The Business of Sports

Sports in India was synonymous to Cricket till some 5 years back. Media flashed stories of luxurious homes of cricketers, their 100 crore brand endorsements, travel diaries of their extravagant tours abroad and elaborate set-ups they managed to create back home like fancy restaurants, gymnasiums and coaching academies. Almost a negligent amount of money was poured into other sports, as if they were non-existant. No corporate was willing to take the risk to put money, advertise and hence none of the channels were much interested in televising it. Stories of Hockey players, Kabaddi players and other sportsperson traveling in Sleeper coaches by the Indian Railway for matches are widely known. In-fact, such were the adversities, that one time a key strike player managed to get himself shot in the arm during his train journey, just before they were about to embark for the Hockey World Cup. All this was happening when the Cricketers travelled by chartered flights, ordered food & wine on the go, captured most TV ad space and returned to rousing welcome when they were back(if they won, that is).

All that changed when the IPL was launched in 2007. With the success of the league and later India  successfully hosting the Commonwealth games in 2010, different channels started to open up for other Sports. A lot of money was plugged into the Sports industry and corporates started to set aside a portion of their marketing budget specifically for Sports.

I had the privilege to attend a session by Dr. Allen Sanderson, World Renowned Economist from the University of Chicago which was organized by FICCI in New Delhi. It was very interesting to understand a Economist point of view on the Business of Sports. FICCI on the outset, has a dedicated Sports division headed by Rajpal Singh who said that they are buoyant about the future of Sports in India. Backed by an able team and with constant support from the top brasses of the Sports fraternity, they are pushing to get Sports recognized as a sector in India.

Allen started by questioning the audience if anyone knew who the 3 highest paid people in the United States- Pentagon were? The Football coaches of the Army, Navy & the Air Force was what he revealed, which left the audience astounded. It only goes to show that Sports is such an important sector for US and other countries unlike in India. He explained the entire process of transformation of Sports Industry in US from the 1970's when the owners had a lions share of the pie(money) to the current scenario where, with an evolved system, the players rake in a 50:50 deal as free agents. No doubt the pie has got bigger over the years with the advent of Television and revenue being drawn from Stadiums (seats, food, boxes etc), merchandising, endorsements, broadcasting & media rights. A 30 second Television Commercial during the American Super Bowl would cost some $400 million. Yes, you read it right, 400 MILLION DOLLARS.

Television has had a huge influence in changing the way Sports are perceived & watched by plugging in an insurmountable amount of money. The thrill of watching a LIVE game on TV, with replays, commentary and the latest technologies is an unexplainable excitement for a Sports Connoisseur.

If we take a look at the current scenario in India, there have been a number of Leagues which have come up on the lines of the IPL. We have the I- League(Football), Hockey India League(HIL), Indian Wrestling League(IWL), Mahesh Bhupati League, Mixed Martial Art(MMA), Rugby League, Indian Badminton League(IBL) league etc to name a few. These have infused a fresh blood into Sports in India. Other Sports are planning to follow suit to garner mileage and gather sponsors. The Business of Sports is growing at an astounding pace and TV Channels like Neo, Zee Sports, Ten Action have started Televising these events, which have led to a wider reach and popularity of these Sports discipline. The Sports industry has also started to witness investments from Corporates like IMG- Reliance in Football(700 crore), Punj Lyod in Squash(Rs 30 mn), Sahara in Hockey & Cricket( Rs 206 crore), Jaypee Group in Cricket & Motor Sports( Rs 400 mn).

Allen took us through the details of why certain economies like US, UK made profits out of Olympic Games while some countries like China, Russia and others had serious repercussion when the games got over and were in huge debts. He also laid stress on the fact that Infrastructure plays a very important role in developing an athlete and that we need to start grooming talent from the age of 5-6 years because an athlete requires a minimum training of 10,000 hours before he can compete at the International level. The training in United States happens at Colorado which is at a High Altitude. This is done to accustom the athletes to the weather conditions so that they are able to perform anywhere around the world. Citing exemplary anecdotes about top athletes like Michael Phelps and drawing strong conclusions from writers like Sherwin Rosen & Simon Rottenberg,he ended the discussion with strong views about the state of affairs in the US and how exploiting the athlete is a part of the system.

An amount close to $600 billion is being plugged in the Sports Industry Worldwide. Sports business in India need to deal with issues like Return on investment, initial costs & annual maintenance of infrastructure. Sports is still in the nascent stage but will be a force to reckon in the next 5 years.