Industry stalwarts discuss the business of sports leagues at KPMG CII Summit
At a summit on business of sports & entertainment, launched by KPMG in association with Confederation of Indian Industries (CII), Nitin Kukreja, CEO, Star Sports moderated a panel discussion chaired by Shrinivas Dempo, Chairman CII Summit on Business of Sports and Entertainment & Chairman & Managing Director, Dempo Shipbuilding & Engineering, Sunando Dhar, I-League CEO All India Football Federation, Uday Sinh Wala, CEO Kosmik Global Media, Venky Mysore, CEO Kolkata Knight Riders, Vita Dani Chennaiyin FC co-owner, Indranil Das Blah, CEO of Mumbai City FC. The discussion titled ‘The Business of Leagues in India’ addressed certain critical factors to create winning franchisees and sustain leagues based-ways to build and engage fan communities and optimum business model among leagues.
Survival of leagues
Kukreja started off on a positive note on how it has been a transformational phase for sports in India with the launch of a ‘unique innovative product’ IPL in 2008 (‘which showed the way for many sports and challenged the notion that sport in India can’t thrive and prosper’). According to him, 2014 was another watershed year with a host of leagues came into the picture like Indian Super League (ISL).
With the facts he posed a question to Wala as to how sustainable are such leagues. Wala replied, “One is the right partnership between league owners and franchises, both in terms of financial structure and working style. If there’s no equity of participation, I don’t think leagues are going to survive. Other point is creating heroes because any sport is going to live and die on its ability to create aspirational heroes, both from the survival of the league itself and in terms of the potential to generate revenue. Most advertisers in India need heroes who they will back. Third point is the ecosystem around sport including management and trained people which take leagues to another level. We don’t have that in India yet as well as the ecosystem of medicine and physiotherapy. These are three crucial factors.”
Success of KKR
Kukreja also praised Mysore on his phenomenal work on KKR on making it one of the leading franchises of IPL and went on to ask his mechanism behind it. Explaining his strategy of running the franchise, Mysore said, “I focused on the pillars on which a franchise is built: the brand and the fan base. When you think of your fan base you think of your customer. We try to understand our fans, and entertain them. We build the brand to a point that the other brands want to associate with it. Currently, we work with 22 brands. So we look at it as a year around business and manage it like one.”
Challenges lying ahead
As the panelists settled in, Kukreja moved on to talk about the challenges faced by Indian leagues and football clubs. He threw an interesting question at Dhar, “There are things that ISL has been able to achieve whereas I-League not able to. If you look back what could have been done better?”
Dhar promptly replied, “It could have been marketed better. There are some teams in the league with great fan base but they haven’t done enough to retain or increase it. But then Bangalore team which came to I-League three years back did a fantastic job in marketing in getting their fan into stadium. Also the last two seasons of ISL has seen positive changes which had a rub off effect on I-League. Restructuring has to be done. The challenge is to get the best out of both leagues and get them into a single one. This marriage of sort needs to happen soon and we are working towards it.”
Kukreja was curious to understand why the passion for football in Goa has not been translated into profitability yet? Dempo explained it with Goa’s scenario, “When it comes to attracting sponsorship Goa’s limited population of 1.5 million is a huge difficulty. When sponsors ask about the exposure and ROI it poses as a structural problem. Till last year, Goa had the least sponsorship despite having the most popular club. But there are other things happening like fans paying for tickets, which was unheard few years back. Another difficulty is what do we do with four clubs with legacy which has spent so much energy, time and passion over the last five decades?”
Kukreja also pointed out that all revenue streams like merchandising haven’t opened up yet. In response to a question on how streams are opening up to make it a viable business proposition, Wala said, “Two biggest challenges are unlocking sponsorship revenue and merchandising revenue. Merchandising is the last one that’s going to be effective due to the availability of clone T-shirts at 1/10th of the original price. This year we innovated with products and sold them on the net which did receive traction. Last two seasons we have gone up from Rs 6.5 lakh to Rs 8.5 lakh (from merchandising) which is humongous for us. Marketers are not willing to look into whole picture. Till they don’t realize the holistic marketing this is going to continue. They haven’t realized what teams can give them across spectrum, through their reach across tier1 and tier 2 cities and fan base. Ticketing is not an issue. We have built a habit of paying. We have to engage the fan base and go for the mass. We still have to open up other sources of revenue like digital and allied sources. But we are seeing interest from schools to introduce kabaddi in their curriculum who are willing to pay. There are sources of revenue that can be engaged.”
Going all out for your fans
For Dani, fan base is extremely important and can be monetized successfully. She mentioned, “Fan base is critical for the survival of the brand and its reach. Once success follows, it can always be monetized later. I am confident with the direction of the growth of the sports industry; it will start getting returns on investment soon.” She also shared activities for fan engagement both on and off season, “We have a fan zone dedicated to the fans. It’s a special seating which closer to the arena. Star owners like actor Abhishek Bachchan and cricketer Mahendra Singh Dhoni come to meet them halfway into the game. Off season we have several competitions run on radio, giveaways as part of the club and special meet and greet with star owners. For the last two years it has only been increasing. Fan wants to have a sense of belonging to the club.”
Kukreja also tried to understand the intricacies of running a football club in cricket-crazy cities like Mumbai and Chennai. Blah said, “Two biggest assets are our players and owners. We try and package our owner. For example we have actor Ranbir Kapoor because 90 % of the brands will be interested in him while the rest on football. Mumbai is a city which needs a big name. Off-pitch people in this city want a big player. So we have innovative ways to market the team. Also our grassroot programme runs throughout the year. We do camps and tournaments, through which we get sponsor. We have engagements across the year.”
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