In chess, the knight is a unique piece. It moves three squares at a time but two in a straight line and then to any adjacent square, right or left. It’s a pattern Venky Mysore, the managing director and CEO of Indian Premier League (IPL) cricket franchise Kolkata Knight Riders (KKR) seems to be mimicking. His first two seasons at its helm followed the straight-line approach. And now, on the cusp of the third, he’s trying to reinvent KKR for a wider audience.
When he took over the reins in September 2010, KKR was the only team at the end of three seasons never to have made it to the knockout stage. Season finishes of sixth (among eight teams), bottom, and sixth, had reduced the knights to jesters. Mysore’s strategy was two-pronged: put the game and the business in place. The first began with a complete overhaul of the team at the 2010 player auctions. Two years later, the team lifted the IPL title. On the business front, he started off by reining in expenses, such as booking team travel in advance instead of waiting for the last minute, ironing out governance issues by appointing Ernst & Young as auditors, and creating a proper reporting structure. The result: The franchise ended FY12 with a net profit of Rs 14 crore on revenues of Rs 125 crore. “The accumulated losses from the first three seasons are still being wiped out though,” he admits.
With both game and business largely fixed, Mysore wants to turn KKR into a global franchise—the Manchester United of the IPL, if you will. “Man Utd has been at it for more than five decades. But I don’t think we’ll take even 25 years,” he says. He projects that KKR will grow at 25% in the next five years. Even at that steady clip, KKR is expected to reach Man Utd’s current revenue in 17 years. Hilmy Cader, CEO, MTI Consulting, a global management consultancy, which has carried out valuations of IPL teams, says, “Having set its team and on-field performance in place, KRR can now focus on growing its top line and bottom line and look at ways to move away from the cookie-cutter business model followed by most franchises.”
Of course, Mysore isn’t just talking numbers, but also the ideas that fuel Man Utd. The club is very much rooted in the traditional Mancunian work ethic exemplified over the years through its continual successes, exceptional players, fabled managers, and the raw, emotional narrative of its successful emergence from the 1958 Munich air crash, which killed seven members of the team. That sustained footballing glory, in turn, continues to oil the cogs of the club’s commercial success, turning Man Utd into the gold standard for global sports marketing today.
The club often figures in the comments of KKR’s majority shareholder, actor and producer, Shah Rukh Khan (55%). In one of his interviews he said he’d like his son Aryan to be a footballer and play for Man Utd. In another he said, “If I had not become an actor, I would have been either a teacher or a Manchester United player—I know that for a fact!” Khan wasn’t available for comment on this story.
Other franchises harbour similar ambitions. All wish they were like Man Utd—a modern, multinational, multimedia, mega merchandising operation. Unni Krishnan, director of Brand Finance, a consultancy which has studied IPL franchises using three key parameters—cricketing excellence, marketing excellence, and governance—says there are three clear frontrunners: KKR, Chennai Super Kings, and Mumbai Indians. Krishnan says the three have built sustainable business models and will reap the benefits going forward.
Of the three, KKR lacks the backing of a big business house such as Reliance Industries (Mumbai Indians) or India Cements (Chennai Super Kings). Khan’s partner Jay Mehta runs two smaller businesses, Saurashtra Cement and Gujarat Sidhee Cement. Yet, KKR may just have what it takes to sustain itself and become a Man Utd. Mumbai Indians’ biggest draw is Sachin Tendulkar, but his cricketing days are nearly over. Chennai Super Kings, meanwhile, may pay the price for N. Srinivasan’s turbulent tenure as the current president of the Board Of Control For Cricket In India—including a conflict of interest in the IPL, given that he’s also vice chairman and managing director of India Cements. With the odds against him being re-elected to the post in 2014, it remains to be seen whether he can wield such clout, at times unfairly—retaining Mahendra Singh Dhoni, the Indian team and Chennai Super Kings captain, and not putting him up for auction in 2010.
While the financials of IPL franchises are closely guarded, none of KKR’s rivals seem to have announced a profit after five seasons. “Too many stakeholders still think of these clubs as a frivolous pastime. It’s an enterprise, and this consciousness needs to come in,” says Krishnan.
The willingness to see the IPL team as a business, and not the extension of someone’s ego, comes from Mysore’s background. He’s the quintessential finance guy—a bachelor’s in economics followed by an MBA in marketing and finance, and then a quarter century in the insurance industry, in the U.S. and India. He began as an insurance salesman for MetLife in New York in 1985, then worked his way up to become a key member of the team that set up operations in Asia. In 2001, he set up MetLife’s operations here, and stayed on as MD and CEO. Then he quit to join Canadian insurance major Sun Life Financial as country head before joining KKR. As a member of the Young Presidents’ Organization—Mumbai Chapter, he had a chance meeting with Mehta, which paved the way for his candidature. Having played cricket at the university level, his passion for the game was unquestionable. KKR’s promoters were also keen on having someone from outside the industry to take care of the franchise.
Mysore works hard to keep the franchise relevant at all times. These days, he’s playing brand ambassador. He has made a conscious effort to learn Bengali as well. He proudly displays the Bangla app on his iPhone with a translator and in-built audio, so that he hears the correct pronunciation. There’s also the database of frequently-asked Bengali questions and answers in text format on his BlackBerry. And he has a tutor who teaches him Bengali at home for at least an hour every week.
The core of Mysore’s strategy is what he calls “the two bookends”. One, build a solid foundation through the fan base, and two, build the KKR brand to get a global footprint. While a healthy fan base will ensure strong ticket receipts, growing the brand will mean more sponsorship. These are the two revenue variables that he has direct control over. And having won the crown last year, KKR can take advantage of the tailwind. There’s a third source of revenue: the BCCI’s central revenue for all franchises, which includes broadcasting fees and tournament sponsorship fees, and is mostly static.
The rough percentage breakup in revenue for KKR is 45-45-10 across central rights, sponsorships, and ticketing revenue, respectively. The corresponding shares for Man Utd are 32-31-37. What that means is that its revenues are not overly dependent on one category. Tickets are also a predictable source of income which de-risk the business and are, in some senses, the mainstay, reflecting the fan following of a club. For any club, fans are the core set of customers. “If we want to make this [franchise] bigger, the variables have to grow. The percentages may change, but the idea is to grow in absolute terms,” says Mysore.
That means revisiting his roots. “Insurance is never bought, it is sold,” says the man, who almost stuck with sales instead of going into management, having been one of the top performers for MetLife in the U.S. “You may have a great story but you’ve got to go and tell it.” And when he does get the opportunity, all that he’s looking for is a foot in the door because he knows he has a great story to tell.
KKR never had to worry about its fan base. “Kolkata is possibly the only city that had any history of a fan following even before the IPL started,” says Jeet Banerjee, director, Gameplan Sports, a sports management firm and among the oldest KKR associates. “The only teams that have such cult followings in the country other than the national cricket team, are the football clubs of Kolkata, East Bengal and Mohun Bagan.”
Cader compares KKR’s home ground Eden Gardens to Man Utd’s Old Trafford stadium. The Rs 35 crore entertainment tax waiver from the West Bengal government from last year also helped maximise revenue from the 65,000-odd seats. But Mysore did more—to fill Eden eight times over (the number of matches KKR played last season), he couldn’t just assume that droves would flock to the stadium every time. Every seat sold was crucial to KKR’s business, which meant it had to think out of the box. For the fifth season, match tickets were home-delivered (think dial-a-pizza) and hawked from vans that roamed Kolkata.
He also pitched aggressively in the virtual world. KKR is the only franchise present on six platforms—Facebook, Twitter, YouTube, Google+, Flickr, and Pinterest. KKR’s Twitter campaign was nominated in the ‘sports team’ category at the 2012 Shorty Awards (touted as social media’s Oscars) alongside English football clubs Liverpool (the winners) and Sheffield Wednesday, American football teams New Orleans Saints and New England Patriots, and Mercedes AMG (Formula 1).
Of course, Khan’s draw has helped immensely. Despite its poor showing in the first three years, KKR’s popularity never suffered. But behind the star is an astute businessman. It was evident from day one: picking up the Kolkata franchise for the second-lowest price ($75.1 million or Rs 408 crore) even as Mukesh Ambani’s Reliance coughed up $111.9 million for Mumbai Indians to emerge top bidder. Khan had no apparent links with Kolkata, but he knew just his status as one of Bollywood’s top actors would be a lightning rod for sponsors and fans alike.
Mysore is equally shrewd, which makes the Khan-Mysore combination an efficient money-making machine. During the player auctions of 2010, Mysore handpicked players using statistical analysis instead of going for famous names. KKR blasphemously did not rebid for Sourav Ganguly, the former India captain who had led KKR in the first season and is one of Kolkata’s star sons. Stadium attendance dropped dramatically for the first match of the season as fans sulked. But they returned, with new captain Gautam Gambhir and his team repaying Mysore’s faith on the pitch. In many ways, Gambhir, one of the less flamboyant players in the Indian team, fits the Mysore mould: an able, straight-talking, and no-nonsense leader.
Indeed, the idea of building a team without an obvious star is an important piece of his strategy and KKR’s success without Sourav Ganguly validated that. (Of course, it’s difficult to predict what would have happened had Gambhir not delivered.) “Without a doubt, the moment you mention KKR, the association that people make is with SRK [Shah Rukh Khan]; which is fantastic for us. We are still very fortunate that we have him solidly backing us. But the business has to run on its own steam,” says Mysore. The obvious analogy: Man Utd fans did not switch allegiance to Real Madrid when David Beckham or Cristiano Ronaldo moved there; Chicago Bulls fans never gravitated to the Washington Wizards with Michael Jordan.
This change in a country obsessed with its heroes won’t happen overnight, but Mysore’s script seems to be slowly playing out, helped in no small part by Khan himself. Having survived for over two decades in the big, bad world of Bollywood with its fragile egos, no one, perhaps, knows sustainability and relevance better than the actor. These days at the player auctions, the franchise is represented by the management, not the owners. Of Kolkata’s sponsor count of 22 (the largest among franchises) only two—Nokia and Dish TV—have direct deals with the star as brand ambassador. And Mysore’s contracts with sponsors have one clear message: Khan does not come with KKR. “I want them to associate with KKR because of KKR.”
The creation of KKR’s own identity began with a revamped team crest. The blazing golden Viking helmet against a black background with the name of the team written in gold gave way in February last year to a blazing purple Corinthian helmet trimmed with gold, with the team name written within a shield. Most conjectured that the move, a first among any IPL team, and remarkably early in its life (the Man Utd crest last changed in 1998), was superstition. Indeed, as Khan himself said at a press meet: “The golden colour was because I like gold and the black has been changed because I was told that it was not lucky.”
But Mysore had his rationale. “There are two versions of the crest—one in its entirety and the other depicts only the helmet,” he says. “My vision is to grow this brand to a point where people recognise the helmet instantly, like a Nike swoosh. And then there’s a whole host of products waiting because the delta [increase in value] that I give sponsors through the association is what generates the licensing fee.”
The branding goes hand in glove with his future positioning of KKR—an independent, fully-incorporated company, which is in the business of sports entertainment. Mysore has been on the lookout for sporting properties to associate with, which will hugely enhance brand visibility. The idea is to get a bouquet of franchises, with the same team colours and set of sponsors, under “the KKR mother brand”. Think a KKR Cheetahs in hockey or a KKR Nine Irons in golf.
KKR was close to tying up with one of the new teams in the Big Bash League, Australia’s domestic Twenty20 tournament, and the Sri Lankan Premier League. “But we had to walk out of them since they did not fit the strategic imperatives,” says Mysore. And not just cricket; the team also had offers in football, hockey, and car racing.
Given KKR’s tight budgets, Mysore is taking his time with recces and hasn’t jumped on to any property immediately. The purchases will be made through the parent company, Knight Riders Sports. And once the accumulated losses are wiped out, Mysore is hoping for adequate funds to make an aggressive push. Finances may also improve with a strategic investor coming in and, as recent rumours suggest, the KKR co-owners may offload stakes. There are no plans to go the Chennai way and sponsor events such as the Chennai Super Kings International Grandmaster Chess Tournament, or attempt something like its Whistle Podu business plan contest for IIM Kozhikode. Mysore wants all its ventures to be run like the KKR business.
KKR is also a brand that sponsors believe in. Nokia (despite its current troubles) has remained KKR’s principal sponsor for the entire tenure of the IPL, a feat rivalled only by Aircel with the Chennai Super Kings. “In fact, the Nokia-KKR brand-team association was rated the strongest among the eight teams and their main sponsors by MEC, a media buying and planning company, which did a study in 2010,” says Viral Oza, marketing director, Nokia India. In contrast, Mumbai Indians, even with its trump card Tendulkar, couldn’t prevent the Hero Group from exiting as principal sponsor this February.
But it is the association with a renowned international brand such as Nokia (also the regional partner of FC Barcelona in India) which can really fuel KKR’s ambitions of world domination. For that, it needs to gain from Nokia’s huge global footprint. Not only can KKR reach out to new segments of cricket fans (even China, Nokia’s biggest consumer, has its Chinese Cricket Association!), it will help strengthen its brand equity as well. After all, more than 1.3 billion people connect with a Nokia device every day. “The potential is there, and given the successful partnership so far, we have no reason to think otherwise,” adds Oza. The lesson, again, is Man Utd’s associations with DHL and General Motors, which boast such big global consumer bases. And for its push into Asian markets, it has even tied up with brands such as Airtel, Wahaha, a Chinese soft drinks manufacturer, and China Construction Bank.
Mysore, too, is looking beyond borders and is willing to utilise any strategic global tieup for the time being, such as sending Vijay Dahiya, the assistant coach, and fitness trainer Adrian Le Roux to Uganda to provide tips on training and improving performance to the national men’s and women’s cricket teams there. KKR, like Man Utd, also has had a policy of buying players from minnows in the sport—Tatenda Taibu (Zimbabwe), Shakib Al Hasan (Bangladesh), and Ryan ten Doeschate (Holland). The last two, bought during Mysore’s reign, have certainly justified their prices.
“Winning teams ultimately generate more media exposure and secure a dedicated fan base. In turn, media exposure drives sponsorship and licensing opportunities. And with sustained success the franchise fanbase extends beyond its immediate city or region,” says John Islley, director, Intangible Business, a British brand valuation specialist, which partnered MTI Consulting in its IPL study.
“SRK always refers to us as a ‘well-oiled machine’. And that can only mean there is more responsibility coming my way,” says Mysore. In early February, he was made CEO of Red Chillies Entertainments, Khan’s own production house and KKR’s majority owner. The move is expected to keep him firmly locked to KKR and give him a bird’s-eye view of the entire business.
So is he looking at listing KKR on the bourses, like Man Utd? That too before Red Chillies? He laughs. My first inclination is ‘No’, though it’s not out of my realm of thinking. There isn’t a strong desire on the part of the shareholders to unlock value through a listing. But in a hypothetical world, if I could give one share to every fan, imagine that.”
