Sports Business Beyond 22 Yards

It's 8 a.m. on a Friday morning. Anjali Barya is training at Tata Steel's Naval Tata High Performance Centre (HPC) for Hockey at the Kalinga stadium in Bhubaneswar. After an hour-long work-out session, the 18-year-old hits the turf for a practice session with her coach. After representing India at a junior championship during a four-nation tour of Germany, Spain, England and India, Barya is now getting ready for a host of upcoming national and international tournaments. "My goal is to represent India at the Olympics," she says, proudly flaunting her Hockey India jersey.

Barya has been training at Tata Steel's centre since 2019 (when she was barely 14!). The steel major takes care of her training, physiotherapy, nutrition, as well as her education. Till date, several girls and boys training at the HPC have made it to various national and international hockey tournaments this year, which played in Germany for junior women's Hockey Asia Cup. Barya is now hoping to make it to the senior national women hockey team.

Adjacent to the hockey HPC at the Kalinga Stadium are HPCs for athletics and swimming run by Reliance Foundation and JSW Sports, respectively. Their goal is to nurture talent who can win medals at the Olympics, Asian Games and other events. At Reliance's HPC, 17-year-old Sabita Toppo (100 metre hurdles) and 16-year-old Bapi Hansda (100 and 400 metre hurdles) are training for national and international tournaments. While Toppo won a silver medal at the Asian Youth Athletic Championship in Kuwait City in 2022, Hansda bagged gold in 400 metre hurdles at the 18th National Youth Athletics Championship in April 2023.

India Inc. is spending serious money to make the country a vibrant multi-sport nation. While Reliance Foundation has invested ₹3,500 crore on sports such as football, athletics and basketball in last five years, Tata Steel has spent thousands of crores in the past decade and JSW Sports has invested over ₹1,000 crore till date (since 2018), according to industry estimates. With an investment of ₹7,090 crore in Lucknow SuperGiants, the RPSG Group (which also owns ISL team ATK Mohun Bagan), will be spending the most in an IPL team.

Tata Steel has five academies across football, hockey, archery, chess and adventure sports, while Adani Sportsline has academies for football, basketball and cricket. The Dani Foundation (run by Jalaj and Vita Dani of Asian Paints) has partnered with the Sports Authority of Gujarat to set up the ELMS Sports Foundation, where it supports 300 residential athletes across athletics, judo, basketball and table tennis. "The agenda is to promote sports and bring about social transformation," says Vita Dani, founder, Dani Foundation. "At Tata Steel, sport is a way of life. Through our academies and initiatives, we scout for talent, invest in grooming their skills, give them exposure, and put them in selection processes," says Chanakya Chaudhury, vice president, Tata Steel.

JSW Sports has HPCs focusing 'on athletics, swimming, wrestling, boxing and judo. While the Inspire Institute of Sport (IIS) in Bellary is its flagship HPC, the company has feeder centres in Odisha, Manipur and Haryana as well, where it trains 6,000 athletes, including the likes of Javelin star, Neeraj Chopra. "My dream is to see India among the top five sporting nations in the world. India needs at least 10 IIS kind of performance centres, so, I am looking at spreading my wings," says Parth Jindal, founder, JSW Sports & IIS.

Money-wise

Corporate India's efforts to groom sports talent have reaped rich dividends. Twelve out of the 107 medal winners at the recently concluded Asian Games in China were trained by Reliance Foundation, while 17 were supported by JSW Sports. Jindal is confident at least five of the athletes currently being trained at his HPCs are capable of winning medals at the Olympics. While Tata-Steel funded Tata Archery Academy's cadets, Ankita Bhakat and Bhajan Kaur, brought home bronze medals, silver medal-winning wrestler Deepak Punia was trained by Adani Sportsline.

No wonder, from football, volleyball and table tennis to indigenous sports such as kabaddi and kho kho, corporate India is seeing mammoth potential in the business of leagues outside of cricket. While the Indian Premier League (IPL) continues to be the fifth-biggest sporting league in the world with a valuation of ₹95,000 crore with the likes of Reliance Industries (Mumbai Indians), RPSG Group (Lucknow SuperGiants), Diageo India (Royal Challengers Bangalore) and JSW Sports (Delhi Capitals) owning teams, smaller ones such as Pro Kabaddi League (PKL), Indian Super League (ISL), Ultimate Table Tennis (UTT) and Pro Volleyball League (PVL) are also attracting substantial interest from companies. While each of PKL's 12 teams is valued upwards of ₹100 crore (taking the league's total valuation upwards of ₹2,000 crore), ISL commands a valuation of ₹463 crore.

According to GroupM ESP's annual Sporting Nation report, sports industry spends (sponsorship, endorsement and media outlay) touched ₹14,209 crore in 2022, a 49% growth over last year. While cricket received the lion's share of 85% (44% growth over 2021), emerging sports grew 15%, 87% higher than 2021.

"The franchise format pioneered by cricket through IPL has since been adopted by many other sports in India, and we now have properties like ISL and PKL which have created flourishing markets of their own," says Vinit Karnik, head, entertainment, esports and sports, GroupM South Asia.

No wonder sports sponsorship spending increased 105% last year. While cricket saw a 99% rise, sponsorship revenues for emerging sports went up 123%.

India Inc.'s maiden brush with the business of sports came in 2008 with the launch of IPL. Prior to IPL there was the Indian Cricket League (ICL), started by ZEE Entertainment founder Subhash Chandra, which was marred by controversies and ended up a failed venture. A heady cocktail of cricket, business and entertainment, IPL had all the elements of success, with poster boys of business such as Mukesh Ambani, Vijay Mallya and Mohit Burman buying teams, as well as Bollywood icons Shah Rukh Khan and Preity Zinta investing in franchises. To top it all, India was a powerhouse of cricket and had a fanbase obsessed with the sport. Today, the 15-year-old league is valued at $11.1 billion, according to a report by D&P India Advisory Services. While Mumbai Indians alone is valued at $410-450 million, the other teams together are valued upwards of $350 million.

While eight out of the 10 teams are profitable, newer ones such as Lucknow SuperGiants (owned by the RPSG Group) and Ahmedabad's Gujarat Titans (owned by CVC Partners) are heading towards profitability. "In three years from now we will start making money," says Shashwat Goenka, sector head, retail and FMCG, RPSG Group. "A large part of it is due to the increase in the central media pool. We are working towards building the franchise's fan engagement which we will also encash. There is a clear path to profitability in IPL," he adds.

Like most leagues, media rights are the highest revenue contributor of franchises. In IPL, 80% of a franchise's revenue comes from the central pool of media and title sponsorship rights. Media bids for the 2023-2027 editions of IPL have increased three-fold from what Disney-Star paid in 2017 (₹16,000 crore). The BCCI earned ₹48,390 crore from media rights, out of which broadcast rights for the Indian subcontinent was bought by Disney-Star at ₹23,575 crore, while digital rights were bagged by Viacom18 at ₹23,758 crore for 410 matches. On the other hand, the Tata Group paid around ₹300 crore for the title sponsorship of the 2022 and 2023 season of IPL.

"The franchises are getting close to ₹500 crore from the central pool. The local revenue pool should be in the region of ₹100-200 crore," explains Santosh N., managing partner, D&P Advisory.

Cricket's newest league is the Women's Premier League (WPL), which had a dream start this year. According to the D&P Advisory report, WPL is valued at $150 million. It has on board the Tata Group as the title sponsor for ₹165 crore, while the media rights are valued at ₹951 crore for five years. Team owners (Delhi Capitals, Mumbai Indians, Gujarat Titans, Royal Challengers Bangalore and UP Warriors) say profitability is already in sight. "Our WPL (Delhi Capitals) team lost about ₹70-80 crore but with the success of Season One and with interest in the sport growing by leaps and bounds, it is a matter of time before WPL becomes highly lucrative," says Jindal.

IPL, The Torchbearer, But...

Riding on IPL's success, India saw the emergence of over 15 sports leagues such as ISL, Pro Kabaddi League, Premier Badminton League, Hockey India League and International Tennis Premier League, to name a few. Barring ISL and PKL, none have survived.

"IPL made everyone believe leagues are the way to go. They forgot that cricket was the most popular sport in India, the best sportsmen from the world are playing in it and it is a TV-friendly sport," explains Joy Bhattacharjya, CEO, Prime Volleyball League (PVL). He cites the example of the badminton league, which had stars such as P.V. Sindhu and Saina Nehwal. "When Sindhu and Nehwal played each other, the stadiums were packed but nobody bothered which team they were representing. The league format works only in team sport," says Bhattacharjya.

"The biggest problem is the economic model. Everyone equates themselves with IPL, but they don't understand that cricket is a different beast altogether. To make your business viable, you need to keep your costs low. There will be losses, even IPL made losses for almost 9-10 years,” says Tuhin Mishra, co-founder, Baseline Ventures. "Leagues such as IPL and PKL have attracted significant investment from corporate sponsors and media companies. But badminton, tennis, and hockey may not receive the same level of financial backing and promotion, which can hinder their growth and popularity," adds Ahetesham Khan, executive director, Nangia Andersen.

Former tennis star, Gaurav Natekar, now director, Natekar Sports & Fitness, says some of the earlier leagues didn't work as not too much thought was given to the long-term aspect. "They didn't have the vision or realised they had bitten more than what they could chew. Leagues need to have a long-term plan," says Natekar.

While PKL with a low-cost model of just ₹1.5 crore as franchise fee and low player costs turned profitable faster, ISL is still in the red even in its 10th year of operation. Reliance Foundation supported the league, despite heavyweight investors such as JSW Sports (Bengaluru FC), Dani Foundation (Chennayin FC) and Tata Steel (Jamshedpur FC) each making huge losses of ₹30-40 crore per year. "Promoters of some of the franchises can't afford this kind of loss. Since Reliance Foundation has deep pockets, it supports these teams," says a sports business analyst. RPSG Group's ATK Mohan Bagan is among the few ISL teams nearing break-even.

According to Jindal of JSW Sports, the group's ₹600 crore sports business is profitable because of IPL. "The profitability of IPL is 10x of PKL and the loss of ISL is 10 times that of IPL." JSW sport co-owns Delhi Capitals (both men and women IPL teams) Bengaluru FC (football) and Haryana Steelers (kabaddi). Jindal says while the men's IPL team reported an average EBITDA of ₹350 crore, the PKL team made a profit of ₹2 crore, Bengaluru FC lost ₹30 crore.

Business Models

The past two-three years have seen the emergence of the second wave of leagues such as PVL, UTT and Ultimate Kho Kho League. Their lesson from the earlier failed leagues is clear — not to equate themselves with IPL and not to expect to make money in the short-to-medium term. "If you want to make money in sports, you need a long-term view. You will never get returns in two or five years," says Bhattacharjya of PVL.

Though the newer leagues have revenue models similar to IPL (teams earning bulk of the revenue from the central pool and a small fraction from the local pool), league owners are being conservative in the way they spend or even generate revenue. While the average CPM (cost per minute) of an ad on IPL is around ₹3 lakh, the newer leagues manage to get barely one-tenth of it, says D&P Advisory's Santhosh.

Bhattacharjya says most of the earlier leagues fizzled out because they wanted to make quick returns. They paid mega bucks to rope in celebrity players, but there weren't enough takers for the sport itself, he adds.

Instead of inviting franchise bids, PVL roped in franchisees ready to stay invested for the longer term. Some of the key franchise owners include Thomas Muthoot of the Muthoot Group who owns the Kochi team and Phone Pe founders Sameer Nigam and Rahul Chari, who own the Mumbai team. Since all the franchisees are stakeholders of the league, they have their skin in the game. "When the volleyball league was conceptualised, we said we would let every team be an owner of the league. Now they try to control costs together. If one of them has access to better hotel rates or is good at logistics, they all chip in and that brings down costs," points out Mishra of Baseline Ventures, which conceived the league.

To save on costs, PVL chose to have all its matches in a single venue. The first season of the league happened in Hyderabad in 2021. "In the second season we did in three cities as an experiment to figure out the fan following, but in season three, we are going back to one venue, which is Chennai," says Baseline's Mishra.

One of the disadvantages of kabaddi is the lack of international traction. Bhattacharjya, however, differs. "Volleyball is the third-most played sport in the world after basketball and football, which gives us an opportunity to scale up beyond India. You can get a top global player for $25,000-30,000 to play for a month, whereas an international football player will probably be 10 times more expensive," he says.

Bhattacharjya has garnered sponsorship revenue of ₹15 crore by roping in brands such as RuPay and Amul. "Our total cost should be around ₹22-23 crore, so we are already close to break-even despite not having sold media rights," he adds.

Like volleyball, kho kho also has a connection with the Indian audience, especially in Tier-III and IV India. Over 80% of the population has sampled the sport during their school or college days. It was on this premise that former EY partner Tenzing Niyogi sold the concept to Amit Burman of Dabur India. "When I saw kho kho, I understood it is a fast-paced sport. The first thing that came to my mind is can I convert it into a TV spectacle? The key to building a successful league is all about how many people are watching it on air, not on ground. The fastness of this sport and the man-to-man combat and spectacles like sky-dive when a player is air-borne, parallel to the ground to get his opponent out made for great TV viewing," explains Tenzing Niyogi, CEO of Ultimate Kho Kho League.

Right from the beginning Niyogi made sure franchise owners are deep-pocketed and willing to stay the course. He roped in the likes of GMR, Adani Sportsline, Capri Global and the Odisha government as franchise owners. Like PVL, Ultimate Kho Kho League also opted to conduct the tournament in a single location, Pune.

Niyogi, who hopes to break-even by the fourth season, has also decided not to go in for player auctions. "We went for player drafts. Salaries of players are pre-capped. We analysed those who played nationals for the last two years, and placed them in different price brackets for three seasons. It's a pre-designate in the P&L," he explains.

Both PVL and Ultimate Kho Kho have still not exercised their media rights, the most important source of revenue for leagues across the world. The idea is to wait for the leagues to reach a certain scale so that they command a good price. In the meantime, the focus is on building a cost-efficient business model. Both leagues currently have an 80:20 revenue share deal with Sony-Liv where they get 80% of the advertising revenue and the OTT platform helps them sell their inventory. "Media rights will be exercised in the fifth season. We will get into a bidding scenario and part of the media revenue will go to franchises," says Niyogi.

UTT, on the other hand, has a centralised business model where franchisees pay the operating cost for one month along with a fee of ₹1.40 crore. "All franchisees need to do is hire a manager to coordinate the training during matches. We take care of the teams' transportation and stay," explains Dani.

With media rights constituting the bulk of a league's revenue, PVL, UKL and UTT are exploring ways of making their respective leagues broadcast and OTT friendly. Cricket, for instance, is considered the most TV/OTT-friendly sport as it gives enough opportunities for commercial breaks (in between overs, in between wickets etc). Football and hockey being extremely fast-paced sports, with just one break in between, aren't considered commercial friendly.

Niyogi of Ultimate Kho Kho has a similar challenge. It's a nine-minute innings sport, and media partner, SonyLiv, asked the league to reduce the speed. "It was important to put us in an appointment viewing one-hour format, leaving enough time to educate audiences. So, we converted it into gameplay of 28 minutes, which left us with time for reference, double reference, and split screens."

Similarily, volleyball is a 25-point game, which also doesn't work on broadcast. "It's like a 50 over match, which is too long. We made it a 15 set match," says Bhattacharjya.

According to Prathamesh Mishra, chairman, Royal Challengers Bangalore (RCB), one needs to build an ecosystem for a league to be successful. "That ecosystem has to make sustained efforts to push the quality of the game and the funnel of players, talent management and overall infrastructure. Once that is taken care of, you need to attract audiences beyond the game," says Mishra.

Rajiv Gupta, MD and senior partner, Boston Consulting Group, says monetisation of a league is proportional to its performance and for that one needs to have a strong media revenue stream, event-management skills, talent and infrastructure. He cites the example of PKL. "PKL had strong founders in Mashaal Sports and Star, and they attracted solid investors who invested in the teams. So, the media and event bits were taken care off. Star also ensured the experience created on air was top notch. The franchisees made sure they groomed the right kind of talent. Finally, the infrastructure started coming in after a couple of seasons when the viewership started to pick up," explains Gupta.

According to Vivek Singh, joint MD, Procam International (organisers of the Mumbai and Delhi marathon), barring cricket, the spectator model hasn't worked in India. The reason for that, according to him, is that league owners have tried to force fit the sport just because it is successful in other countries. "Sports is about passion and one monetises it by doing a league. It can't be the other way round. Kabaddi has passion and connection, but owning a team now has become prohibitively expensive." Singh feels the franchise fee of most leagues is on the higher side and the value generated doesn't equate with the money spent.

The National Basketball Association (NBA) has been in India since 2011, however, it has refrained from launching a league in India. According to Rajah Chaudhry, country head, NBA India, the plan has been to first create adequate interest in the sport before investing in a league. "A challenge most leagues other than cricket have faced in India is the right kind of talent. We decided to first build talent pathways by partnering with Reliance Foundation for the Junior NBA programme, we also launched basketball schools, and made the NBA academy available to Indian kids. The idea is to make India a basketball playing country."

NBA India has till date has trained 12 million school children in India. In the last five years, it has also sent 20 children to U.S. universities to play basketball. The model has been to partner with corporates through their CSR programmes and train grassroot talent.

Advertiser Interest

In the 2023 edition of IPL, broadcaster Disney-Star and Viacom18, both of which had the streaming rights, found it difficult to sell inventory. While Disney-Star had hoped to sell its inventory at ₹17-18 lakh for a 10-second ad spot, and ₹34-35 lakh for the playoffs, Viacom18 charged ₹6.5 lakh for connected TVs and ₹200 CPM (cost per million) for 1,000 impressions for other video ads. However, according to media planners, both struggled to sell their inventory.

So, does this indicate waning interest in cricket?

Not really, say analysts. Cricket is a religion in India and Disney-Star is known to have sold 80% of its inventory at ₹10-13 lakh for a 10 second spot even before the ICC World Cup tournament commenced. Advertisers, however, have started to complain about clutter in cricket. "Brands have started looking at non-cricket sports. Most of them have a herd mentality and end up roping in men cricket stars. However, they are realising they are blowing crores with not much RoI. It's like putting money in a multi-star movie where you get limited screen time," points out Tuhin Mishra, co-founder, Baseline Ventures.

A title sponsorship deal for a property such as Prime Volleyball, for instance, costs ₹14-15 crore. The Tata Group paid ₹300 crore to become the title sponsor of IPL. Though cricket does give brands the reach with close to 800 million consuming the sport, the RoI that sports like kabaddi, volleyball or table tennis offer are several notches higher, says Ronnie Screwvala, founder, U Sports (which owns U Mumba kabaddi team, U Mumba TT and Mumba Masters in the Chess League). "It's a law of diminishing returns. You can't pay double the ad spot. It makes no sense if I paid ₹10 lakh a year ago for a 10 second spot on IPL and now I am paying ₹15 lakh." He expects emerging sports to contribute 30-40% to a company’s revenue kitty in the next couple of years.

"Not all brands can afford IPL. It makes it unviable from an RoI perspective, therefore money is beginning to get diverted to a less-watched property, which generates more RoIs in terms of ad spends," agrees Chandrashekar Mantha, partner, Deloitte India.

In fact, a lot of national brands such as Hero MotoCorp, RuPay and Amul are allocating a significant amount of their advertising budgets on sports outside of cricket. Hero MotoCorp was the title sponsor of the Hockey World Cup earlier this year, as well as the title sponsor of ISL. The auto major also supports golf and motor sports. The company is supporting 30 budding boxers at the Mary Kom Regional Boxing Foundation. "These strategic partnerships are tailored to offer crucial resources and guidance to emerging athletes, encompassing comprehensive training and holistic development," explains the company spokesperson.

Similarly, dairy major Amul has started spending close to 20% of its advertising money on sports such as hockey, football, volleyball and kabaddi. "We were one of the first brands to support the Indian Olympic contingent back in 2012," says Jayen Mehta, MD, Amul. The company has doubled spends on sports outside of cricket in the past couple of years. "We don't overspend on cricket. Every sport has a following in a particular state or region. If you advertise on multiple sports, you can reach out to multiple audiences," says Mehta.

Even for D2C brands non-cricket sports make immense sense. Ankit Nagori, founder and CEO, Eat Fit, invests 80% of his advertising money on cricket, but his media plan comprises a host of local cricket events such as the Maharaja Trophy organised by the Karnataka Cricket Association. "The intent behind local events is to build a strong association between sport and Eat Fit," says Nagori. "In terms of value for money, emerging sports is a strong category. It may have limited reach, but it can get a decent RoI." Eat Fit has partnered with Bengaluru FC as well as PVL.

Yannick Colaco, co-founder of sports streaming platform, FanCode, says most advertisers focusing on non-cricket sports have a clear plan of building association with the followers of those sports. "If you are able to capture a sport like golf and build on it, the ability to stand out and build brand associations with consumers is much stronger," he says.

Brands advertising on non-cricket sports, according to Colaco are not there for the reach. "Advertisers investing in rugby, basketball or hockey hardly talk about buying spots. It's about an association, about how their brand can build affinity or get the message across the audience which consumes these sports."

Brand Endorsements

According to the GroupM ESP report, sports celebrity endorsement saw a 20% jump in 2022, with endorsements in emerging sports growing 30%, and cricket gaining 18%. Mishra of Baseline Ventures claims a large number of brands prefer to support talent from emerging sports as it gives them ownership of the sport, unlike cricket where they are one among many.

The total endorsement value involving cricketers in 2022 added up to ₹637 crore, 85% of all sports, and 18% growth over 2021. As many as 381 deals involved cricketers, three-fourth of the total count. In fact, the average deal value involving cricketers is 1.8 times that of athletes from emerging sports. However, the silver lining is that there were 124 deals in sports other than cricket, delivering a total value of ₹112 crore.

With UNSDG goals laying emphasis on diversity, brands have increased their endorsement deals with women athletes. In fact, cricketer Smriti Mandhana and badminton star P.V. Sindhu command a higher price than most national-level male cricketers. "Enabling our women athletes who have the potential to reach podium positions is the direction we want to take," says Neelendra Singh, MD, Adidas India, which has signed up boxers Mirabai Saikhom Chanu, Lovlina Borgohain, table tennis sensation Manika Batra, long-jumper Shaili Singh and 100-metre hurdler Jyoti Yarraji. Sports such as volleyball, kho kho and kabaddi, on the other hand, have over 40% interest from female audiences, another reason why brands are looking at supporting them.

There's a sports ecosystem developing outside of cricket, but it is just the tip of the iceberg. Companies need to stay the course for the actual growth story to unfold.