Coming Of Leagues

IPL is a money spinner. Most experts, who know the inner financials, agree. As per the data available with the registrar of companies (RoC), the first season of IPL in 2008 generated a surplus of Rs 15 crore for the Indian cricket board BCCI. IPL-7 held in FY15 generated a surplus of Rs 127 crore. Except IPL-2 that was played in South Africa, all seasons have helped BCCI generate surplus of over Rs 100 crore, with the maximum of Rs 335 crore generated in FY14.

For franchisees too, IPL has raked in big moolah. In FY16, minus the two new teams of Gujarat and Pune, the combined revenue of the six IPL franchisees stood at over Rs 850 crore — an average of Rs 140 crore per franchisee. Kolkata Knight Riders, Kings XI Punjab, Mumbai Indians, and Sunrisers Hyderabad reported profits, while Delhi Daredevils and Royal Challengers Bengaluru booked losses. The Delhi team, however, has shown profits in some of the past financial years despite poor rankings due to a lower cost base. Bengaluru team, however, has a high cost base due to several highly-paid cricketers.

The new leagues are, more or less, following the model set by IPL. For most leagues, the majority of the revenue comes in the form of central pool comprising money earned from TV rights/advertisers and on-ground/in-venue sponsorship. For individual teams, there are three additional sources of revenue: ticket sales, merchandising, and sponsorships. Additionally, content generated around teams (depending on popularity) can contribute to their revenue. Some franchisees that have star players often charge money for interaction sessions during/before/after the league.

Of course, for the winning IPL team, the prize money is an added bonus. KKR, which won IPL 7, took home Rs 39 crore as prize money, which helped it turn profitable. In other leagues, the prize money is around Rs 3 crore or so but just as much is the licencee fee. An IPL franchisee is required to pay around Rs 70 crore as franchisee fee to organiser BCCI.

A quick glance at the profit and loss figures of GMR Sports-promoted Delhi Daredevils franchisee throws up some interesting takeaways. For the financial year ended 31 March, 2015 (IPL-8), the IPL league for Delhi posted a total income of Rs 117.12 crore, down 25.36 per cent from Rs 159.19 crore in FY 14 (IPL-7) when it also posted a net profit of Rs 7 crore. For IPL-6, it had posted a loss of Rs 4.8 crore on a total income of Rs 151 crore. For FY 15, the net loss was Rs 20 crore. The players’ fees and other outgo was registered as Rs 27 crore for IPL-8 and Rs 24.7 crore for IPL-7. “It’s clear from the study of numbers filed with the RoC that teams like Delhi (which never won the league or came in second), can generate a consistent revenue of Rs 140-150 crore in a typical IPL season. The profitability of IPL teams is a function of expenses incurred on players, marketing, etc., and not so much of the revenue generating capabilities of these established teams as every established team (operational in all IPL seasons) can generate revenue,” says a senior executive involved with one of the IPL league teams.

GMR Sports in its filings with the RoC also talks about creating future value for Delhi Daredevils (DD), “...the operations of our company have been focused on maximising and creating future value. Our team has been going through a rough patch in the last few years due to its on-field performance. The same has also affected the team’s fan-base and profitability.” Further, commenting on the two-year ban imposed on Chennai Superkings and Rajasthan Royals, the company says: “... the brand value of the league and teams has been adversely affected due to the ongoing crisis. However, our management feels the worst is behind us and the league and DD as a franchise will emerge stronger moving forward.” On the team’s performance in IPL-8, the filings noted: “IPL 8 (2015) was a season of missed opportunities. The team lost several close matches that resulted in them missing the play-off and thereby finishing on the seventh position. The continued lackluster performance of the team has strained the balance sheet and some drastic measures are required.”

Why So Many Leagues? 

“If the viewers are familiar with a sport that can be packaged to look attractive on television, a successful sporting league can be created,” says Sunil Yash Kalra, CEO of Pro Wrestling League (PWL) created by Noida-based sports marketing entity Pro Sportify and the Wrestling Federation of India. The second season of PWL, which started on 2 January this year, generated a viewership of over 50 million in the first five days of broadcasting on Sony Max and Sony ESPN. It cornered viewership comparable to Pro Kabaddi League (PKL) in the Hindi heartland and better than the competing Premier Badminton League (PBL) that was also on air during the same period.

The second edition of PBL, run by Sportzlive, started in the first half of January this year. Says Atul Pande, managing director, Sportzlive: “PBL-2 reached around 40 million viewers. There are millions of badminton lovers across the country. Right now, the league is in the investment phase where we are building the property. Even today, it has made money for the winning team. Overall, PBL will start making money from season four onwards.”

Promoted by Mashal Sports and broadcaster Star Sports, the Pro Kabaddi League (PKL) is officially known as the Star Sports Pro Kabaddi. In its season four that concluded in 2016, PKL had eight teams. The number is expected to go up to 12 this year and even higher the year after. According to a media report quoting a Star Sports spokesperson, the viewership for PKL has grown since the first edition. It was the second most watched sport on television after IPL in 2014, with a cumulative reach of over 400 million. As per a 2015 report on sports spending in India, the host broadcasters reportedly earned around Rs 45 crore in on-air sponsorship revenues from PKL in 2015. In 2016, this figure reportedly went up to around Rs 70 crore. PKL is expected to turn profitable by 2018. On a cumulative basis, the league has shown 51 per cent growth over the last four seasons, and is the only Indian sports league to demonstrate growth over four seasons, the host broadcasters said. “PKL will offer an even more unique sporting proposition for reach, coverage, participants and sports fans,” says Anupam Goswami, commissioner of PKL. 

For PKL, the viewership as well as revenues from sponsorships has grown. About 435 million people watched the first season in 2014, the second-most viewed sporting event that year after the IPL with 552 million viewers, it said.“If that is the case then it should be earning as much money (as IPL) from advertisers as well. Host broadcaster Sony made around Rs 1,000 crore in ad-revenue from IPL 9. Logically, the host broadcaster for Kabaddi claim over 220 million viewership or even more. Then why the ad-revenue was not in proportion to IPL. Perhaps, the ad-rates are much lower,” says a senior analyst who tracks sports for one of the bigger professional services firm.

But Star India is going to leverage from the popularity of PKL by adding four new teams for the fifth season to be held later this year. More teams mean more matches, longer tournament, more production cost and more loses as well. But it also means more advertisers can join in as the viewership base grows. Star India has reportedly invested over Rs 700 crore in promoting Kabaddi and earned around Rs 100 crore in revenue. It expects PKL to start making money from the upcoming season. However, sports marketing professionals peg the investment figures as a notional number that takes into account the cost of inventory utilised at par with the average cost of showcasing some other sporting events. “From TV point of view, PKL looks good and has created some buzz. At franchisee level, it has made money for some of the teams. Generally, any league that cracks ticketing revenue and revenue from broadcast rights will work in the long term. Others may fail in four to five years,” says a sports marketing expert. Last year, the Hockey India League (HIL) and Premiere Badminton League (PBL) were the only two sports principally driving on-ground sponsorships upwards by 15 per cent, taking the figure to Rs 257 crore from Rs 223 crore in 2015, says Vineet Karnik, business head - Entertainment, Sports & Live Events at GroupM. Experts say making profits at the franchisee level is not that difficult provided the licence fees is in the range of Rs 3-5 crore and there are six to eight teams involved. “At the same time, if the tournament days exceed as more franchisee teams are added, making money at the level of franchisee becomes that much more challenging unless advertising revenue from TV increases proportionally,” says Raghav Anand, director (Digital Media & Sports), Media and Entertainment, EY India.

Show Me The Money
What does it cost to own a franchisee team? What are the fixed expenses? What are the revenue streams? In the ecosystem of broadcasters, team owners, league creators, sporting federations, and advertisers, who is making money? These are some of the pertinent questions that stakeholders ask every time a league is created, says a senior executive of a sports marketing firm. “Broadcaster or a TV partner is central today. Either the channel holds the IPR for some of the current leagues or has a sports marketing firm taking care of the business. For sporting federations, it’s a win-win situation as they get a fixed revenue in lieu of their permission. Also, involvement of a federation ensures the availability of top players for the league. For a television channel, sometimes, the cost of creating a league is much smaller than buying the broadcast rights of an international tournament,” says the executive quoted above. Agrees Pande of Sportzlive, who has previously worked with Zee and Ten Sports. “PBL has lost money. Wrestling is not making money. Football league is also not making any money. But this is something that is known to the organisers and well accounted for. Some leagues begin to make money in their third, fourth or fifth season as the viewership base grows,” says Pande. PBL currently has six teams. The teams that meet in the final tend to make money, at least the winning team does. The runners-up cut the losses to a minimum, while the rest tend to lose around Rs 2-2.5 crore. But things are about to look up, feels Pande. “With higher ratings and greater advertising support, the central kitty will swell up leading to profitability of individual team owners,” he adds.

A franchisee team can be run at an average cost of Rs 5-6 crore — typically around Rs 3 crore is paid in fee to the organiser and Rs 2 crore is spent on players. Additionally, there are administrative and marketing costs of around Rs 50-60 lakh. This is on the expense side. On the income side, Rs 1.5-2 crore comes from the central pool. Plus, there is gate money (currently smaller for PBL, PWL and others). Then there is sponsorship and merchandising streams. “For PWL, the investment period is three years or so. We will start making money from the next season,” says Kalra of PWL. League insiders say that while PBL will lose around Rs 20-25 crore before it makes any money, PWL too has invested around Rs 40 crore till date. To reach break-even point or to make profits, it may take one or two seasons more. 

Says Anand of EY India: “A majority of the currently operative leagues are propelled by sponsorship fees. Though, in order to be sustainable in the long term, leagues cannot rely solely on these and will have to secure broadcast licence fees and also attract ticketing. But the lack of large stadiums with seating capacity of 25,000 to 30,000 is becoming a key hurdle in the growth for various leagues.” The popularity of the first season of Futsal raises the concern of not many quality mid-size indoor stadiums in India. It is perhaps, one of the reasons that Premier Futsal organisers are now exploring overseas locations for their future seasons. Says Dinesh Raj, managing director of Premier Futsal: “Premier Futsal Season 1 registered a viewership of over 61 million globally. It’s an excellent opportunity for Futsal to propagate the sport at a time when there is an ever increasing appetite amongst the audience. Premier Futsal Season 2 will be instrumental in providing the sport with the much-deserved recognition in India.” Raj hopes to take Premier Futsal to global locations such as China, Taiwan and Dubai. “We are also in discussion with multiple institutional investors who are looking to fuel our growth,” he says. Futsal is a variation of association football; it is played on a hard court that is smaller than a football pitch, and is mainly indoors.

Celeb Power
Cricket legend and icon Sachin Tendulkar co-owns a team each in PBL and ISL with his consortium of friends and celebrities such as film star Chiranjeevi, Akkineni Nagarjuna and Allu Aravind. Last year, this consortium invested in Bengaluru Blasters — a part of the Indian Super League football tournament — their second venture in a sports league. The consortium already owns Kerala Blasters. Tendulkar has often shared his intent of upping the quality of other sports in India if his association can help get more eyeballs and sponsors. In his personal capacity, Tendulkar has supported Rio Olympic medal winners such as PV Sindhu, Sakshi Malik and Dipa Karmakar. Celeb power has worked for PBL and almost every other league.

Apart from being an IPL superstar, the Indian cricket captain Virat Kohli is also a businessman. He is involved in over half-a-dozen ventures such as youth fashion brand Wrogn, chain of gyms and fitness centres called Chisel, London-based tech startup Sports Convo, ISL franchise team FC Goa and UAE Royals, an International Premier Tennis League (IPTL) team.

In January 2014, tennis star Mahesh Bhupathi launched IPTL in Melbourne, Australia. It’s sponsored by Coca-Cola and Qatar Airways and has teams from India, Japan, Singapore and UAE.

Bollywood star Abhishek Bachchan is involved with Pro Kabaddi League, while close friend and film producer Goldie Behl and his actress wife Sonali Bendre are associated with PWL.

Leagues In The Making
Table tennis, billiards, polo, and poker leagues will get underway in the next few months, while basketball, volley ball, golf and few more will expand and perhaps taste success in the next few years.

The inaugural edition of the Indian Table Tennis League (ITTL) is expected to be launched in July. It was earlier scheduled to take off last year, but was postponed due to the Rio Olympics. It is promoted by Vita Jalaj Dani, who serves as a director of Dani Finlease and Geetanjali Trading And Investments. Dani also co-owns Chennaiyin FC, the Chennai-based ISL soccer team with actor Abhishek Bachchan and former captain MS Dhoni.

Dabur vice-chairman Amit Burman-promoted Poker Sports League (PSL) is also set to make its debut in India this summer. According to Pranav Bagai, CEO of PSL, the league’s vision is to sportify the game of poker in India. “Our goal is to educate people about the fact that poker isn’t a game of chance. Poker relies heavily on probability and psychology of the human mind and also tests your decision making skills,” says Bagai. But he concedes that Poker as a sport is fairly organised online, while equally disorganised offline. “Our first ever PSL will showcase the best of poker enthusiasts in India and will also provide them a platform to showcase their mind skills,” he adds. The prize pool is pegged at Rs 3.36 crore. Bagai admits that due to low fees, it will be difficult to cover the basic expenses. Then how will PSL make money? “The first few years are not about making money. It’s about testing the unique format of the league and ensuring that we create a great brand. The primary source of income for the league will come through sponsors and advertisers. We will be live streaming the final tables and are looking to develop a reality show series based on all the ‘behind the scenes’ footage. Broadcasting rights for the reality show will be a good source of revenue in the future,” he says.

Come September, India’s first official polo league — Champions Polo League (CPL) — will become operational. Pegged as the “New Avatar of Polo”, the polo league will be played in a new format, with smaller grounds, easy to understand rules, and night matches with flood lights. Franchise auction and player auction will be held in the coming months, says Chirag Parekh, founder of Champions Polo League and chairman and managing director of Acrysil Group. Some of the players who will be a part of the league are Arjuna Award winners and India’s most decorated polo players such as Samir Suhag, Syed Basheer Ali, Dhruvpal Godara, Shamsher Ali Khan, Richard Le Poer (England’s rising young polo professional), Leroux Hendriks of South Africa and H. H. Padmanabh Singh of Jaipur amongst others, the organisers said.

We can only wish all the leagues the very best. May all grow in popularity, viewership and revenue, and make India a multi-sports following nation leading to more talent and icons in the coming years. Amen!