Representational Image.(HT Photo)
Representational Image.(HT Photo)

Club together, Indian football’s new deal

Will this be open season for mergers and takeovers? And is this the only way clubs in the I League, now relegated to the second tier in the country behind the ISL and forever struggling for finances, survive?
Hindustan Times, Kolkata | By Dhiman Sarkar
UPDATED ON JAN 26, 2020 03:26 PM IST

With history as rich as it is varied, two 19th century clubs have joined an Indian football league that has turned six.

Last November, the City Football Group (CFG), whose biggest subsidiary is the 126-year old Manchester City, bought a 65% stake in Indian Super League (ISL) franchise Mumbai City. Last week, Mohun Bagan, established in 1889, and ATK, twice winners of ISL who are owned by Sanjiv Goenka’s RPG Group, agreed to build a team where the latter will have 80% control.

“As a neutral, this is a practical decision. Mohun Bagan require hard cash and professional management and ATK the massive platform this association provides. Both teams being from Kolkata should smoothen settling-down pangs. The challenge will be to preserve tradition even as modernity is embraced,” says Shaji Prabhakaran, president, Football Delhi, and former Fifa Development Officer for South and Central Asia.

‘Mergers, the solution’

ATK-Mohun Bagan, the new team, will play in the 2020-21 ISL. After beating East Bengal 2-1 in front of over 63,000 spectators in the I League on January 19—in what would be their penultimate derby—Mohun Bagan general secretary Srinjoy Bose said the reaction to the new deal has been “positive.”

Will this be open season for mergers and takeovers? And is this the only way clubs in the I League, now relegated to the second tier in the country behind the ISL and forever struggling for finances, survive?

“Either you need strong Indian backers such as the Jindals, Goenka or Tatas or you need CFG and their like,” says an ISL franchise official who did not want to be named because he is not authorised to talk to the media.

“This has to be the way forward for I-League clubs that want to be a part of the ISL (India’s top league). Based on the kind of funds they now have, even if they qualify for the ISL they will not be able to survive,” says Debasish Dutta, Mohun Bagan’s finance secretary.

According to the pathway approved last October by the Asian Football Confederation (AFC), two I-League teams will join ISL after 2020-21. In 2022-23, the I-League winners will qualify for ISL and play without paying the annual franchisee fee, set between Rs 12-18 crore. From 2024—when the 10-year agreement guaranteeing franchises an ISL berth ends—promotion and relegation will start in ISL, and India will not have two parallel leagues anymore.

“Mohun Bagan and East Bengal (in their 100th year) have so much history, so many supporters and yet they have struggled to find solid corporate backers. That tells you how difficult it will be if other I-League clubs go solo. In ISL, 10 clubs are investing around Rs 50 crore per season. I don’t see 10 I-League clubs being able do that on their own,” says Dutta.

Including Indian Arrows, a development team run by the All India Football Federation (AIFF), there are 11 teams in the 2019-20 I-League.

Mohun Bagan spent approximately Rs 15 crore on football teams this term, says Dutta. The average spend per season is between Rs 12-14 crore, he says. Without a sponsor since 2014, Dutta says most of it was provided by club president Swapan Sadhan Bose. “A sustainability issue is bound to crop up,” says Prabhakaran.

Mohun Bagan’s great rivals East Bengal are also desperately looking for an investor because their current one, business service provider Quess Corp, is likely to exit after 2019-20. ATK was one of the teams they had opened negotiations with. With non-resident Bengali supporters in many countries, East Bengal even tried boosting income through crowd-funding six years ago. They got one response—a student in West Bengal who gave them Rs100 from his monthly lunch allowance.

“For almost 80 years, the goal was to form a first team which would beat Mohun Bagan,” says Debabrata Sarkar, East Bengal executive committee member. “Developing infrastructure, looking at the business side of things came only 20-25 years ago.”

For Sarkar, how much East Bengal cede to the investor is important. “We will try for it to be 50-50,” he says. Then why did East Bengal sell 70% of its football team to Quess Corps in June 2018?

“It was a mistake. Our supporters and members have pointed that out. At the time, our biggest sponsor for nearly 20 years had left and we needed money immediately to build a team for the season.”

That relationship has run into turbulence and merging with another ISL franchise could be a new beginning for the team known as the red-and-golds. Sarkar says it is too early to comment on that.

“But about this I am 100% sure: East Bengal will play the ISL next season. We will be the first to buy bid documents when they are out,” he says.

Dutta says it would be mutually beneficial if I-League clubs joined with ISL franchises. “Say, Churchill Brothers with FC Goa, Gokulam Kerala with Kerala Blasters and Chennai City with Chennaiyin FC. It doesn’t have to be a 20-80 deal.”

VC Praveen, president Gokulam Kerala FC, is having none of it. “We always wanted to play in the top league of the country. We joined I-League (in 2017-18) because the AIFF promised to us it would be the top league. We are against paying a huge amount as franchisee fee and entering ISL. We are for a league that has a proper system of promotion and relegation,” he says.

When Gokulam Kerala joined, I-League was India’s top league, That changed this season.

Change is constant

Mergers aren’t unusual in a new league. In Japan, which started the J-League is 1993, there were four between 1993 and 2014—including one between Yokohama Flugels and Yokohama Marinos in 1998 that caused heartburn among Flugels’ fans.

Eight years after it began, the USA’s Major League Soccer (MLS) closed Florida teams Miami Fusion and Tampa Bay Mutiny. The 10 that remained—all haemorrhaging money—were consolidated under three owners including AEG Group, the co-founders and chief investors of the league. It wouldn’t be till 2005 that the teams were replaced and one of them, Chivas USA, wound up in 2014.

In 2007, LA Galaxy, owned by AEG Group, signed David Beckham. One year earlier, AEG sold Metrostars, its New York team, to energy drink makers Red Bull. Around the same time a cash-rich Canadian sports group set up an MLS team in Toronto. The arrival of Red Bull, a team in Toronto and Beckham’s luminous intensity triggered expansion in the MLS that now has 26 teams including three in Canada.

Like MLS, ISL is a closed league (no promotion or relegation). Many franchises are connected to the Ambani family’s Reliance Industries which, along with international sports management company IMG, set up Football Sports Development Limited (FSDL) to run ISL. Like in the early MLS years, ISL teams have struggled to develop fan connect and are losing money heavily.

‘Let down by Bagan’

What of I-League then, if East Bengal too jump ship? Last July, Mohun Bagan and East Bengal were fighting to keep it alive. A letter to Prime Minister Narendra Modi urging him to “probe” AIFF’s functioning said ISL has players who are over 35 and they are contributing to lowering the sport’s standard in India. Among the signatories was Swapan Sadhan Bose.

“Because of our fight, the I-League got a fresh lease of life and FSDL gave permission to negotiate with a separate broadcast partner,” says Dutta, the Mohan Bagan secretary. “To change the system, you need to be in the system.”

“All the I-League clubs fought together for the survival of the league,” adds Praveen. “Mohun Bagan were one of the clubs that stood with us. The whole I-League cause has weakened due to their merger.”

An AIFF official, who did not wish to be names, points out that much of the I-League’s appeal was because of Mohun Bagan and East Bengal.

“Even losing Bengaluru FC (in 2017-18), didn’t affect popularity much,” he says.

One way of keeping the I-League relevant is filling the vacated slots. The AIFF has agreed to do that. Even when it plays in the ISL, East Bengal want to field a reserve team in the I-League, says Sarkar.

“Only in big cities do you see ISL. The I-League has taken the game to Coimbatore, Ludhiana, Kozhikode, Srinagar, Aizawl and Imphal among others. Its growth and connect with local fans has been organic and that will continue,” says the official.

In this crisis, Prabhakaran sees an opportunity. “India has the potential to have a top league with 20 teams. What needs to be developed over the next few seasons is a proper league structure down to state leagues. Not everyone can play in the top tier but if the other tiers and state leagues are strong, games are marketed well and televised, many I-League clubs could take pride in playing in them.”

“To make the lower tiers stronger over the next few seasons, FSDL will have to help. The second tier should be good enough for teams relegated from ISL,” says the football official.

Show us the money

“Ultimately, television money will have to be generated. But for that, you need to broadbase interest in the sport,” says Prabhakaran.

When ISL began in 2014, a sports broadcaster offered around Rs 140 crore to buy rights for 10 years, says a league official. Since it would initially mean a little over Rs 1 crore per franchise—which was spending around Rs 40 crore annually—the offer was rejected and broadcasters Star Sports became ISL co-owners.

An exact figure couldn’t be got but speaking to different franchisees and the league, it was learnt that the share from the central revenue pool in the ISL was between Rs 9-15 crore per franchisee in 2018-19. Shirt sponsorship and ticket sales taken together generate less than 10 crore, says a franchisee official. So, most ISL franchises are losing approximately Rs 20 crore per season. Profits from football is a long way off in India.

“Till then, it will have to be passion and emotional connect that gets investors in,” says Prabhakaran.

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