India: Opportunities in the Business of Sport

There are opportunities for all sports in India - the exploding economy of the world’s biggest democracy.

It hardly needs saying, but cricket’s inaugural Indian Premier League, held in early 2008, and has proved to be a massive success on a number of fronts. Perhaps the more important question is what this success says about the Indian sports market as a whole.

To give some sense of the scale of the IPL’s success, consider the following: The BCCI secured a $1 billion deal with Sony and Singapore-based sports marketing agency WSG for global TV rights and sold 10-year franchise licences for an average price of $60-70 million.

In the first year alone, franchise holders recouped 80 per cent of their money under a revenue-sharing formula devised by the BCCI. Although the deal is calibrated so that franchise holders get less in future years, the BCCI is already claiming that a true valuation in light of the first season’s success would be around $250 million. The BCCI also brought in a swathe of blue-chip sponsors, all hoping to ride the Indian economic wave including DLF, Hero Honda, Vodafone, Citibank, Nokia, Coke and Hyundai etc.

But the impact of the IPL doesn’t stop there. Anxious to capitalize on its early success, the BCCI joined forces with governing bodies in Australia and South Africa to launch a Twenty20 Champions League. In September, broadcaster ESS stepped up to the plate again, paying $975 million to secure exclusive control of the event’s rights for 10 years.

So what does this say about the state of the Indian sports marketing sector. Is there any evidence that other sports are benefiting from the Indian economy’s bull charge? Or is cricket so strong that it is suppressing activity in other potential growth areas? The answer is a mix of the two. To begin with, there’s no question that many big brands want to be associated with cricket in some form or another. But even though cricket is reckoned to take 70-80 per cent of all available sports marketing revenues in India, there’s still enough commercial activity around other sports to suggest the non-cricketing community is also making headway. Golf is an interesting case in point. The sport began to gain traction in the late 1990s but the real sea-change came with the creation of a new governing body, the Professional Golf Tour of India (PGTI), in October 2006. Led by around 100 golfers, the PGTI was a breakaway from the PGAI (Professional Golf Association of India), and has pretty much taken control of the sport As a result, India is now home to four Asian Tour events - making it second only to China (with five events). Golf’s turnaround isn’t just apparent in terms of the sponsors it attracts (which also include Johnnie Walker and Emaar). The PGTI has also sold its exclusive broadcast rights to Sport 18, the sports marketing division of media conglomerate Network 18.

Network 18 managing director Raghav Bahl is in no doubt that he is tapping into a growth opportunity. Explaining his involvement in golf, he argues that “a fundamental shift is occurring, with the rise of non-cricket sporting interest. With an expanding pedigree of home-grown world class golfers, greater media support and sophisticated management, golf in India can see the same heights as it has achieved internationally. This partnership with PGTI will be a landmark for the game in India.”

The fact that Network 18 is both broadcaster and marketer for the PGTI is not that unusual for India. Look around the Indian sports sector and you can find at least two parallel examples where broadcasters are trying to get in at the event ownership level in order to secure a pipeline of content to their channels. One is field hockey where the Indian Hockey Federation brought in ESS as a partner when it launched its Premier Hockey League in 2005. The other is soccer, where Pay-tv broadcaster Zee TV linked up with the All India Football Federation (AIFF) in 2006 to try and build a 360-degree strategy around the sport (the theory being that a stronger club-based system will eventually feed through into the national team set-up).

Zee’s involvement with soccer started when it signed a deal with the AIFF which gave it exclusive rights to domestic soccer in return for $65 million over 10 years. At the same time, Zee agreed to help the AIFF promote the sport off-air. Subsequently, the AIFF has revamped its domestic soccer league - giving it a new name, the I-League. This move has been well-received both by fans and title sponsor ONGC, which has just renewed its support with a $250,000 sponsorship deal.

Increased investment in Indian sport isn’t just evident in attempts to build new league structures like IPL, PHL and the I-League. There’s also been a much greater willingness to host set-piece sports events in recent times. 2010, for example, will see the Commonwealth Games come to New Delhi. A year later, Formula One will arrive in Delhi following negotiations between the Indian Olympic Association and F1 supremo Bernie Ecclestone.

Delhi is hoping to use its new sports facilities for other events once the Commonwealth Games are over. Although it was beaten in its bid to host the 2014 Asian Games by Incheon in South Korea, the Indian Olympic Association has said it may bid for the 2020 Summer Olympics. As for the F1 story, there had been talk of India joining the circuit in 2009 or 2010. But even 2011 represent impressive progress when you consider how far India was off the international pace just a few years ago. Combine the arrival of F1 in Delhi with the launch of an India F1 team (Vijay Mallya’s Force India) this season, and you have the emergence of a new power within the sport.

Among international sporting franchises which have made progress in India, one of the most noteworthy is WWE Wrestling, which has toured the region on and off for a number of years. Underlining the point made in the previous paragraph, its popularity has been driven in recent times by the emergence of Punjabi wrestler The Great Khali, now one of the biggest sports stars in India.

More recently, the NBA has also set out its stall in India, staging one of its Basketball without Borders outreach programmes in partnership with FIBA and the Basketball Federation of India (BFI). Although this is a pan-Asian event, the fact that it was held on India soil underlines the way in which India is moving up the corporate agenda (though basketball and the NBA have some way to go before they can claim to have much traction in India).

Soccer’s big guns are also starting to circle the Indian market. Having seen the kind of money that the IPL is capable of attracting, it is no real surprise to see clubs like Manchester United beginning to get involved. In summer 2007, the club sent a coaching team from its Soccer Schools programmes to work with 5,500 children in Goa (one of half a dozen major regions where soccer is popular). This summer, the club took another tentative step forward when CEO David Gill went on a fact-finding tour to India. While there, he talked with AIFF president Priya Ranjan Dasmunsi about ways they might collaborate going forward to promote the game in the subcontinent.

Stories like this show that there is a lots of money moving into parts of the Indian sports marketing arena other than cricket. More insight and analysis on the opportunities in the Indian sports market are presented in the brand new Business of Sport in India intelligence report from Sport Business. Drawing on extensive expertise from within and outside the India, this comprehensive resource will be invaluable for those looking to expand in this rapidly emerging market...