Despite losses, franchises see ISL as investment in Indian football
Based on conversations with ISL franchise officials, officials at the All India Football Federation (AIFF) and those involved in running the league, it is estimated each of the eight franchises lost between Rs 35-40 crore in the first season.football Updated: Jul 19, 2015 12:10 IST
First, the good news — Rs 12.45 crore was spent in a day on Indian footballers at the Indian Super League (ISL) auction and draft on Friday, July 10. That’s a little more than what it costs to stage the 11-team I-League on a home-and-away basis for nearly five months.
The not-so-good-news is that losses for all ISL franchises going into Season 2 have been way more than anticipated. After the owners were announced last year, Sourav Ganguly, one-fifth proprietor of Atletico de Kolkata (ATK), said he had asked the partners whether together they would be willing to lose Rs 20 crore annually for the next few years. As it turned out, they lost nearly double that in 2014.
Based on conversations with ISL franchise officials, officials at the All India Football Federation (AIFF) and those involved in running the league, it is estimated each of the eight franchises lost between Rs 35-40 crore in the first season.
That means by the time the turnaround year comes in 2017 — as projected in a business plan circulated in 2014, of which HT has a copy — franchises may have lost almost Rs 100 crore each. That’s almost twice the annual budget of the AIFF, factoring in a raise it is supposed to get next January from commercial partners IMG-Reliance. Conversely, it is also approximately Rs 28 crore less than Wayne Rooney’s annual salary.
“It is a matter of concern and we expect economic viability sooner rather than later,” said Gaurav Modwel, the Mumbai-based CEO of FC Pune City over the phone.
“But it is also an investment into football in India. Sure, it is a long punt but there is the possibility of this turning around. What is the alternative? It has been difficult to create fan engagement and consequently sponsor interest in I-League. It might not lead to economic viability in next 20 years.”
A team owner said: “Frankly, no one is looking to break even till Year 4. But we didn’t expect the losses to be this high either. At some point during our conversations, we were promised around Rs 12 crore through the central sponsorship pool and broadcast revenue. Somewhere it came down to Rs 4-5 crore and later it turned out to be zero.”
According to the business plan, the projected loss for franchises was around Rs 20 crore after the first season. Modwel said salaries of players and the coaching staff were more than expected and going for pre-seasons to Europe too contributed to overshooting the budget. A players’ salary cap of Rs 21 crore has been introduced this season and IMG vice-president of football Andy Knee said in Mumbai last week that it was done to ensure fiscal discipline.
What possibly aggravated the problem was that nothing from the central sponsorship pool, said to be worth around Rs 70 crore, came to the franchises. The league is supposed to take 20% as operational expense but the rest wasn’t ploughed back to the teams as promised. A spokesperson for the ISL said that happened because a huge amount was spent in getting the venues ready. “India does not have a football stadium at the ready. We spent a lot on refurbishing, be it relaying the turf in Delhi, increasing the workforce in Guwahati to ensure the pace didn’t slacken during Durga Puja, getting practice grounds ready in most venues and even increasing the wattage of floodlights in every place except Kolkata. Our international pitch consultant Gregory Gillin flew in regularly.
“The idea was to create a product for international audience and also provide exposure for Indian players. A number of big names were involved as players and coaches and it was imperative to undertake every possible measure to make a good impression of India as a footballing nation.”
The spokesperson put the amount spent in refurbishing eight stadia at around Rs 50 crore. “This term, except for Chennai, most franchises won’t have to spend anything near as much on pitch and stadium upkeep,” he claimed.
A franchise official said the league did a lot to get the stadia ready but didn’t discuss figures.
Speaking separately, an official associated with organising AFC Cup (an Asian club tournament) matches said it takes between Rs 70 lakh to 1 crore to get a stadium ready for football. That does not include relaying the pitch, replacing floodlights and getting practice grounds ready.
It is estimated that despite total franchise fees of around Rs 100 crore and Rs 70 crore from sponsorship, the league lost money after accounting for broadcast costs, organising opening and closing ceremonies and other expenses. The league, however, is looking at the amount as investment.
“The ISL did become the fourth-largest viewed league in the world. We remain committed to the development of football in the country… In the first year, 24 boys have been given residential scholarships between three to five years,” said the ISL spokesperson.
At least two clubs separately told HT that not auctioning the television rights — the main source of income for most top football leagues of the world — was a flawed idea. “Even if it was sold for Rs 5, it should have been auctioned and a percentage of the money generated given to the teams,” said one of them.
Till press time, ISL co-owners Star India hadn’t replied to an email from HT sent on Wednesday afternoon asking how it plans to monetise the ISL so that stakeholders could benefit.
The second edition promises enhanced sponsorship deals for teams, a fatter central sponsorship pool and possibly share of broadcast revenue. A franchise official said, having internally sold ad-space last term, he is expecting Rs 12 crore this time. ATK’s shirt sponsors haven’t reconfirmed but should they not, the champions are confident of getting one for more.
Shirt sponsorship deals went for between Rs 2-5 crore last term, it was learnt. One of the semifinalists is already claiming to have sewn up a deal for around Rs 8 crore this year. Teams that have been down, they should each get between Rs 3-5 crore from the central pool this term.
“There are Championship (English second division) club seeking owners for Rs 250 crore. You could buy one and lose Rs 20 crore annually thereafter for some time. Or, you could invest in the ISL. There’s a better chance of wiping off the deficit and obviously a huge rub-off of creating a brand and developing football in your own country,” said Modwel.