Sport is an increasingly important component in the capitalist drive to create invaluable, globalised networks of transnational capital flows.
Besides the fully-evolved in-yer-face American model, there is no better or bigger example today of the potential commercial dividends offered by the corporatisation of sport than India. What’s more, given its immediate reach of a population of 1.2 billion and a rising middle class, the country today is the most valuable sports market in the world. Little surprise then that major conglomerates are keen to make the most of its ever increasing appeal.
With the latest instalment of India Sport Inc. — the Indian Super League (ISL), born out of a partnership between Reliance Industries and sport marketing and management company IMG Worldwide — set to kick off in September and join the IPL, and with hockey and badminton leagues in the heavily flourishing commercialised sports sector, questions linger: how far can corporatised sport go in India? And does it always work?
Big bucks rule
“Corporate backing in sports can lead to revenue generation in a systematic form,” says Shailendra Singh, Joint Managing Director, Percept, an Indian media conglomerate.
As an example of the corporate clamour to get involved in India’s showcase sports tournament, the IPL, International Cricket Council (ICC) and Board of Cricket Control in India (BCCI) have 11 and 36 registered trademarks respectively in India. More than 500 applications have been filed by IPL franchisees since its inception.
And, while broadcast advertising costs are still miles away from Superbowl levels (a ten-second ad during the semi-finals and final of IPL 6 cost nearly $25,000 — about Dh92,000 — whereas a 30-second ad during half-time at the Superbowl costs a whopping $4 million), PepsiCo’s $71 million investment for a five-year stint as the title sponsor of the IPL is telling the story: major conglomerates eye sport in India as an unrivalled opportunity to increase brand equity and value.
So banners and other ad material of companies seeking to tap India’s lucrative market, such as Etihad Airways and Emirates Airline, are splashed on IPL kits and billboards around stadia, establishing a rapport with a market that will likely yield big bucks soon.
With seismic investments streaming into India’s glitzy sports ventures, the money also helps set up academies at the grass-root level to encourage youngsters to take up sport as a career.
“The ISL franchises are targeting one million children across eight cities through an engagement programme,” says Singh. “It is specified in the bid document that Rs20 million (about Dh1.2 million) must be spent on grass-root development in the first year and between June and September.
“By next year, all franchises are expected to have academies. Corporates are also providing scholarships and health schemes for various sporting federations and clubs.”
It may be a win-win. But with big money on the line, there’s always a caveat.
For all of the commercial success enjoyed by the IPL, whose broadcast rights alone are valued at $1 billion there have been events guided by Indian conglomerates such as the Indian Grand Prix, which haven’t met expectations.
Although Jaypee Group invested upwards of $400 million on bringing Formula One (F1) to India, which they saw as a legitimate strategy to wipe out some of the company’s $600 million debts, the venture seems to have backfired, with the Indian version missing from this year’s calendar due to apparent scheduling issues.
But the reality of the situation is that investors and sponsors are not convinced there is enough money to be made from it to justify exorbitant commercial tie-ups, given India’s limited interaction with motorsport.
After only three years into its five-year contract with F1, it’s uncertain whether the Indian Grand Prix will return in this decade. The losses for the corporate driver, Jaypee, could be huge.
Vicky Chandhok, President, Federation of Motor Sports Clubs of India, said after the third Indian GP in 2013: “If we can bring F1 back in 2015 then the miss of 2014 is not crucial. If we go beyond 2015, it will be very difficult to bring F1 back.
“The first year there’s always a buzz, in the second year we saw a decline and now, in the third year, you get a sense of the real picture.”
Sameer Gaur, MD and CEO, Jaypee Sports International Limited, believes “there is no reason why the race should not be held here in 2015”.
Talking turnovers
Financial uncertainty isn’t unique to the race in India. It’s worth noting that the majority of IPL franchises, such as the Royal Challengers Bangalore (RCB), are still not turning in profits.
An annual report released by United Spirits, who bought the RCB franchise in 2008 for a reported £112 million (about Dh693 million), posted a loss of Rs78.85 million in 2013, compared to a loss of Rs70.75 million the previous year.
While expenditure and overheads for franchise owners are enormous and immediate profitability not always forthcoming, much of the value for owners lies in the brand they back rather than the immediate financial rewards.
So what differentiates a good corporate sports model from a bad one, and where does the ISL stand in relation to the IPL?
“The IPL is the perfect example of corporate involvement in sports in India. The audience for cricket and football is ‘massy’ — it’s different from F1 and this could be one of the reasons why the race didn’t fare well in India,” says Singh.
Each ISL team has a spending budget of $2.5 million in the first year to spend on a maximum of four foreign stars and a compulsory six under-21 Indians.
While some question the ethical viability of throwing money at celebrity endorsements and retired footballers to build a lasting sports legacy, it’s certainly caught the public’s attention. And it is, as Singh points out, all about mass appeal.
Though no monetary value had been disclosed at the time of writing, Hero MotoCorp Ltd.’s three-year deal as the title sponsor of the ISL suggests the conglomerates expect the new league format to be a big success.
In a statement released by the organisers, Pawan Munjal, Managing Director & Chief Executive Officer, Hero MotoCorp Ltd, said: “Like every other part of the world, India is also in the grip of football as millions of youngsters across the country are taking to the game with enthusiasm. It is therefore, a timely initiative, and we are delighted to be partners in this journey for the > common goal of promoting football in the country.
“As title sponsor, we are happy to [be] catalysts in bringing in much-needed professionalism to the game and promoting it at the grass-root level to help identify and promote local talent.”
And with Rs240 million being spent by franchises on India’s domestic talent in the first two days of the player draft held in Mumbai last year, investors will want to see plenty of bang for their buck when foreign stars join the set-up.
Is success guaranteed?
India languishes in the 145th position (out of 170) in Fifa rankings. Yet the country is football crazy. Lifting the country out of obscurity into a position to qualify for a World Cup is no easy task. So can the ISL, replete with celebrity and conglomerate franchise owners, be the catalyst the country needs? Opinion is divided.
Says Singh: “There will be quality as the stakeholders are the most serious players in the industry today. This will ultimately be a product, which is on par with the IPL in terms of the game and commercial and viewer appeal.”
In a report published in Indian newspaper DNA, Mathew Susainathan, a coach at the Mathew Football Academy, said: “The ISL will help generate interest in the sport across the nation. It will give our players an opportunity to play with foreign stars, which will help get the best out of them.
“It is time that India start taking football and other sports seriously instead of just concentrating on cricket. The country needs to inspire the game. In Pune alone, we have more than 170 football teams, which shows that interest is not lacking, impetus is.”
But some are not convinced that the ISL is the answer. For some, the first edition will fall short of the standard set by the IPL purely because the tournament has the world’s current best; not the best of yesteryears.
“It’s a good marketing strategy but, in the end, it all boils down to the standard of football,” former India player Satyajit Chatterjee said in an interview with Reuters.
“Young fans want good football and they’ve grown up watching the English Premier League, La Liga and the Bundesliga. They won’t settle for anything less. I don’t think over-the-hill players can dish out that kind of football.”
The former Indian midfielder’s concerns that the ISL will be no more than a seriously lucrative retirement home is not a unique opinion within the football community.
Former football pin-ups such as England and Liverpool legend Michael Owen, France and Arsenal winger Robert Pires, Sweden and Arsenal’s Freddie Ljundberg and Spanish Liverpool and Athletico Madrid forward Luis Garcia are all in for the event and expected to lend international-level quality to the ISL’s eight franchises.
“I am very happy to be part of the new league when passion for football in India is on the rise,” the ISL’s official Twitter feed quoted Pires as saying. “It will be great to play in front of enthusiastic Indian fans as well as share my knowledge with my teammates.”
The ISL’s chief aim is to procure lasting grass-root schemes and academies that can bring India’s youth into football, which the franchises are ordered to fund. But Former Indian footballer and coach Derrick Pereira is not convinced the new league will achieve its goal.
“Honestly, we don’t know what is going to happen,” Pereira told Gulf News in June. “I am happy that a lot of actors and former cricketers are backing the ISL, but I think the franchises should, in addition to their teams, also concentrate on youth development and infrastructure. Only then can there be progress for football.
“If we want to compete with the top Asian countries, we need a total overhaul of the entire system. And at the outset, we have to look at the infrastructure.”
But whether the ISL actually encourages a dramatic overhaul of the system that many think India is in desperate need of, remains to be seen. n
