In a Utopian world, all the leagues, envisaged by the promoters and bought by the franchises, would make profits and players would be laughing their way to the bank. But the real world is different. Making money from sports and keeping all stakeholders happy is a tough ask.
model was created in 2008 by Lalit Modi out of compulsion to counter a rival tournament — the Indian Cricket League (ICL) — and since then the tough task of making money has become simplified for newbies who want to jump on to the league bandwagon.
In the seven years since its inception, a spurt in franchise leagues has seen badminton, hockey and kabaddi all launch multi-million dollar tournaments while the countdown for football and tennis to join them has started.
The Pro-Kabaddi League, in fact, is making a big splash with broadcasters claiming that the event has received more than six million tweets from different hashtags in just 12 hours of broadcasting of the tournament. And the flattering ad rates (see box) will warm the cockles of the franchises and stakeholders, among others.
The way leagues are mushrooming in the country, post the Indian Premier League (IPL), it seems the lucrative domestic tournament is now a template for running franchise-based leagues.
Along the way, some leagues like wrestling and boxing, despite replicating the popular model, have been aborted or are yet to take off despite numerous infusions.
In wrestling, even double Olympic medallist, Sushil Kumar, and Yogeshwar Dutt, could not help the ambitious tournament envisioned by the Wrestling Federation of India (WFI) to take off in 2012.
In fact, apart from the main sponsors, even associate sponsors were not willing to come on board for the traditional sport and finding six franchises became a laborious task for the WFI.
A lot of factors go into making a league successful and very few know about the soft underbelly of the IPL, despite its sound fundamentals of sharing broadcasting and sponsorship money with its franchises. Losses are mounting and have touched a staggering Rs. 330 crore, according to franchise balance sheets and the details BCCI furnished to the Parliamentary Standing Committee of finance.
And no wonder the IPL is now spreading its wings to places like Raipur, Ranchi, Cuttack, Vizag and Ahmedabad where people are lapping up the already established product. But what about nascent tournaments like the Indian Badminton League (IBL), the Pro-Kabaddi League, the yet-to-be-launched Mahesh Bhupathi-promoted International Premier Tennis League (IPTL) and the Vijay Amritraj-fronted Champions Tennis League (CTL)?
Every organiser wants to talk about the millions being pumped into the leagues but information on the source of funds and transparency on the ownership details are hard to come by. The Fema violation case by the Enforcement Directorate on the BCCI still continues following the IPL’s visit to South Africa in 2009.
In IPTL for example, details are still hushed. It is only known that the first year will see four Asian teams — India, Singapore, Manila and Dubai --- play in a round-robin format at all four locations. Details on who owns the Indian team is still not clear. There were talks of PVP Group owning the team, but it was later revealed that Micromax have invested instead.
There are some reports that team owners have paid about $15million for the franchises, which they will own for 10 years. Such sketchy details with a tentative launch in November don’t evoke much enthusiasm.
Thinking out of the box is not the forte of our sports administrators and the current trend only points to the fact that IPL’s the only model which bears the burden of shoring up each league. But why is every sport in the country in a hurry to have a league of its own?
It seems there is a gold rush in sports investment. The market has doubled from 2008 — Rs. 2000cr to Rs. 4000cr. While a big chunk is still being gobbled up by the IPL, niche sports like badminton, boxing, motorsports and established sports such as hockey and football are expecting a 20% jump in advertisement share every year over the next three years.
So, when a broadcaster talks about pumping Rs. 1,500cr into hockey over the next eight years and Hockey India (HI) promises a winners’ cheque of Rs. 2.5cr, it doesn’t raise eyebrows any more.
But sceptics say the bubble will burst. “There is not much study done before the launch of these leagues,” says a sports administrator on condition of anonymity. “These league promoters do not disclose their marketing model; how much they are paying sports federations, what is their commitment to the franchises and how will they cover the losses,” he says.
The thrust now is to get franchises with deep pockets while sport takes a backseat. Little is also known about how and when those who have bought teams will break even.
In the case of IPL, whose model everyone claims to be following, a major chunk of money comes from TV rights and title sponsorship. The revenue is now shared between the franchises and BCCI in 60:40 ratio. Besides, the franchises are entitled to keep the entire revenue earned from personal sponsorship, gate money and merchandise. But this model is difficult to replicate elsewhere because sports like tennis, kabaddi, badminton, wrestling and boxing, among others, do not have the kind of connect cricket has. Less connect translates into lesser sponsorship while the overhead costs keep on mounting.
Football steps in
The Reliance-IMG promoted Indian Super League (ISL), scheduled to kick off in November this year, though has some transparency when it comes to its revenue model. Teams have to pay an annual fee of Rs. 15cr for 10 years. The bulk of the teams’ income will accrue from an equal share of the central sponsorship pool and broadcast revenue, according to the business plan.
While, for 2014, it is projected at Rs. 6cr (Rs 3cr each from broadcasting and television), it should become Rs. 8cr by 2016 and Rs. 17cr in 2017, the year India hosts the U-17 World Cup.
Hero has been signed as title sponsor for the first three seasons and it was learnt that the deal was worth approximately Rs. 15 crore per annum.
At the end of the day, it’s up to the spectators and television viewers who will call the shots. Ditto for Pro-Kabaddi League. It ultimately wants to connect to every village through this rural sport, but for the first season has started off in metros like Mumbai, Bangalore, Kolkata and Delhi.
Soon, it will be survival of the fittest. The leagues with genuine love for the sport will have the better chance of thriving.
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