapoor danced at the ICL inauguration and Shah Rukh Khan appeared in the commentary box
when his Chak De and Om Shanti Om were released. At another level, sports will attempt to replace soaps as prime
time TV entertainment, and occasionally even replace movie shows in theatres.
According to sports marketing consultant Navroz Dhondy, in 2008, marketers' spending on sports will jump at least 30-
40 per cent. "There will be a greater inventory of high profile, high-interest sports available to marketers in India this
year," he says.
Conventionally, both public and private enterprises have funded sports as part of their corporate social responsibility
(CSR). The new sports entrepreneurs are, however, looking at running sports teams and events as business.
Chennai superstars celebrate their win in the finals of the ICL Twenty20 league (AP)
Just Did It
Thapar gives BCCI credit for turning sports into a modern, global business. "The BCCI has done a great job by getting
money into the game and has shown others how it can be done," he says.
Lalit Modi, chairman of IPL and vice president of BCCI, says that IPL has modelled itself after the English Premier
League (EPL), the top football league in England. "Though a domestic league, IPL will be a global business with global
investors, global players and a global broadcast," he says.
EPL, Modi's ideal, was started in 1992, and has since transformed English domestic football from a provincial sport
played on beach-like pitches in half-empty and rickety stadiums to an international phenomenon. Billionaires from the
world over queue up to buy English football clubs. Among them is steel tycoon Lakshmi Mittal, who has picked up 20
per cent stake in the once-glorious club of Queens Park Rangers. Mittal and his partners would be hoping to emulate
Russian billionaire Roman Abramovich, who infused funds and turned the also-ran Chelsea FC into a champion club.
According to Forbes, the Chelsea team was worth $339 million in 2004. By early 2007, after two Premiership titles, its
value had risen to $537. The BCCI, which is run, like nearly every sport in India, by a motley crew of politicians and
bureaucrats, now has IMG, a global sports management firm, to study the professional sports leagues in the US and
Europe and model its IPL business.
"The IPL by itself is a whole new business model for sports in India," says Balu Nayar, managing director of IMG India.
"There are a number of conceptual innovations here - revitalisation of a domestic sport through globalisation, entry of
true market forces into sport, corporate team ownership on a global scale, the licensing of Indian brands, etc," he
explains.
IPL's inaugural season of 44 days and 59 matches of 20:20 cricket is scheduled to start on 18 April, 2008. But even
before a ball is bowled, BCCI would have made close to a billion dollars from selling teams, team and league naming
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rights, and broadcasting rights.
In contrast, Subhash Chandra's Zee Group is spending millions of dollars of its own to put up cricket events, and hopes
to make profits from sponsorships, advertising, and merchandising.
For each of the eight team franchises on sale, BCCI is demanding a minimum of $50 million. It may get much more.
There are nearly 80 bidders in the fray, including Kishore Biyani's Future Group and Hollywood star Russell Crowe.
For five-year global broadcasting rights, BCCI is demanding a minimum of $59 million. Once again, it could end up
with a lot more. Besides the regular broadcasters, two news broadcasters are also in line - TV18 and NDTV.
NO SPEEDING FINE HERE: India’s first Formula 1 car race will be held in 2010 once the planned F1
track is completed in Greater Noida (Bloomberg)
"We expect IPL to nearly double BCCI revenues in five years from the current year's revenues of $1 billion (which
include revenues from multi-year rights)," says Modi.
IPL matches will be staged between seven and 10 in the evening amid a carnival-like setting. "IPL is not targeted at the
individual fan. We want families to come to the grounds for evening entertainment, or watch the games at home instead
of watching soaps," says Modi.
To improve spectator experience in cricket stadiums, BCCI has decided to give Rs 1,000 crore to state cricket
associations during 2008. "By 2011, when the ICC World Cup comes to India, all major Indian cricket stadiums will be
world class in spectator comfort and playing facilities," he says. The Subhash Chandra-promoted ICL may have been
declared a 'rebel' league by BCCI, but Modi concedes that it will deepen the market for the sport. Zee is also planning to
take its cricket circus to homesick Indians in North America.
Playing Ball
The biggest turning point is yet to come. "You'll see many million-dollar deals in football this year," says Anirban Das
Blah, vice-president of sports management firm Globosport.
Blah recently spent two weeks in Europe talking to executives of many major football clubs, including England's
Manchester United, Chelsea and Arsenal, and FC Barcelona of Spain. He says they are extremely keen on touring India
in the off-season, and tapping the Indian market for image rights. They are also looking for Indian sponsors.
However, the bigger money in football will come from Indian companies looking for global publicity. "Cricket's
commercial appeal for Indian companies is pretty much restricted within Indian borders," Blah says.
IT services exporter Satyam Computer has signed up as a sponsor with FIFA, the governing body of global football. It
will pay FIFA about $80 million to be the official supplier of IT services at the 2010 FIFA World Cup in South Africa, and
its next edition in 2014, in Brazil.
Sources say that Bharti and Reliance plan to own football teams and set up academies in collaboration with leading
European clubs. Tata Tea has already tied up with Arsenal of England to send talented junior footballers for training to
Arsenal on sponsorships.
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HOLE IN ONE: In 2008, India will take giant strides in golf as well with three new events from the European tour
for the first time (Bloomberg)
In fact, India's junior footballers hold great promise, according to Samir Thapar. Recently, India's under-16 team
became Asian champions, beating junior teams from Japan, Korea, Saudi Arabia, Kuwait, all World Cup playing
countries.
Media mogul Subhash Chandra's Zee Group, also plans to start a football team. It has a 10-year broadcasting and
event management deal with the All India Football Federation (AIFF). "ICL is great for tier-II cricketers," Thapar says.
Similarly, wages of top level footballers, such as Baichung Bhutia and Sunil Chhetri, now raised to Rs 35-40 lakhs a
year, will lift average footballers' wages too, he points out.
In 2008, golf will also take giant strides in India. "With two $2.5-million events this year, Indian golf will be catapulted to
the big league," beams corporate golf promoter, Brandon De Souza, CEO of Tiger Sports Marketing. In early February,
realty major Emaar-MGF will stage the Indian Masters at Delhi Golf Club and at the end of the same month, liquor major
Diageo will bring its travelling tournament Johnny Walker Classic (JWC) Golf to Gurgaon's DLF Golf and Country Club.
JWC will be telecast live worldwide, putting India into millions of homes and offices across the world, and give impetus
to golf tourism, points out Asif Adil, managing director, Diageo India.
The other two significant spectator sports in India, hockey and tennis, will grow incrementally as more viewers and
marketers begin to believe in them, says Anirban Blah.
The Right Formula
India's first Formula 1 race will be held in 2010, once the planned F1 track comes up in Greater Noida. Aviation and
spirits tycoon, Vijay Mallya, who himself used to race cars and was the first to get an F1 car in India, has acquired a
dominant stake in the Spyker F1 racing team. Though a minor team with remote chances of winning anything at all,
Mallya has consolidated India's interest in Formula racing, which was sparked by Narain Karthikeyan's participation in
the 2005 season.
A winning driver will make all the difference but Karthikeyan has no takers at the moment, and upcoming drivers Karun
Chandok, Arman Ibrahim and Aditya Patel will take at least another year in the lower rungs of Formula racing to become
contenders for a seat in F1.
HOLE IN ONE: In 2008, India will take giant strides in golf as well with three new events from the European tour
for the first time (Bloomberg)
The Colour Of Money
Some things, unfortunately, will remain the same. The Olympic Games in Beijing this year will boost advertising billing
of the sports genre, but will do little for Indian sportsmen or sports entrepreneurs. Retired shooter Morad Ali Khan points
out that winning players such as Raghavendra Singh Rathore, who won a silver medal in the last Olympics at Athens,
get a lot of respect but very few commercial contracts.
Moreover, Indian sports industry is still small- revenues from tickets, sports equipment, broadcast, sponsorship,
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advertising, and merchandising may not exceed Rs 10,000 crore a year. Still, according to Gary Lovejoy, COO of Zee
Sports, "India's sports business is following the growth of its economy and people are consuming more professional
sports than ever before, even if it comes from abroad," he says.
However, for the long-term viability of sports, there is a need to shift from the current model of several small sporting
events to fewer but larger events, according to Balu Nayar of IMG. "We'll also need to see a shift from mere event
management to sport management," he says.
And the great optimism for money in sports prompts Zee Sports' Gary Lovejoy to fire a warning. "For a sport to
succeed as business, it must have the people with it. Companies will ditch sports in tough times, fans will not," he says,
adding, "Money is calculating, but passion is irreversible."
feroz.ahmed@abp.in
(Businessworld Issue 08 January - 14 January 2008)
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