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St Xavier’s College, Kolkata | 3rd Year Project Report Commercialization of Sports
Avik Paul | Roll 509 | Room 31 Under the guidance of Professor Partha Pratim Ghosh
Contents: Chapter 1.1 1.2 1.3 2
Particulars Objectives of the Study Summary of the Project Introduction The Sports Industry 2.1. Introduction 2.2. The SportsMedia-Business Complex 2.3. Impact of the Sports Industry 2.4. Sports Industry: Structure at a Glance 2.5. Conclusion The Sporting Goods Industry 3.1. Introduction 3.2. The Growth of the Sporting Goods Industry 3.3. The Modern Sporting Goods Industry-Product Range, Strategies and Market Share:
Page No. 6 7 8-10 11-14 11 11-12
14 15-17 15 15-16
A Brief discussion with the prime focus on industry giants Adidas and Nike 3.4. Conclusion Sports, Media, Sponsorship and Technology
4.2. Relationship between Sports and Sponsorship
4.3. Relation between Media and Sports
4.4. Technology in Sports
4.5. Case StudyMost Sponsored Sportsmen
4.6. Conclusion 24 Commercialisation 25-44 of Cricket 5.1. Introduction25-26
The World Series Cricket 5.2. Commercialized Cricket in the Modern Era 5.3. Case Study on Commercialisation of Cricket-the Indian Premier League (IPL) (2008-) 5.4. Analysis of the Impact of Commercialisation on Cricket 5.5. Results and Conclusion Commercialisation of Football
6.1. The Football 46 Industry 6.2. 46-47 Commercialisation of Professional Football 6.3. Commercial 47-48 characteristics of the modern football firm 4
6.4. Business model in modern football 6.5. Commercialization and supporter contentment 6.6. Case Study 1: Manchester United vs. Barcelona FC 6.7. Case Study 2: Indian Football Conclusion and Limitations of the Study Bibliography Appendix Annexure
66 67-70 71-76
Acknowledgements: First and foremost I would like to thank my Project Guide Professor Partha Pratim Ghosh for sharing his time and ideas and guiding me throughout the project work. I would also like to thank my Parents for their support and the necessary data provided by them which I could include in my Project work. My Father was particularly instrumental in organizing the interviews through his friends without which I could not have completed the project satisfactorily. I also wholeheartedly thank My College- St. Xaviers College, Kolkata for providing me the opportunity for doing this project. I also warmly thank Rev. Father Dominic Savio, Vice-Principal of B.Com (H) Morning Department and Rector of the College and Rev. Father Felix Raj, Principal of the College.
1.1. Objectives of the Study: The project enumerates how various facets of commercialisation such as industry, media and sponsorships and finally the sportsmedia-business relation had an impact on the sports. This paper also attempts to highlight issues relating to commercialisation of two of the finest sports ever played-Football and Cricket. Finally it tries to establish whether commercialisation is a blessing or a curse in disguise. The broad objectives of the project are enumerated below: 1. To obtain a broad overview of the Sports and the Sporting Goods Industry. 2. To understand the importance of the media and sponsorships in commercializing sports. 3. To have an overview of Commercialisation of Cricket and Football. 4. To analyze whether commercialisation has benefitted or adversely effected these two sports. 5. To understand the current state of both the sports as far as commercialisation and performance are concerned by collecting market data.
Commercialisation of Sports in today’s times has reached magnanimous proportions. Especially in Professional Sports, its impact is very much wide-felt. This was started very slowly in late-1880 and early-1920 with the gradual evolution of the Sports Industry. Today it is Multi-Billion Dollar Industry with Sports Support Services, Sports Delivery Services and Sports Requirements being its various facets. Thus the growth has been immense. The major component of the Sports Industry is however the Sporting Goods Industry, which is currently dominated by Industry Giants like Adidas and Nike. With the growing commercialisation, Media, Sponsors and Technology were automatically attracted to the Game. Most of the Players derive a major chunk of their annual income from the lucrative sponsorship deals. This has obviously increased performance pressure but in a very positive way. Media attention has given a global base to sports but at the same time it has led to sensationalisation of sports. Finally Technology has helped in making correct decisions but it has delayed the progress of a game. To understand the financial impact and overall impact of Commercialisation of Sports, we have tried to elaborate its impact through two of the finest games- Cricket and Football. Financial as well as Overall Analysis of the impact of Commercialisation on these two sports has been explained as properly as possible through relevant Case Studies. Finally, Commercialisation of Sports and its impact on the same is still a topic of debate and discussion. Some consider Commercialisation as the death and destruction of Sports while others consider it as a positive driver of the game. While it is difficult to specifically comment on whether Commercialisation is
a curse or blessing, its impact is definitely felt in every nook and corner of the game today.
1.3. INTRODUCTION Without delving right into the topic “Commercialisation of Sports”, let us first understand what is “Commercialisation.” Commercialization is the process or cycle of introducing a new product or production method into the market. The actual launch of a new product is the final stage of new product development and the one where the most money will have to be spent for advertising, sales promotion, and other marketing efforts. Commercialisation is now-a-days evident in all fields: Education, Industry, Social Circuit, Sports etc. Commercialisation of Sports is that aspect of the sports enterprise that involves the sale, display, or use of sport or some aspect of sport so as to produce income. Some experts prefer the term "commodification of sport" as a label for the same process. Interest in the commercialization of sport has existed for several decades, but only in recent years has the phenomenon has been taken seriously on a larger scale. The commercialization of sport is not a cultural universal, but a product of unique technical, social, and economic circumstances. Sports in the colonial United States were usually unstructured, spontaneous activities that the participants initiated, coordinated, and managed. Only in the latter part of the 19th century did organized sport cross the ocean from Great Britain and arrive in America. At that time, urbanization forced a large number of people to live in new settings and to abandon traditional leisure activities, which included drinking, carousing, and gambling. The dominant class sought to replace them with activities such as baseball, horseracing, and boxing. In the present day scenario, Professional sports, a big business that has grown rapidly over the last three decades, may be the epitome of commercialization, its influence pervasive throughout. Athletes, support personnel (managers, coaches, officials, media persons, lawyers, and agents), and sports team owners benefit handsomely from the willingness of sports fans to pay to watch their favorite sports and to purchase the commodities endorsed by sports personalities. Hundreds of professional athletes earn well over $1 million a year. Before 1977, $1 million contracts did not exist. By 1994 there were well over 200 professional athletes who earned salaries in excess of $1 million. In 1990, reported average 1989 salaries for athletes in four different professional sports stood at $577,200 in the National Basketball Association, $490,000 in the national baseball leagues, $212,000 in the National Football League, and $156,000 in the National Hockey League. Forbes’s 1994 list of the top-earning athletes included basketball stars Michael Jordan at $30 million and Shaquille O'Neal at $17 million, golfers Jack Nicklaus at $15 million and Arnold Palmer at $14 million, and boxers Michael Moore and Evander Holyfield at $12 million each. In most cases, athletes' endorsements make up over 90 percent of their earnings. 10
In the last few decades the impact of Commercialisation has been rapidly felt in two of the most popular games across the universe- Cricket and Football. Commercialisation of Cricket started way back in late-1970’s largely due to the World Series Cricket which was a breakaway professional cricket competition staged between 1977 and 1979 and organized Kerry Packer for his Australian television network, Nine Network. The matches ran in opposition to established international cricket. World Series Cricket drastically changed the nature of cricket, and its influence continues to be felt today. It was here wherein players of the team wore colored jerseys in limited overs matches which was introduced in official matches in the ODI-format in the late-80’s. Many great players of the time- the likes of Sir Viv Richards, Ian Chappell, Graham Gooch, Geoffrey Boycott participated in these games at the cost of their place in their International side. World Series Cricket was discontinued in 1979. Off late, with the advent of T20 Internationals, not only the way the game was played has changed but the advent of IPL, KFC Big Bash has increased media interest, Corporate participation and investment in the game. Commercialisation of Football started way back in the late 1870’s and 1880’s across various countries under the British colonial rule. Surprisingly, the early seeds of commercialisation of football were sown in Pre-Independent India with the introduction of the Durand Cup in as early as 1888. The IFA Shield and the Rovers Cup also followed suit. In fact the Mohun Bagan Athletic Club became the first Indian team to defeat a European team, when they defeated the East Yorkshire Regiment, 2-1 to lift the 1911 IFA Shield. Modern day Commercialisation of football kickstarted aggressively all over the globe with the advent of various leagues like the Barclays English Premier League in England, La Liga in Spain, Copa America in Latin America to name a few. This rapid commercialisation of modern sports has led to the development of the Sports and the sporting goods Industry. Various sportswear companies like Reebok, Adidas, Nike came up and have become multinational corporate giants by taking advantage of this commercialisation. Presently, Modern sports and modern mass media are both multibillion-dollar businesses. Elite sports cannot function as they do without the mass media to publicize and underwrite them. The huge market for sports equipment and teamrelated merchandise is to a large extent sustained by the media’s 24-hour-a-day sports coverage, and the economic infrastructure of the mass media depends to a considerable extent on the capacity of sports to create large, loyal cohorts of readers, listeners, viewers, and interactive consumers. This dynamic synergy between sports and the mass media is not without its problems. The mass media have enormous influence not only on the way that sports events are staged but also on when they take place. When Olympic sprinters run their races at 5 am so that New Yorkers can watch them in prime time, as happened at the 1988 Summer 11
Games in Seoul, South Korea, the media have clearly exercised a degree of influence that was unthinkable in the days of Olympic founder Pierre de Coubertin. That the media’s economic interests are uppermost is evidenced by the advertisements that continually interrupt the action of sports events covered by commercial television networks. Not surprisingly, there is an occasional backlash against the symbiosis of sports and the media. Some athletes and spectators resentfully accuse the media (especially television) of “taking over sports” and altering their ethos, rules, and structure. Evidence of concern about the economic power of the mass media was provided in 1999 when the British government decided to prevent Rupert Murdoch’s BSkyB, which owns the broadcast rights to English Premier League association football, from acquiring control of Manchester United, one of the world’s richest and best-known sports “brands.” There is also some evidence that the commercial interests of individual media companies, especially when monopolistic, may damage the crucial requirement for uncertain outcomes in sports leagues and tournaments and create a popular perception that sports contests have been “fixed” to further the interests of media corporations. With various abuses in mind, some critics have argued that sports need to be monitored by governments, elite sports bodies, and fan organizations in order, ironically, to secure their long-term commercial value. Corporate sponsorship is one key area where the “brand value” of sports is central to the relationship between mass media and sports. Corporate sponsorship, which has long since replaced the aristocratic patrons who once staged sports events, has enabled sports organizations and competitions to be funded while expanding brand recognition, identification, and loyalty for the sponsors. Naming-rights sponsorship for events and facilities and the prominent placement of the sponsors’ logos where spectators cannot help but see them are extremely valuable marketing tools for which sponsors are prepared to pay enormous sums. In 1997, for example, when the newly elected British Labour government attempted to introduce a comprehensive ban on tobacco advertising and sponsorship in sports, it was delayed by the fact that the revenue from advertisements and sponsorships was in excess of £300 million a year. Linked to sponsorship is merchandising, which enables sports, sponsors, and companies to derive additional income and exposure by selling to sports fans goods and services that identify the fans as supporters both of teams (such as football shirts) and of sponsors (through displaying, for example, the Nike sportswear company’s “swoosh” or the distinctive stripes of Adidas). Additional impetus to this marketing effort is bestowed by paying star athletes, such as basketball player Michael Jordan or tennis player Anna Kournikova, to actively endorse branded sports products or merely to display or use them. The key to the commercialization of sports through sponsorship, celebrity endorsement, and merchandising is, of course, the mass media, whose astonishing capacity to showcase sports events and individual athletes has propelled sports contests from local to global phenomena. The story of the development and evolution of modern sports is therefore one in which the mass media are among the essential agents of change across the whole field of sports culture. 12
Thus before discussing further about Commercialisation of various sports like Cricket and Football, let us first have a brief discussion about the Sports and the Sporting Good Industry, and of course the importance of media in sports. These topics and others are discussed in the subsequent chapters of this project.
Chapter 2: The Sports Industry 2.1. Introduction: Ignoring MediaSport today would be like ignoring the role of the church in the Middle Ages or ignoring the role of art in the Renaissance; large parts of society are immersed in media sports today and virtually no aspect of life is untouched by it. If misty-eyed nostalgia exaggerates the extent of this long lost independence, then the sports industry’s gross annual revenues of some $324 billion worldwide—nearly half of which is generated in the United States alone.
2.2. The Sports-Media-Business Complex: The Sports Industry started growing rapidly ever since the early 90s with the industrial restructuring of Westinghouse Electric Corporation in 1993. The recent reinvention of Westinghouse provides a graphic example of how the US political economy has been transformed by cultural industrial logics and shows sport’s role in this process. At one time an industrial giant with thriving interests in the consumer-durable, commercial engineering, defence and nuclear industries, Westinghouse had amassed $15 billion in debt by 1993, because it had failed to respond expediently to the macroeconomic changes that signalled the demise of the traditional manufacturing sector. The threat of financial collapse was resolved by hiring Michael Jordan from PepsiCo in 1993 to direct the corporation’s transformation. Jordan initiated a five-year plan that, while including more than 20,000 job losses, saved Westinghouse for its shareholders. His solution: make it a media corporation. This was achieved by selling off traditional businesses in order to fund the purchase of the CBS media group for $5.4 billion in 1995 and the Infinity Broadcasting radio group in 1996. As if finally to signal the death knell of its industrial capitalist past, and indeed its rebirth as a major force in the media sector, Westinghouse officially changed its name to CBS Corporation in 1998. This was followed by the $34.5 billion purchase by Viacom (owners of Paramount Pictures, MTV, VH1, Nickelodeon and Simon & Schuster publishers) of the CBS Corporation in 1999, which effectively created a diversified media entertainment giant to compete with Time Warner, Disney and News Corporation.
Sport played a central role in this industrial restructuring process. CBS had reached its nadir after losing television broadcast rights for National Football Conference (NFC) games to the maverick Fox network, which made an unprecedented $1.58 billion bid in December 1993, ending CBS’s 38-year relationship with professional football. Few were surprised in 1998 when the newly reorganized and competitive CBS regained an NFL (National Football League) foothold with its $4 billion purchase of rights for American Football Conference games for the period 1998–2005. Leslie Moonves, then president of CBS television, said the deal put CBS ‘back in the game’. As if to further consolidate the network’s standing, in late 1999 CBS signed an unprecedented $6.2 billion contract for world-wide multi-platform (television, radio, Internet, licensing, sponsorship and publishing) rights to the National Collegiate Athletic Association (NCAA) men’s basketball tournament for the 11-year period from 2003 to 2013.
Thus from the above case study we can establish the following linkage as shown below:
The above chart represents a golden triangle between Sports, Media and Business. Media uses sport to gain viewers/readers. Media in turn is used by business for advertising. Business pays for media advertising space/time. Business pays sport to act as advertising medium. Sport must be in media to attract sponsorship. Sport gets money for allowing events to be televised. Business pays sports for advertising at grounds/events/sponsorship. Sport becomes popularised/more fans. But the above relation also has its own share of disadvantages. Media sensationalise sport/reports dysfunctional aspects. It affects 15
organisation/timing of sport and can change nature of sport/breaks/length/method. Only popular sports are televised. Moreover as a result of such Commercialisation, players spend too much time working or in making appearances. Due to involvement of business interests, there is more pressure to win due to sponsorship pressure. This relationship is also called the Sports-Media-Business Complex.
2.3. Impact of the Sports Industry: The impact of this newly developed Sports Industry was felt all across the globe with the passage of time. While European Nations felt the impact primarily through their various Football Leagues in the form of increasing investment in the players, the Asian countries, specifically India saw the impact through Cricket. Infact, the Soccerex Transfer Review by Prime Time Sport released figures on 6th February, 2014 showing that the Premier League clubs spent a mammoth 52% of the total investment on players across the top 5 leagues in Europe this winter. Premier League spending topped €150 million compared to €53 million in French Ligue 1, €42 million in Italian Serie A, €33 million in the Bundesliga and just €12 million in Spanish La Liga. The confidence given from the new collective broadcast deals for English clubs is highlighted by the fact that the spending is also spread across more clubs in England than any other in Europe. Whilst Chelsea and Manchester United top the European spending, with €52.8 million and €45 million respectively, Fulham (€16.3 million) and Hull City (€15.2 million) also feature in the top 10 of the biggest spenders in Europe. In India, the Sports Industry is primarily centered around Cricket. This can be clearly understood from the fact that while the total investment in the Indian Premier League (IPL) was close to $724 million with around $67million-$112 million being paid for acquisition of each team in its opening season, the investment in its counterparts-the Indian Badminton League(IBL) and the Indian Hockey League in their opening seasons are only $13.6 million and $12 million respectively. Moreover owing to the craze in India surrounding 16
International Football, sporting goods companies like Reebok, Adidas and Nike also found their foothold in the country. The biggest benefactors however were the Soft Drinks Companies like Pepsi, Coca Cola etc. In 2012, Pepsi acquired the naming rights of the IPL. Pepsi also followed a shrewd marketing strategy whereby they roped in Star Indian Cricketers like Sachin Tendulkar, Mahendra Singh Dhoni, Virat Kohli among others from time to time to endorse their product. The Health Drink “Boost” also grew popular in the Indian Market by having ambassadors like Kapil Dev in 1986, Sachin Tendulkar since 1989 and Mahendra Singh Dhoni as the current face of the brand since 2008.
2.4. Sports Industry: Structure at a glance:
S po o r t s I n d u s t r y - A l s p o r t s r e l a t e d p r o d u c t s , g o o d s , s e r v i c e s , p l a c e s , p er t o p l e a n d i d e a o ff e r e d t o t h e c u s t o m e r s del iv e ry ser v ic es Source: Commercialisation of Sports By Trevor Slack 2.5. Conclusion: Thus from the above discussion we can conclude that the Sports Industry, though it was late in its inception has grown by leaps and bounds over the past few years. It comprises of not only the Sporting Goods Industry, but also the Media, Television, Technology and Sponsorship. These aspects have been dealt with in the later chapters.
Chapter 3: The Sporting Goods Industry 3.1. Introduction: An important component of the increasing commercialisation of sport has been the growth of the sporting goods industry. The Sporting Goods Manufacturers Association (SGMA) in the United States defines this industry as ‘a composition of manufacturers of athletic footwear, sports apparel and sporting goods equipment, as well as manufacturers of accessory items to the sports and recreation market’. More specifically, sporting goods are the uniforms, footwear, balls, bats, gloves, protective equipment and so forth that are necessary for playing sport. Thus the manufacturing of sporting goods is a key component in the commercialised sport industry, and it is the primary focus of this chapter. Sporting goods and equipment are not, of course, gifts of nature; they are made by people working in manufacturing plants throughout the world. Understanding the manufacture of contemporary sporting goods requires historically situating this segment of the sport industry within the rise of factory manufacturing, the evolution of commercial sport forms, the growth of the sporting goods industry and the recent trend towards a global economy. These are the foundations on which the contemporary sporting goods manufacturing industry rests.
3.2. The Growth of the Sporting Goods Industry: During the first half of the 1900s organized sport grew and prospered, becoming a massive commodified industry. Sport became one of the most engrossing of all social interests. The sporting spirit became a prominent part of the social life of large numbers of people. Growing urban areas, better transportation facilities, a growing affluent class, a higher standard of living and more discretionary funds for purchasing sporting equipment fostered sport and facilitated the formation of numerous leagues and teams. Commercialised sport penetrated many levels of the business world: fashion, mass media, transportation, communication, advertising and a variety of marginal enterprises all profited. With the rising popularity of numerous sports at the end of the nineteenth century, with advances in technology making possible the production of newer and better equipment and, finally, with improved manufacturing and distribution methods, sporting goods had become a multimillion-dollar-a-year industry. In the US, between 1900 and 1923, the average number of wage earners employed in sporting and athletics goods manufacturing increased 338 per cent. And the value of products manufactured in the sporting and athletic goods manufacturing industry increased 1,052 per cent. Today, they constitute a US$170 billion global industry. In the US alone, sporting goods sales, in 2002, at wholesale prices totalled $47.7 billion. 19
In India the Sporting Goods Industry took off in 1958 with the formation of the Sports Goods Export Promotion Council (SGEPC), a Government of India sponsored organization is working for the promotion of India’s exports of sports goods and toys. Founded in 1958, SGEPC represents all the leading manufacturers and exporters of sports goods and toys in India. This was followed by the formation of various indigenous sports goods industries like Royal International, Ranson Sports Industry in Jalandhar, Sport Syndicate etc. As the Indian Economy started having a more liberal outlook since the mid1980s and as a result of the 1991 economic reforms, sporting goods industry giants like Adidas, Reebok and Nike also set up their units in India. As of 2011, the Indian Sports goods industry had revenue of around $2.2 billion which with a forecasted compounded annual growth rate of around 4.4% is expected to value $2.7 billion by the end of the financial year 2016-17.
3.3. The Modern Sporting Goods Industry-Product Range, Strategies and Market Share: A Brief discussion with the prime focus on industry giants Adidas and Nike: As already discussed earlier, the modern sporting goods industry represents an integral part of global economy. To further strengthen this point, it is worth mentioning that Forbes, the globally popular American Business Magazine has listed Nike and Adidas at #24 and #61 respectively in its list of top 100 global brands published in November, 2013. Nike and Adidas are two of the largest athletic shoe manufacturers in the world. In August 2005, Adidas declared its intention to buy British rival Reebok for $3.8 billion (US$). This takeover was completed with partnership in January 2006 and meant that the company would have business sales closer to those of Nike in North America. The acquisition of Reebok would also allow Adidas to compete with Nike worldwide as the number two athletic shoemaker in the world.
3.3.1. Products Range: Athletic footwear is one of the most important segments of the sporting goods industry, and the market sales (at wholesale) of sporting footwear more than doubled between 1986 and 1998, increasing from $4.3 billion to $8.72 billion. Nike was the market leader in sporting footwear throughout the 1990s. Besides athletic footwear, Nike produces a large number of sporting equipments- jerseys, shorts, cleats, baselayers, etc. for a wide range of sports, including track and field, baseball, ice hockey, tennis, association football (soccer), lacrosse, basketball, and cricket. Adidas meanwhile, besides footwear, manufactures other sports equipments, sportswear etc.
3.3.2. Competitive Strategy: The Sporting goods industries, especially Nike also have the distinction of operating with cost effectiveness as they follow the strategy of 3rd party production. It has contracted with more than 700 shops around the world and has offices located in 45 countries outside the United States. Most of the factories are located in Asia, including Indonesia, China, Taiwan, India, Thailand, Vietnam, Pakistan, Philippines, and Malaysia- in short, countries supplying abundant cheap labour. Adidas meanwhile follows Premium Pricing Strategy-the practice of keeping the price of a product or service artificially high in order to encourage favorable perceptions among buyers, based solely on the price. The practice is intended to exploit the tendency for buyers to assume that expensive items enjoy an exceptional reputation or represent exceptional quality and distinction. It involves setting the price of a product higher than similar products.
3.3.3. Market Spread: Adidas mostly enjoys a vast share of the European market which accounts for nearly 43% of its global market base. On the other hand, Nike enjoys more or less equal footing across all continents-North America, Europe and Asia. This is shown below with the help of the two comparative diagrams of both the companies’ market share across the globe-
Figure 1: Market Share: Reebok vs. Adidas. Source: Soccerex.com 3.4. Conclusion: Thus the Sporting goods Industry was very instrumental in commercialisation of sports a successful concept. The other two most important concepts that stimulated and further promoted commercialisation-media and sponsorship have been discussed in the next chapter.
Chapter 4: Sports, Media, Sponsorship and Technology 4.1. Introduction: The global popularity of sport has made it a powerful vehicle in the expansion of transnational commercial interests. While debate continues as to whether particular sporting events are demanded or imposed upon the increasingly satellited television audience, the reality is that people are tuning in. The fact that audiences are watching (or even assumed to be watching) means that they can be demographically cross-sectioned, commodified and sold to eager advertising and marketing conglomerates. In simple terms, the Olympics, World Cup soccer, the Super Bowl, X-Games and a host of other increasingly global media sporting spectacles are created and produced in order to attract television audiences whose capacity to consume is sold to prospective promotional agents. In short, we cannot underestimate the immense impact that global media sporting spectacles have in reproducing power relations that shape our various social identities. Moreover, it is important that we recognize that
sporting spectacles, along with many other aspects of culture, have been transformed into commodities by transnational corporations (TNCs). On the other hand, since the 1984 Olympic Games the concept of marketing has become of central importance in the world of sport. The contemporary discourse that is promoted by politicians, the media, sport managers and indeed many athletes is no longer just about winning medals or producing best performances. It is about such issues as the size of television contracts, the licensing and merchandising of official products and the marketing of ancillary goods and services (concessions, parking and corporate hospitality). One particularly significant component of the sport marketing mix is the sponsorship of individual athletes, teams, events and organizations. While exact figures on the size of the sponsorship market are difficult, if not impossible, to ascertain, estimates suggest that as sport has become increasingly commercialised the amount of spending on sponsorship worldwide has risen from $5.6 billion in 1984 to approximately $25 billion in 2000. Another inclusion to the world of sports is Technology. The world of sport is continually changing over the years, and the use of technology is just one of those areas that has made an impact on many sports in the modern day. One criticism of the use of technology is that it can slow down the speed of the game, but on the other hand for many people it makes watching it more enjoyable to see the correct decisions being made. In the upcoming segments of this chapter, we will try to explore the relationship between sports and these three modern facets of sports commercialisation separately. To further express our ground, we have also taken a case study on top five highest earning sportsmen at present and their incomes through sponsorship. 4.2. Relationship between Sports and Sponsorship: Sponsorship is cash and/or in-kind fee paid to a property (typically in sports, arts, entertainment or causes) in return for access to the exploitable commercial potential associated with that property. To sponsor something is to support an event, activity, person, or organization financially or through the provision of products or services. A sponsor is the individual or group that provides the support, similar to a benefactor.
The conceptual underpinning of such an understanding of the process of sport sponsorship is based in the notion that these types of transactions (and 23
other marketing practices) involve an exchange relationship. McCarville and Copeland for example suggest that ‘sponsorship involves an exchange of resources with an independent partner in hopes of gaining a corresponding return for the sponsor’. Lee, Sandler and Shani define sponsorship as involving ‘the provision of resources (e.g. money, people, equipment) by an organization directly to an event, cause or activity in exchange for a direct association (link) to the event cause or activity. The providing organization can then engage in sponsorship-linked marketing to achieve either their corporate, marketing or media objectives.’ Advantages and Disadvantages of Sports Sponsorship: Points of Discussi on For the sponsor
Advantages of sponsorship
Disadvantages of sponsorship
Increased publicity, status increased by being linked to success and glamour. Increased sales of their products
Negative events (drug use, cheating, crowd trouble) may affect your reputation
For the sportsma n
Free clothing and equipment or payment for wearing sponsor's clothing and using their equipment. Can concentrate on training without financial worries.
May be tied in to a contract including appearances at sponsors' events.
For the sport
Financial support in addition to admission fees etc.
Dates, times, clothing may be changed to suit the sponsor
Sponsorship by cigarette companies is no longer legal. Sports Governing Bodies have to decide if proposed sponsorship, say junior sport by an alcohol brand, is acceptable. It is always easier to get sponsorship if a sport or event receives media attention. High profile events gain greater amounts of sponsorship than those with no coverage. A few examples of sports sponsorships are illustrated on the next page: Most competitions have sponsors names included in their title:
Barclay's Premier League - Football 24
Heineken Cup – Rugby Union
NPower Test Series - Cricket.
Some sports stadia have sponsored names. For example:
Walker's Stadium - Leicester City
Emirate's Stadium - Arsenal
Reebok Stadium - Bolton Wanderers
Most clubs and teams have sponsors. For example:
Vodafone - England Women's Cricket Team
O2 - England Rugby Union Team
Norwich Union - UK Athletics
4.3. Relation between Media and Sports: Media coverage of sport is widespread. By listening to commentators, pundits and watching replays we improve our knowledge and understanding. Participation in sports covered by the media is always higher than for those that are not.
Figure 2: Media Coverage in Sports. Source: Google Images TV coverage takes many forms:
Entertainment - live programmes and highlights 25
Informative - documentaries
Instructive - coaching series and excerpts
Educational - schools programmes
When watching sport on TV it is important to understand that the director of the programme will have an influence on what is seen and said. You should always analyze what you see and develop your own opinions about events. The advantages and disadvantages of Media Coverage are illustrated on the next page. Advantages and Disadvantages of Media Coverage: Advantages of media coverage
Disadvantages of media coverage
Attendances may drop - more people watch from home
Some sports get lots of exposure, while others get none
Sports personalities lose privacy
Events can be sensationalized to promote the media (TV channel, newspaper etc), rather than the sport
Changes to event timings (day/night matches)
Changes to playing season (e.g. rugby league)
Changes to the rules (e.g. badminton, volleyball rally-point rules, tennis tie-breaks).
Attendances may rise as people want to see the 'stars' Better informed supporters Easier to attract sponsorship Encourages participation Develops personalities and role models Gives viewers a closeup view of the action
4.4. Technology in Sports: The world of sport is continually changing over the years, and the use of technology is just one of those areas that have made an impact on many sports in the modern day. One criticism of the use of technology is that it can slow down the speed of the game, but on the other hand for many people it makes watching it more enjoyable to see the correct decisions being made The influence of Technology in Sports can be seen in the following areas: Assisting the Umpires / Referees Most professional sports in the United States have long used instant replay and other high-tech aids to help referees make the right call. Basketball referees use replay systems to make sure players are shooting within the time allotted by the shot clock. In international cricket, the third umpire has been used, one sitting off the ground with access to TV replays of certain situations (such as disputed catches and boundaries) to advise the central umpires. The umpires out on the field are in communication via wireless technology with the other umpire. The third umpire is also asked to adjudicate on run out decisions, which he makes without consultation with the two central umpires. One sport that has resisted the use of high-tech assistance is soccer/football. Replays could be used to decide off-side decisions, whether a ball passes over the goal line, and clarify penalty decisions. Hawk-Eye Technology Hawk-eye is the name of a computer and camera system which traces a ball's trajectory. It is being used in international cricket and tennis, and many other sports are also looking at making use of this technology. The system is also being tried in soccer as part of the goal line assessment. The Premier League of Football in the UK has agreed to the introduction of goal-line sensors after being given approval by football's rule-makers. The system being developed by the UK Company Hawk-Eye, would give a definitive decision on whether the ball had crossed the line. The Hawk Eye uses a camera taking 600 frames a second on the goal-line, with the information is analyzed by computer and sent to the referee's headset or a device on his wrist.
Figure3: Hawk Eye Technology in Cricket. Source: Google Images Sport Specific
Tennis - it is now standard at the major tennis tournaments for a line review system to be in place, with players given power to review contentious line calls. It is powered by the Hawk-Eye ball tracking system.
Soccer / Football - Soccer is looking at joining the 21st century, looking at various technologies for the goal line to determine if the pass passes over the line or not.
Basketball - the NBA uses replay vision to review 'last touch' decisions in the final two minutes of games, and also to determine whether players release the ball before the shot clock expires.
Cricket - technology in cricket has been driven by advances in the TV coverage. Things that were once extra information provided by the TV networks are now being incorporated into the decision referral system (DRS), such as hawk-eye and hot spot. See more about Cricket Technology.
Rugby League - The NRL was an early implementer of using the video referee to help adjudicate questionable tries.
Computer Software There are numerous software packages that are designed for fitness and nutrition professionals to organize data and produce reports, ideal for visitors
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4.5. Case Study- Most Sponsored Sportsmen: This case study attempts to look at top five of the world’s most sponsored sportsmen and how they impact the Sportsman. These are: Tiger Woods: Sponsor: Nike Estimated Value: $105 million Back in 2000, Tiger Woods’ five-year, $105 million endorsement deal from Nike was the biggest ever handed out to an athlete at the time. Let’s just say things like inflation and scandals have pushed Tiger a bit further down the list. Nike still endorses Tiger, but it slashed his allowance big time after his public indiscretions in 2009. While his contract still makes the list, it’s fairly clear that the one-time golden boy’s been tarnished and that’s hurt his value. George Foreman: Sponsor: Salton, Inc. Estimated Value: $137.5 million George Foreman, the former heavyweight champ landed a solid knockout when he signed a lifetime deal from Salton, Inc. He earned $137.5 million in cash and stock in exchange for the right to use his name on their grills, and he’s continued to earn even more millions for the many TV appearances he’s made and the 45% of profits he’s received as the Lean, Mean, Fat-Reducing Grilling Machine has grown into one of the most popular kitchen appliances in America. Since its inception back in 1994, the grilling machine has sold over 100 million units worldwide. David Beckham: 29
Sponsor: Adidas Estimated Value: $160 million In the summer of 2003, one of the biggest names in sports signed the biggest endorsement deals in history for an athlete. David Beckham signed a massive $160 million lifetime contract with Adidas. The midfielder earned nearly half the money upfront and will continue to earn percentages of profits on all of his branded Adidas products. Beckham took a salary cut in 2012 to drop to merely $1.5 million. His Adidas endorsement rings in over $20 million. Derrick Rose: Sponsor: Adidas Estimated Value: $260 million The city of Chicago was waiting for its next Michael Jordan and many residents feel they found him in 2008. Since the Chicago Bulls drafted Derrick Rose, they have made the playoffs every year and have seen their stock rise in the Eastern Conference. In 2011, Rose became the youngest MVP in NBA history, and Adidas, the sporting goods industry giant, rewarded him with an astounding 10-year, $260 million endorsement deal. Rory McIlroy: Sponsor: Nike Estimated Value: $250 million McIlroy has taken the golf world by storm since 2012, winning two majors and finishing 2012 first in the money in both the PGA and European Tour. He’s now the world’s No. 1 golfer and the face of Nike Golf after they locked up the 23-year-old to a reported 10-year, $250 million endorsement deal. 4.6. Conclusion: Thus with time, Media, Sponsors and Technology have clearly increased the amount of money involved in sports with Billionaire Businessmen and Multinational Companies taking over the arena. As interest surrounding sports and sportsmen continues to grow around the world, the amount will only increase with time.
Chapter 5: Commercialisation of Cricket 5.1. Introduction- The World Series Cricket: Commercialisation of Cricket as already mentioned in an earlier chapter began in a full-fledged way with the beginning of World Series Cricket in the late 1970’s. World Series Cricket (WSC) was a breakaway professional cricket competition staged between 1977 and 1979 and organized by Kerry Packer for his Australian television network, Nine Network. The matches ran in opposition to established international cricket. World Series Cricket drastically changed the nature of cricket, and its influence continues to be felt today. Two main factors caused the formation of WSC—the widespread view that players were not paid sufficient amounts to make a living from cricket, and that Packer wished to secure the exclusive broadcasting rights to Australian cricket, then held by the Australian Broadcasting Commission (ABC). After the Australian Cricket Board (ACB) refused to accept Channel Nine's bid to gain exclusive television rights to Australia's Test matches in 1976, Packer set up his own series by secretly signing agreements with leading Australian, English, Pakistani, South African and West Indian players, most notably England captain Tony Greig, West Indies captain Clive Lloyd, Australian captain Greg Chappell, future Pakistani captain Imran Khan and former Australian Captain Ian Chappell. Packer was aided by businessmen John Cornell and Austin Robertson, both of whom were involved with the initial setup and administration of the series. The World Series Cricket had originated owing to the lack of understanding on the part of Cricket Australia (Then Australian Cricket Board) the link between sports, corporate sponsorship and television exposure which was not evident to Australian sports administrators at the time. Though World Series Cricket was discontinued after the 1978-1979 season, it made an everlasting impact on the game. Due to the punishing schedule, cricketers had to be fitter than ever before. Night matches have become very common in most nations, and one-day cricket has become the most widely followed form of the game (though this is being threatened by Twenty20 cricket). Players are full-time professionals, and at least in the larger cricketing nations are very well-paid, mainly
through television rights; broadcasters now have a huge say in the running of the game. Marketing was a major tool for World Series Cricket, and revolutionized the way cricket in Australia was marketed, with the catchy C'mon Aussie C'mon theme song, the simple logo, the coloured clothing worn by the players and a range of merchandise. All of these techniques pioneered by World Series Cricket have become a staple of the way the game is now marketed in Australia.
Figure 4: World Series Cricket Marketing. Source: Google Images
5.2. Commercialized Cricket in the Modern Era: India won the Cricket world Cup in 1983. They defeated an invincible West Indies Team comprising players like Malcolm Marshall, Clive Lloyd, Sir Vivian Richards among others. As a result, Cricket became a celebrated sport in India but did very little as far as Commercialisation was concerned. Nevertheless, in 1986, the manufacturers of chocolate energy-drink “Boost” signed the then Indian captain Kapil Dev as its brand ambassador. Influenced by the World Series Cricket, teams were now represented by coloured jerseys with effect from the 1992 Cricket World Cup. Soon, Mascots were used to represent big ICC tournaments like the World Cup and the ICC Champions Trophy. County Cricket clubs in England also started signing 32
various noted Cricketers around the globe. But the game was commercialized to a great extent with the arrival of the star Indian batsman Sachin Tendulkar. His fantastic on-field performance helped him attain a Demi-God status in India and helped him bag many endorsements. In 1990’s and early 2000’s Tendulkar was sponsored by as many as 10 brands- Boost (1990–present), Pepsi (1992–2009), Action Shoes (1995–2000), MRF (1999– 2009), Adidas (2000–10), Britannia (2001–07), Fiat Palio (2001–03) TVS (2002–05),ESPN Star Sports (2002–present) and Airtel(2004-2006); more than any other Cricketer in the world. Today, nearly 3 months after his retirement, Tendulkar has a personal fortune of nearly $160 million, making him the country's wealthiest cricket player. As of 2014, Sachin Tendulkar has been listed at #51 in Forbes magazine’s list of 100 highest-paid sportsmen with earnings of $22 Million, second only to the current Indian captain MS Dhoni. About $18 Million of Tendulkar’s earnings comes from endorsements. Commercialisation of sports has also paved the way for sports betting-a practice that originated in the late-1980’s at Sharjah. Former India batsman Dilip Vengsarkar recently stated that the dreaded Indian underworld don, Dawood Ibrahim had come to the Indian team’s dressing room and said the team was offered Toyota cars if they beat England, Australia and Pakistan in the 4-nation Sharjah Cup series in April 1987. Betting raised its ugly head again in 1998 when former Pakistani pacer, Ataur rehman alleged that Wasim Akram had paid him 100,000 Pakistani rupees to bowl badly in a one-day match held at Christchurch, New Zealand, in March 1994. The matter was investigated and Justice Malik Qayyum's Commission into match-fixing proceeded against Ata-ur rehman for perjury and when it published its report in 2000 the Commission recommended that he be banned from international cricket, further finding that the evidence against Wasim Akram has not reached what it called "the requisite level", primarily because Ata-ur-Rehman had perjured himself. But it was in the season of 1999-2000, when a Cricket betting scandal rocked the entire sporting world and subsequently led to more stringent regulations enforced on the game. Players were found under performing for sums of money. Hansie Cronje, the former South African cricket captain, was guilty in this charge. He gave one of his mediocre performances against the Indians for alleged sum of two millions. Similarly another South African batsman, Hershelle Gibbs, was also found guilty. He was bribed to score less than twenty runs in a match. Players like the former India captain Mohammad 33
Azaharuddin, Salim Malik and former Indian batsman Ajay Jadeja were banned for life. The saga ultimately ended when Cronje was killed in a plane crash in 2001 although the crash is still considered as a conspiracy against Cronje. More recently, commercialization has encouraged doping. The players are using performance-enhancing drugs. They want to win and for that they are prepared to do something more than just play. Former Pakistani fast bowlers Shoaib Akhtar and Mohammad Asif were convicted of this charge. The trio of Mohammad Asif, Mohammad Aamir and Salman Butt were convicted and jailed for 30 months for conspiracy charges relating to the spot-fixing as the result of a sting operation conducted by the discontinued English national newspaper News of the World in 2010. Commercialisation however has its positive effects on the game also. Players now enjoy a financially secured life. It was not the case few decades ago. Players had to hold another part time job along with playing to sustain their livelihood. They were paid negligible sum in their profession. It is not the case now. Players now receive huge sums of money to play. Each and every Indian cricket player gets approximately half a million rupees per one-day international match and a million for a test match. For instance, Michael Holding, one of the greatest West Indian fast bowlers, had enrolled at the University of West Indies on a scholarship to study Computer Science. As a profession cricket did not pay well, so Holding was preparing himself for employment off the cricket pitch.
Commercialization has helped the other business sector to sustain. The television networks and sponsoring companies have boomed along with the sports. The big sporting events such as World Cup are covered live by the televisions. The millions in their home view these events. And while doing so, the sports as well as the television networks get advertised. One of the recent cricket tournaments was named DHL cup. It was named after the sponsoring company DHL. The hoarding boards and the big logos were used all around the ground to promote the company. The event was a success so was the promotion of sponsoring company. Moreover, the mobile company, Vodafone has sponsored the English cricket team for a long period of time. Likewise, the Indian conglomerate Sahara India Pariwar sponsored the Indian Cricket team for a period spanning over a decade till 2013. Commercialization has initiated sledging and conflict in the game. The players are paid millions and are expected to win. They sometimes take 34
extra steps of sledging and fighting. Australian cricketers sledge a lot on and off the field. They target a particular individual of the opponent team and sledge. Former Indian batsman VVS Laxman was the victim of such incident. Australians openly discussed the vulnerability of Laxman while facing the short balls in the press. Furthermore they claimed that they had sorted him out. This provides them with the psychological edge over the opponents. They also do this on the field. They are often taped commenting the batsman on his technique and making joke of him during the match. They play just to win. And this might be a possible outcome of commercialization. The England team in Australia in 2013-14 also faced similar challenges. It may be argued that while sponsorship, one of the arms of commercialisation has paved the way for improved performance of Cricketers, it has also intensified ruthlessness. Now, let us discuss about one of the greatest spectacles in the history of Cricket that has revolutionized commercialisation in Cricket- the IPL (Indian Premier League). Our topic commercialisation of Cricket will be incomplete without an analysis of the IPL and its impact on Cricket. For this, we have first listed the teams with their owners and the money spent for their acquisition and the star players of these teams and their highest paid players. Together with this, we have also analyzed its immediate impact on the game in the light of the emerging betting scandals surrounding the tournament and its overall impact on the game.
5.3. Case Study on Commercialisation of Cricket-the Indian Premier League (IPL)(2008-):
Figure5: Marketing Poster for IPL 2013. Source: Google Images The Indian Premier League (IPL) is a Twenty20 cricket championship league in India. It was initiated by the Board of Control for Cricket in India (BCCI), after an altercation between the BCCI and the breakaway rebel Twenty20 tournament Indian Cricket League. The league is headquartered in Mumbai, Maharashtra, and is currently supervised by BCCI Vice-President Ranjib Biswal, who serves as the league's chairman and Commissioner. It is contested by eight teams as of 2014, consisting of players from around the cricketing world. The Premier League is generally considered to be the highest-profile showcase in the world for Twenty20 (T20) cricket, the shortest form of professional cricket with just 20 overs per innings, but the IPL is perhaps as well known for its commercial success as for the cricket played – during the sixth IPL season, in 2013, its brand value was estimated to be around US$3.03 billion. Live rights to the event are syndicated around the globe, and in 2010, the IPL became the first sporting event to be broadcast live on YouTube. In 2012 the naming rights for the series was awarded to Pepsi. Two eligible bids were received, with Pepsi winning over Airtel with a bid of Rs. 3968 million. However, the league has been the subject of several controversies where allegations of cricket betting, money laundering and spot fixing were witnessed. 5.3.1. New Business Model for Cricket: The Essel Group in India embarked, to discover, diligence and display (3D) and encourage international level cricketing talent among the youth. Keeping the 3D model in mind the group floated in late 2007 a private league – the Indian Cricket League (ICL) to promote the game of cricket. ICL had invited 36
cricket’s big names like Brian Lara, Javed Miandad, Kapil Dev, late Tony Greig and Kiran More. Initially, ICL comprised 6 teams. Each team, besides the players also had a mentor, dietician, psychologist, a physiotherapist, and a media manager. The teams could include 4 international players, 2 national players and 8 domestic players and the game played in both Twenty20 and One Day International formats (50 over format). The ICL promoted by the Essel Group’s chairman, Subhash Chandra, was considered as a “rebel” and not recognized by ICC. When ICL sought permission to start the league the BCCI refused. Initially, ICL began with 50 over ODI format but quickly jumped on to T20 format. But BCCI countered ICL with its own Indian Premier League (IPL) in T20 format on the lines of English Premier League (EPL) in early 2008. The prize money of IPL was three times more than ICL. The ICL adopted a single employer modality, and distributed players to various teams to contest for the prize. The ICL had about six teams when it started and increased to about eight teams with a total of 200 players. All the teams were owned by Subhash Chandra who made an investment of about INR 1 billion. But, IPL adopted a franchise model – which was more market-friendly than ICL. When IPL auctioned the clubs and the players, the bidding generated huge response from the industry big-wigs, film stars, and media. BCCI marketed IPL as a prime time soap to generate keen interest. Moreover, each franchise ran their teams as a business headed by a CEO and the bottom line was performance. The IPL became a $2 billion property and sold cricket as a reality show. The broadcasting company of the SONY Group – Sony-World Sports (Sony) consortium bagged the telecast rights for $1.02 billion. Of this, Sony planned to spend about $108 million to promote this version of sport for the next ten years, until 2018. Teams in the IPL (2008-2010): A summary of owners and team cash outflows: The table below represents the detailed cash outflows and acquisition expenses of the initial 8 teams with which the IPL started (data given as of 2008-2010): Table 1: Estimated Annual Team Cash outflow and acquisition expenses of initial 8 IPL teams:
2011-Present: Former Teams and New Franchises: In the 2011 season, just before the beginning of the 4th edition of the IPL, two new teams were added with a view to expand the IPL, namely: Pune Warriors India and Kochi Tuskers Kerala. However while Kochi did not appear in any subsequent edition of the IPL except the 2011 season, the Warriors appeared in the IPL but only till the 2013 season. The Deccan Chronicle, affected by continuous losses sold its franchise, the Deccan Chargers to Sun TV Network and the new team was rechristened as the Sunrisers Hyderabad. A brief discussion is given about these teams: Former Teams and New Teams: Sahara Pune Warriors India:
Figure 6: Team logo. Source: Google Images 38
Pune Warriors India was a franchise cricket team that represented the city of Pune in the Indian Premier League. The team was one of two IPL franchises from the Indian state of Maharashtra, the other being Mumbai Indians. It was also one of the two new franchises added to the IPL for the 2011 season, alongside the also-defunct Kochi Tuskers Kerala. On 21 March 2010, Sahara Adventure Sports Limited successfully bid Rs.1900 crore (US$300 million) for the Pune franchise, the highest bid by any company in the history of IPL. The Videocon Group, an Indian consumer appliance manufacturer, also bid for the Pune IPL Team, but were unsuccessful. The team in 2011 bought players like Yuvraj Singh, Robin Uthappa, Jesse Ryder, Angelo Mathews, Murali Kartik, Ashish Nehra, Graeme Smith, Mitchell Marsh etc. with the highest money being paid to Robin Uthappa- a whooping sum of Rs. 9.45 Crores. However Sahara withdrew Pune Warriors India from the IPL along with the sponsorship of the Indian cricket team just hours before the 2012 IPL auction was about to start, providing a major blow to the Board of Control for Cricket in India (BCCI) and the IPL, which was already reeling after the disbanding of Kochi Tuskers Kerala in late 2011. They also boycotted the auction held on 4 February 2012. The main reason for the withdrawal was due to a problem in the amount of franchise fee to be paid by the Pune team. Sahara insisted that it had bid a huge amount for the Pune franchise under the notion that there would be 94 matches in the 2011 IPL season. As the BCCI later reduced the number of IPL matches to 74, Sahara demanded for a reduction in the amount of franchise fee to be paid by them to maintain viable IPL proposition. On 16 February 2012, the BCCI and Sahara ended their differences and announced that Pune Warriors India will play in IPL 5. The BCCI agreed to give Sahara a total purse of $3.4 million, $1.6 million from the money that they had for the auction and $1.8 million as compensation due to the absence of Yuvraj. It was also decided that Pune could replace Yuvraj with one player, whose fees would be up to $1.8 million. IPL's trading window was extended up to 29 February 2012 to allow the team to purchase players. Pune was also allowed the compensation of playing 5 foreign players in the squad, subject to the consent of the other 8 franchises. However after two more seasons in 2012 and 2013, on 21 May 2013, just two days after finishing its league campaign, Sahara withdrew Pune Warriors India from the IPL for the second time in three years. The reason, according to BCCI, was due to encashing the team's bank guarantee after Sahara defaulted on paying the entire franchise fee. BCCI sources said that Sahara paid 20% of the franchise fee in January 2013 and had promised to pay the 39
remaining amount by 19 May 2013 but they failed to do so. But Sahara blamed BCCI for the decision to pull out the Pune franchise from the IPL. In a statement from Sahara after pulling out Pune Warriors India from the IPL, it stated that Sahara had to pull out of IPL due to the BCCI's stubborn and disinterested attitude towards the reduction of the Pune team's franchise fee. It also stated that Sahara was "disgusted" by the unsporting and biased attitude of the BCCI towards it and the Pune franchise despite it supporting Indian cricket for more than a decade, the decision to withdraw from the IPL was final and it will not return to the IPL even if the entire franchise fee is waived off by the BCCI. However, it added that Sahara would remain the sponsor of the Indian cricket team until December 2013, when its contract with the BCCI expires, following which it asked the BCCI to find a new sponsor for the team. On 26 October 2013, the BCCI officially terminated its agreement with the team, bringing an end to the team's IPL sojourn. Kochi Tuskers Kerala:
Figure 7: Team logo. Source: Google Images Kochi Tuskers Kerala was a franchise cricket team that played in the Indian Premier League (IPL) representing the city of Kochi, Kerala. Rendezvous Sports World made the second highest bid of Rs.1533.32 Crores, and elected to base its team in Kochi, at the auction for two new teams of IPL held in 2011. Its most expensive player was Mahela Jayawardene bought at a price of Rs.6.75 Crores at 2011 IPL Player’s Auction. The franchise had been at the centre of many controversies since its inception. BCCI had given the franchise ultimatum to dissolve factionalism and infighting or face scrapping. After a series of lengthy meetings the company sent a letter to the BCCI requesting more time stating that the negotiations were in an advanced stage and they needed some more time to be sorted. The BCCI announced that on 27 October,2010 it would decide the fate of the Kochi team and the IPL Governing council decided to give them a 30-day termination notice which meant that the franchise would have to 40
reply to the notice within 30 days and if the IPL accepted their agreement then the franchise would no longer face the prospect of being terminated. The Kochi promoters submitted a letter to the BCCI officials with regard to the revised structure of agreement hammered out between them. The BCCI governing council meeting was held on 28 November, 2010 at Nagpur to decide the fate of Kochi franchisee. BCCI president Shashank Manohar said the board needed more time to discuss the issue and to take legal opinion and that the final decision on Kochi Tuskers Kerala will be taken on the BCCI governing council meeting at Mumbai on 5 December 2010. After much speculation it was finally announced by the BCCI that it was satisfied with the agreements signed by the franchise owners and the team would participate in the 2011 IPL Season. But at the end of the 2011 edition of the IPL, There were been mixed signals over whether the Indian Premier League (IPL) franchise the Kochi Tuskers Kerala will be sold. A stifled cash-flow which resulted in a humungous loss of Rs 125 crore in its first year alone had placed a question mark over who will own the second most expensive team in the league (the team was bought for about $333 Million). Financial woes plagued the team ever since its inclusion in the IPL. While adequate sponsorship has not been forthcoming, operational expenses have gone through the roof. The team had to pay the BCCI Rs 150 crore towards the franchise fee, over and above which the player fees amounted to Rs 45 crore. In addition, operational costs were somewhere in the ball park of Rs 20 crore. In return the BCCI parted with Rs 42 crore from its central sponsorship share, but in the meantime, Kochi hardly garnered any revenue from spectators, while the sponsorship money was minimal. On 19 September 2011, the newly elected BCCI president N Srinivasan, after the annual general meeting in Mumbai, announced that the Kochi Tuskers Kerala IPL franchise was terminated by the BCCI for breaching its terms of agreement. Under the terms of the agreement, each franchise has to submit a bank guarantee every year that covers the fee payable to the BCCI. The 2010-founded team was bought for 1,550 crore and the consortium has to pay a bank guarantee of 156 crore every year till 2020. The consortium that owns Kochi is reported to have defaulted on an annual payment of 156 crores as a bank guarantee. On 21 September 2011, owners of Kochi Tuskers moved the Bombay High Court to challenge the BCCI's decision to terminate the team's contract. However, the franchise's plea seeking to restrain the BCCI
from encashing its bank guarantee of 156 crore was rejected by a single bench of Justice SF Vajifdar. As a result, the team did not participate in any subsequent edition of the IPL. Sunrisers Hyderabad:
Figure 8: Team Logo. Source: Google Images Due to financial problems Deccan Chronicle Holdings Ltd, the team owner of Deccan Chargers announced sale of their team by auction. The sale was through a bidding process that would be completed by 13 September, with the winning bid announced on the same day. However the auction for the franchise on 13 September 2012 ended with no results as the team's owners rejected the sole bid they received from PVP Ventures. It was reported that Deccan Chargers owner rejected the bid by PVP ventures as DCHL's bankers were not happy with PVP's plan to divide the bid amount in two parts over the next ten years. Later on 14 September 2012, the BCCI announced that the Deccan Chargers IPL franchise was terminated due to various violations of BCCI codes by DCHL and the tender will be called for new team. DCHL moved to court to sort their issues with BCCI on termination. Sunrisers Hyderabad replaced Deccan Chargers from IPL 2013 onwards. They retained 20 players from the old Chargers, which left slots open for 13 players (eight Indian, five overseas). They filled six of these with Thisara Perera, Darren Sammy, Sudeep Tyagi, Nathan McCullum, Quinton de Kock and Clint McKay. The team was announced in Chennai on 18 December 2012 and is owned by Sun TV Network. The network won the bid of 850.5 million per year (850, 500, 000 Indian rupees, approximately $15.9 million) for a five-year deal, a week after Deccan Chargers was terminated due to prolonged financial issues. Sun TV Network Limited, which is headquartered in Chennai, is one of India's biggest television network with 32 TV channels and 45 FM radio stations which is India's largest media and entertainment company. The Sunrisers till date have appeared in one edition of the IPL so far and they finished in the 4th place. In the IPL Player Auction 2014, the Sunrisers bought numerous players, the most expensive being David Warner ($880,000), Amit Mishra 42
($760,000), Aaron Finch ($640,000), Dale Steyn ($2 Million) and Shikhar Dhawan ($1.5 Million) respectively. The Sunrisers Hyderabad are currently coached by Tom Moody and have former India players like VVS Laxman and Krishnamachari Srikkanth as their mentor and brand ambassador respectively. They are led by Shikhar Dhawan while West Indies captain Darren Sammy are their vice captain. 5.3.2. Financial Analysis of the IPL Tournaments and IPL teams (2008Present): General: In this section, we will focus on the financial performance of the IPL and IPL teams. However, we have not included the team Kochi Tuskers Kerala in this segment as its financial performance has already been discussed in earlier segments.
Almost 70% of an IPL team’s revenue comes from BCCI through central sponsorship which includes digital and broadcast rights, according to IPL team executives. Of the central sponsorship revenue from the associate sponsors that accrue to BCCI, 60% is shared with the team franchises for 10 years. That income is under pressure with BCCI signing up fewer associate sponsors. Last year, the league had only four associate sponsors—Pepsico India Holdings Pvt. Ltd (which is also the title sponsor), Yes Bank Ltd, Star India Pvt. Ltd and Vodafone. The total associate sponsorship fee for IPL 2013 was close to Rs.180 crore compared with Rs.190 crore for 2012. The income decline is surprising considering Pepsi got the title sponsorship with a bid of Rs.397 crore (over five years), almost double what DLF Ltd paid in 2008. In 2012, Hero MotoCorp Ltd, Citibank N.A., Vodafone, Volkswagen Group Sales India Pvt. Ltd, Royal Challengers and Karbonn Mobile India Pvt. Ltd were associate sponsors and together paid Rs.190 crore. Advertisers may be shying away from association with IPL as BCCI was asking for a premium even though its television ratings declined. According to data provided by TAM Media Research in 2012, the first 68 matches of IPL 5 had average TRPs (television rating) of 3.27 compared with 3.39 in IPL 4. The 2008 inaugural season had the highest rating of 4.81. A recent study by MEC, a media company from the WPP Group, said that the amount of time people spend watching the Twenty20 cricket matches will decline even if the IPL reaches more viewers this year. Secondly, a “seemingly never ending series of governance and transparency lapses have contributed to the rapidly declining brand value of IPL,” said a 22 May 2012 report from Brand Finance Plc. The consultancy estimates IPL’s brand value—which it defines as the commercial sustainability of the league —to have declined to $2.92 billion in 2012 from $4.13 billion in 2010.
BCCI’s initial plan of widening the sources of revenue is also not going according to plan. After ousting the former IPL commissioner Lalit Modi, the board scrapped some agreements, such as those on video streaming with YouTube (Rs.25 crore per year), theatrical screening (Rs.330 crore for 10 years), broadcast rights for IPL parties, awards and reality shows (with Colors and MTV to the tune of Rs.100 crore). It did, however, sell the new media rights to Times Internet, the digital media company of Bennett, Coleman and Co. Ltd, which is now screening IPL through YouTube for Rs.261.6 crore (for global Internet, mobile and radio rights) for a four year period from 2011-2014. The other significant chunk of BCCI’s contribution to IPL teams’ revenue is the annual TV broadcasting rights fee. The official television broadcaster Multi Screen Media Pvt. Ltd’s pay out to BCCI will increase to Rs.10.5 crore per match during IPL 6 and IPL 7, according to the 2010 agreement. This payout was around Rs.7 crore in the previous two editions. However, the increased payout will not help IPL teams as they got only 60% of this fee last year down from the 80% share for the first five years. The revenue contribution from ticket sales has been stagnant as well as stadium capacities haven’t increased and ticket prices have been kept under check to remain affordable for fans. However, sponsorship incomes for individual teams are stabilizing, said Indranil Das Blah, partner, CAA KWAN, a talent and entertainment agency. The ticket price ranges between Rs.500 and Rs.20,000 per seat in a stadium, depending on the city the match is being played in. Gradually over a period of three to five years, various components of central pool will deplete for franchises. With ever-increasing costs like player fee, running costs, support teams and ground activation costs, there is going to be a squeeze on cash flows going into future. That squeeze is already evident for some teams. Team Operating Results:
Net results(2012-13) (Rs. In Crores) 30 20 10 0 -10 -20 -30 -40
Net results(2012-13) (Rs. In Crores)
Chart 1: Net Results of IPL Teams (2012-13). Does not include Kochi, Pune, Chennai and Mumbai Teams as comparative data are not available. All the relevant data collected from the official websites of the DNA, the Times of India and The Telegraph. The data available on the financial performance of the IPL franchises is sketchy at best. For Chennai Super Kings, which is owned by India Cements Ltd, there is virtually no separate public data available as its activities are described as furthering the cement brand. Thus, its financial numbers are subsumed into those of the parent company. However, asked about profit, India Cements’ general manager (marketing) Chandrabhan Tiwari, said: “Ticket sales make up for around 13% of our team revenues, it has dipped in the last few years. However, team sponsorship has increased between 22-24%.” He did not specify the revenue. Similar is the case with the now defunct Deccan Chargers franchise. The financial data for seven other franchises present a mixed trend. Holding companies of four franchises—Mumbai Indians, Delhi Daredevils, Kings XI Punjab and Royal Challengers Bangalore—have made losses for the last four financial years ending 2011-12. Still, the losses are narrowing for some of them, data from the Registrars of Companies website show. Asked about narrowing gap between revenue and expenditure, Hemant Dua, head (marketing and commercial), GMR Sports Pvt. Ltd, said in an emailed response that the team it owns had managed its finances prudently.
“Delhi Daredevils has been working towards this (breaking even) aggressively and should break even and even possibly make profit this year,” he said. The team sponsorship had been growing 10-15% year on year, he added. Kings XI Punjab made a loss of Rs.1.52 crore in 2011-2012 (IPL 4) down from a loss of Rs.35.26 crore in the previous year, according to data filed with the Registrars of Companies. However, the team’s chief operating officer Arvinder Singh said: “The Mohali team made a profit of around Rs.4 crore last season (IPL 6). This year our team sponsorship revenues have increased by 30% over last year.” The team has signed on 14 brands for this year which includes a three-year title sponsorship deal with renewable energy products manufacturer NVD Solar. IndiaWin Sports Pvt. Ltd, which owns the Mumbai Indians franchise, posted a loss of Rs.38.3 lakhs in 2012-13 compared with Rs.15.4 crore a year ago. Similarly, the Delhi team reported a loss of Rs.63.9 lakhs in fiscal 2012 compared with Rs.8.4 crore a year ago. Royal Challengers Bangalore reported a loss of Rs.7 crore in 2012-13, the highest in at least four years. On the other hand, Kolkata Knight Riders posted a profit of Rs.10.42 crore in 2012-13. That is a turnaround from the loss of Rs.11.3 crore it reported the previous year. Sahara Adventure Sports Ltd, which owned the Pune Warriors franchise, was profitable as well, but its latest figures were for the 2010-11 financial year. The most profitable franchise, according to the limited data available for this analysis, is the Rajasthan Royals. Its financial prudence is evident in its careful expenditure on player auctions all these years. The holding company, Jaipur IPL Cricket Pvt. Ltd, reported a profit of Rs.5.72 crore in 2010-11. It had reported profit of about Rs.22 crore in each of the previous two financial years, but it is not clear from the Registrars of Companies documents whether there was any one-time income in those periods. Sunrisers Hyderabad, owned by Sun TV Network Ltd made its debut in IPL last year, expects to break even in the second year, according to the management during an analyst call in November. However, in a conference call with analysts on 9 November 2012, the company’s management said it expected a loss of Rs.30 crore in the first year. It had projected a profit of Rs.45 crore from the fifth year onwards at that time. The team was formed after BCCI terminated the earlier IPL Hyderabad franchise Deccan Chargers owned by Deccan Chronicle Holdings Ltd. The Chennai-based media conglomerate got the Hyderabad franchise for Rs.425 crore for the next five seasons (Rs.85 crore a year) of the Twenty20 tournament. 46
While the company will pay Rs.85 crore a year for the franchise rights, the players’ salary for the first year will add up to Rs.40 crore. With Rs.25 crore earmarked for other expenses as per analyst estimates, the team would have to earn Rs.150 crore from the second year onward to break even. In its first year in IPL, the team earned revenue of Rs98.54 crore. However, operating costs of the IPL franchise ate up a chunk of its parent company’s revenue. The operating cost for the team was Rs129.33 crore and the division made an operating loss of Rs30.79 crore. 5.3.3. IPL Controversies: The Board of Control for Cricket in India (BCCI) has found itself in the middle of many conflicts with various cricket boards around the world and controversies as a result of the Indian Premier League (IPL). Notable among these are discussed in the next few pages. (I) Conflicts with the England and Wales Cricket Board- Because the inaugural IPL season coincided with the County Championship season as well as New Zealand's tour of England, the ECB (England Cricket Board) and county cricket clubs raised their concerns to the BCCI over players. The ECB made it abundantly clear that they would not sign No Objection Certificates for players—a prerequisite for playing in the IPL. Chairmen of the county clubs also made it clear that players contracted to them were required to fulfill their commitment to their county. As a result of this, Dimitri Mascarenhas was the only English player to have signed with the IPL for the 2008 season. (II) Controversy about tax exemption- A controversy was triggered when the Centre gave away potential revenue of 45 crore by granting exemption to International Cricket Council (ICC) on the revenue generated from the 2011 World Cup Cricket Tournament. In connection the PIL filed by Shiv Sena leader Subhash Desai seeking a direction to the Maharashtra government and the Income Tax Department to recover entertainment tax from IPL. He also asked the petitioner to make Sharad Pawar a party if he wanted to make allegations against him as he headed the apex cricketing body two years ago. In August 2011, the then Finance Minister Pranab Mukherjee that the Income Tax Department was probing allegations of financial irregularities and "criminal activities" against some of the franchisees in the Indian Premier League (IPL).
In June 2011, the Chennai High Court said it “could not appreciate” the tax exemption to the Indian Premier League and sought a response from Tamil Nadu government on the issue. The PIL filed by Sakthi Vasan, had contended that the tickets for the IPL matches were being sold at exorbitant rates and the higher range of tickets were purchased by the rich and the affluent. The petitioner said the Income Tax Department was the authority for regulating the tariff for entertainment, which he said would include the IPL matches, but the department failed to regulate the IPL tariff. (III) Suspension of Lalit Modi- On 25 April 2010, the BCCI suspended Lalit Modi, the first IPL chairman, for "alleged acts of individual misdemeanors". The suspension notice was served on him by Rajeev Shukla, then BCCI vicepresident, and N Srinivasan, then board secretary, sending an e-mail to the same effect. It followed a day of negotiations with interlocutors attempting to persuade Modi to resign. Modi was officially barred from participating in the affairs of the Board, the IPL and any other committee of the BCCI. (IV) 2012 spot fixing case- On 14 May 2012, an Indian news channel India TV aired a sting operation which accused 5 players involved in spot fixing. Reacting to the news, Indian Premier League president Rajiv Shukla immediately suspended the 5 uncapped players. The five players were TP Sudhindra (Deccan Chargers), Mohnish Mishra (Pune Warriors), Amit Yadav, Shalabh Srivastava (Kings XI Punjab) and Abhinav Bali, a Delhi cricketer. However, the report went on to claim that none of the famous cricketers were found guilty. On the reliability of the report, Raj at Sharma, the editor-inchief of news channel India TV quoted that the channel had no doubts about the authenticity of the sting operation and were prepared to go to court. Mohnish Mishra, who was part of Pune Warriors India team for the 2012 season, was being admitted to have said that franchises pay black money, in a sting operation. Mishra was caught on tape saying that franchisees paid them black money and that he had received 15 million (US$240,000) from the later, among which 12 million (US$190,000) was black money. He was also suspended from his team. (V) 2013 Indian Premier League spot fixing and betting case- The 2013 IPL betting case arose when the Delhi Police arrested three cricketers, Sreesanth, Ajit Chandila and Ankeet Chavan, on the charges of spot-fixing. The three represented the Rajasthan Royals in the 2013 Indian Premier League. In a separate case, Mumbai Police arrested Bollywood actor Vindu Dara Singh and Gurunath Meiyappan, son-in-law of the current BCCI 48
President Narayanswamy Srinivasan, and owner of the IPL team Chennai Super Kings for alleged betting and having links with bookies. The International Cricket Council withdrew umpire Asad Rauf from the Champions Trophy in the wake of reports that the Mumbai Police are conducting an investigation into Asad Rauf’s activities in the IPL spot fixing scandal. Sunil Bhatia, a bookie arrested by Delhi Police said that he was involved in fixing in Indian Cricket League and Bangladesh Premier League besides the IPL leading to speculations that the entire fixing scandal runs even deeper. A team of Delhi Police Special Cell officers arrested Yahya Mohammad in the early hours of 24 May 2013 from the Rajiv Gandhi International Airport (RGIA) in connection with the cricket betting. Ahmedabad Crime Branch arrested bookie Vinod Mulchandani from the Satellite Area of Gujarat city on 25 May 2013. Rs 1.28 crore in cash, laptops and mobile phones were seized from his possession. Vindu Dara Singh was arrested for alleged links to bookies in this spot fixing. He was later released on bail on 3 June 2013 by a Mumbai court. Call records of Vindu Dara Singh in connection with the spot fixing scandal showed that he was in frequent contact with Chennai Super Kings (CSK) Team Principal and BCCI president N. Srinivasan's son in law Gurunath Meiyappan. To investigate whether frequent calls to Mr. Meiyappan were for betting, Mumbai Police had issued summons to him. On 24 May 2013, Gurunath Meiyappan was arrested on charges of betting, conspiracy and cheating after he was questioned by the Mumbai Crime Branch. After his arrest, the CSK franchisee immediately disowned him. The main reason for the immediate disowning of him was that, his arrest could lead to termination of the CSK franchise. This was because of the Clause 11.3 (c) of the Franchise Agreement, which stated that: “a franchise may be terminated immediately if the Franchisee, any Franchisee Group Company and /or any Owner acts in any way which has a material adverse effect upon the reputation or standing of the League, BCCI-IPL, BCCI, the Franchisee, the Team (or any other team in the League) and/or the game of cricket.”
5.4. Analysis of the Impact of Commercialisation on Cricket: In the light of our aforestated case study we will now analyze the overall impact of commercialisation on Cricket.
While due to commercialisation, the amount of money involved in the game was increased; the phenomenon has its adverse effects also as evidenced by the rise in spot-fixing and match-fixing reports from the post-90’s era. Infact, commercialisation was clearly at the central stage of the recent restructuring of the International Cricket Council (ICC). This latest restructuring aims to hand over the Central administration of the game in the hands of three full members- India, Australia and England; while the rest of the countries will continue as associate members. Needless to say there are financial aspects as well as non-monetary benefits involved also. The Telegraph in its 9th February, 2014 edition has reported that India’s share of the revenue distributed by the world body is likely to jump from around 4% to over 20% while the current BCCI President N. Srinivasan is all set to become the ICC’s first chairman post restructuring. Such developments at a time when there have been numerous calls from all corners to sack him owing to his team’s involvement in the 2013 IPL betting scam. More recently, the Supreme Court has also quashed the plea of India Cements, the owners of Chennai Super Kings, that Gurunath Meiyappan, chief accused in the 2013 betting scam, is only a Cricket “enthusiast.” On the basis of the report of the Justice Mukul Mudgal Committee the role of Mr. Meiyappan as the team official and “face” of Chennai Super Kings has been already proved. Further he has been convicted of offences like passing team information and placing bets through Vindu Dara Singh. Worse, the team owners are said to have given statements that contradict the factual position. Moreover the Report also criticizes the modification in the IPL rules that allows BCCI officials to hold commercial interests in IPL teams. On 5 June 2013, Rajasthan Royals team co-owner Raj Kundra was questioned by the Delhi Police for alleged involvement in illegal betting. On 6 June 2013, Delhi Police claimed that he had confessed to them of placing bets on his IPL team through a bookie who was his friend. On 7 June 2013, Rajasthan Royals team management said that Raj Kundra would be suspended and all his shares in the team taken back if the charges against him of betting were proved. Because of this, he was suspended from the IPL by the BCCI on 10 June 2013. Currently, the Delhi Police are awaiting a directive from the apex court to investigate Kundra and his wife, Bollywood Actress Shilpa Shetty after the Supreme Court-appointed panel said that charges against him need further probe.
The future of the current Team India Captain M.S.Dhoni also hangs in the balance. Dhoni along with teammate Suresh Raina are among the six capped Indian players named in the Mudgal Panel report. Bookie Uttam Jain alias Kitti has named Dhoni and Raina in connection with IPL spot-fixing and betting when confronted by Trichi Railway SP Sampat Kumar, informed Mudgal; as per the reports of Zee News Network on 12th February, 2014. The three Rajasthan Royals Cricketers- Sreesanth, Ajit Chandila and Ankeet Chavan faced severe misfortune and punishment for their offences. Reportedly, Chavan was promised 6 million (US$96,000) to give away 14 runs in Rajasthan Royals' match against Mumbai Indians on 15 May 2013 and he did it giving away 15 runs in his second over. After being arrested, he was immediately suspended by his employer, Air India. He later broke down in police custody and confessed to spot-fixing in IPL 6On 13 September 2013, Chavan and fellow player Sreesanth were banned from cricket for life by the BCCI disciplinary committee. Delhi Police also said that Sreesanth, Chandila and Chavan and 23 other people arrested by them in the spot-fixing scandal were going to be slapped with the provisions of Maharashtra Control of Organized Crime Act (MCOCA) since they were acting under the command of underworld dons Dawood Ibrahim and Chhota Shakeel. The question that looms large as of now is- Where the game going? In the interview I conducted with Mr. Gautam Dasgupta, Former Joint Secretary of BCCI and CAB (Cricket Association of Bengal) and current Chairman of the Board of Trustees, CAB at the YMCA grounds on 22nd February, 2014 in connection with this project, Mr. Dasgupta has stated that the IPL is leading to deterioration of the game as a whole while turning out to be a lucrative pass-time for the young generation. When asked about the impact of the tournament on Commercialisation, Mr. Dasgupta clearly stated that Commercialisation of the game had begun a long ago. The IPL has only led it to the point of saturation. Moreover it is the performance of the player that makes him a winner both on the field as well as off it. A shining example of that is the Australian Cricket Team. Infact, former Aussie Captain Ricky Ponting quit the tournament after playing only four games in its inaugural edition. He did not play in it again until his International Career was over. IPL apart, just how far has the other facets of Commercialisation affected the game? The answer is too much. Commercialisation has brought in sponsors 51
to the game who always tend to invest their money on a player whose performance off late has been noteworthy. It has increased performance pressure. While many teams and players have stood up to the challenge, some have not. A case in point is that of Former English Opener, Marcus Trescothick. Trescothick pulled out of International Cricket temporarily owing to depression in late-2006 just before the Ashes Series that year. He never played for England again, although he continues to play Domestic Cricket. Similar was the case of Jonathan Trott who pulled out of the recent Ashes Series due to similar reasons. Tournaments like IPL have also given rise to a new phenomenon-“Money over Country.” A shining case in point is that of the West Indies opener Chris Gayle. Gayle had a fallout with the West Indies Cricket Board (WICB) in 2011 owing to payment issues and did not play for his country for over a year. At the same time, Gayle started playing for Royal Challengers Bangalore in the IPL and for Sydney Thunders in the Australian Big Bash. Post his comeback to International Cricket in mid-2012, Gayle’s performance for West Indies has been very sketchy, though he continues to score for his League Teams. Similar is the case of Indian Middle-Order Batsman Suresh Raina. Raina, one of the prolific run scorers in the IPL had only scored one International HalfCentury in his last 24 ODI Innings. Consequently, he was dropped from the team for the Asia Cup, 2014. Modern Cricket has also attracted glamour to the game. The concept of the Cheerleaders was more renowned in American Basketball but courtesy IPL every team has its own set of Cheerleaders who dance to the team’s theme song each time a four or a six is hit or a wicket is taken. Popular Bollywood Celebrities like Shahrukh Khan perform at the opening ceremonies.
Figure 9: Shahrukh Khan performing at IPL 2013. Source: Google Images Impact on First Class Cricket: In my interview with Mr. Gautam Dasgupta I asked him whether First Class Cricket had been replaced by IPL as a medium of entry to the National Team. To this he instantly replied No. he cited the case of Shami Ahmed- the current bowling sensation of the Indian team whose great
Figure 10: Shami Ahmed. Source: Google Images performance at the Ranji Trophy games has earned him a place at the National Team. He also stated that none of the IPL Cricketers as of now are a part of the National Team on a consistent basis. He cited the cases of Praveen Kumar and Munaf Patel who, unable to bear the hectic schedule of the game went unsold at this IPL Player’s Auction. 53
Impact on the owners: My last question to Mr. Dasgupta was regarding whether the teams were able to make profits out of the high investments associated with the game. To this, he answered that the Teams had not invested their money with an intention to lose it. Rather the benefit was more intangible in nature. He maintained that while none of the teams were able to earn Cash Profits to the extent they would have liked to, the goodwill and brand value of the team owners was getting enriched. So it was not exactly a waste of time. But off late, the owners have been very sensible with their spending. The amount paid for top 10 players at IPL Player’s Auction was only $12 Million compared to $18 Million in 2011. However the figure was higher than the amount spend in the Inaugural Player’s Auction. A table in this regard has been presented in the Appendix Segment. 5.5. Results, Conclusion and Suggestions: In the reply to my question how has IPL benefitted the game, Mr. Dasgupta opined that T20 Cricket was hugely benefitted and that the team’s overall performance in that format was very good. But strangely, the solitary T20 Cricket World Cup that India has won was in 2007- before the IPL came into vogue. When I raised this point, Mr. Dasgupta gave a very nice reply and attributed the cause of such disappointments as fatigue. He also maintained that Indian Players had learnt nothing from their International Counterparts and attributed the cause of differences in performances of both the categories of Players as mindset. Thus in the end, we may conclude that while the IPL has sensationalized Indian Cricket in a way that we have never seen before, it has failed to achieve its primary purpose- finding and promoting Cricketing Talent all over India. Players like Pragyan Ojha and Amit Mishra are no doubt talented but are yet to solidify their place in the National Squad. Infact since the second season of IPL its primary purpose appears to have been lost. Thus the game’s administrators still have to resort to First Class Cricket as the medium of team selection. However, the IPL has succeeded in enhancing the 54
corruption and the glamour associated with the game. It follows the Indian Tradition- Every Good Objective ultimately leads to Not-so-Good destinations. In the light of the above it can be suggested that the game of Cricket, courtesy commercialisation, has reached astounding heights. Mr. Dasgupta has very correctly pointed out that IPL has taken this commercialisation aspect to the point of saturation. He has also selected Glamour as the main focus of IPL instead of Promoting talented Indian Cricketers for the National Team in the Questionnaire that I submitted to him. It can be suggested that the number of Star Performers in each team be reduced and raw Cricketing Talent should be given more exposure as a means of revamping the objective of the IPL. Only then the IPL can achieve what it had set out to do in 2008. The rebel ICL was a champion in this regard and as its successor, the IPL is required to do the same. As far as Team Operating Results are concerned, four out of the six teams whose data were available were in losses. Though Mr. Dasgupta has opined that the Goodwill of the Owners has increased, I feel that the Goodwill alone cannot be soothing to the owners especially when such profit-hungry corporate like Vijay Mallya are involved. Goodwill may increase team valuation but regular profits will further raise goodwill which in turn will raise Valuation. Ticket Price alone cannot bring profits, for the profits to increase many other factors are necessary. As already discussed above, the BCCI has reduced the share of TV Broadcasting Fees that the Team Owners used to get while advertisers seem to have shied away owing to declining viewership for IPL Matches. Fewer Associate Sponsors have been signed up and the Brand Value of IPL has fallen by nearly $1 Billion during 2012-2013. One of the ways to attract more advertisers is to waive the premium that the BCCI charges from them. Lower Ticket Prices and increase in stadium capacities are necessary to attract more viewers. Lastly, the BCCI should be more transparent and accurate in its dealings with the team owners. Cases like the exit of the Pune Team should be avoided. But the primary suggestion should be to ensure that the diluted game of Cricket should be galvanized. The IPL matches should be exposed to stricter vigilance. But what can one do if the administration itself is a sham? As of 25th March, 2014; the BCCI is yet to remove N. Srinivasan as its President despite Supreme Court Ruling. The delay in doing so is totally unconstitutional when the Country’s Law itself suggests that relatives of the accused cannot occupy powerful positions. An order from the Apex Court is 55
still pending regarding directing the CBI to further investigate the Rajasthan Royals Team Owners. This is further delaying the redressal process. On the basis of the above analysis, it seems that betting is perhaps the root cause for reduced interest in the IPL and its declining financial position. Betting has led to lower public interest which has led to reduced number of sponsorship and advertisement deals and consequently losses and lower brand value. If the current scenario is cleaned up, people might be initially skeptical but they will come back as loyal supporters if the transparency is maintained and a Chain Reaction will happen leading to improved deals and ultimately leading to improved financial outcomes. Finally, it is suggested that IPL should take a cue from similar tournaments like the T20 Big Bash in Australia. So far, the money involved in that tournament is far from satisfactory but still it has succeeded in contributing Cricketers to Australia like Glenn Maxwell, James Faulkner etc. to name a few. These Cricketers are present mainstay of the Australian T20 side. The IPL should not focus on Money alone and primarily concentrate its efforts in promoting Domestic and International Cricketing Talents. Only then its goal can be realized.
Chapter 6: Commercialisation of Football In general, football clubs have originated since the 1850s and the majority of European clubs are about 100 years of age. When the game attracted spectators and players became financially compensated, business practices developed into the clubs that were until then just sporting associations. Thus, to a certain extent business has always been a part of sports. However, since the 1980s there has been a large economic development in the sport with an involvement of corporations and other business institutions. During these last decades business in football has grown enormously and football clubs have commercialized largely. Consequently, the football industry now is an international business; international professional competitions are established, players are transferred all over the world and the European Championship finals and FIFA 56
World Cup finals are top media events with television broadcasting all over the world. Football is also said to be the most popular sport globally. And although the currently very challenging economic times there is a continued revenue growth in European football, illustrating the continued loyalty of supporters and the continued appeal of football to sponsors and broadcasters. 6.1. The Football Industry: Regarding sports football is one of the most popular. It is the number one sport with regard to media attention and audience reception globally. However, there is a multibillion euro industry in professional football that is hardly recognized in scientific articles, as demonstrated by Nilsson (2005). Football has experienced dramatic changes over the last 10 years, with some estimates indicating that the global game is now worth $12 billion per annum while commentators suggest the industry grew in size by up to 25 per cent during the same period. According to Wright (1999) football has attracted special academic interest both in regard to the globalization of the sport and the impact of the worldwide game on national identities. European football is becoming more and more important to research in international business and business administration. The reason is that it is a giant and fast growing business, working at a global level, but still in need of a more systemized knowledge. 6.2. Commercialisation of Professional Football: In professional football the role of financial capital has increased significantly over time. Before the 1990s, the aim of professional clubs was to entertain the fans by accomplishing sport success while staying solvent and not to maximize profit. Finding ways to improve playing success is the most important, and the clubs can be described as win (utility) maximization oriented.
In the 1990s, an increased involvement of global media conglomerates in football took place. For media companies the broadcasting of sporting events had become a very important tool to attract viewers and advertisers. The Bosman arrest was also a keystone event. The Bosman ruling is a 1995 European Court of Justice Decision concerning freedom of movement for workers and freedom of association. The case was an important decision on the free movement of labour and had a profound effect on the transfers of football players.
Bosman Ruling: Jean-Marc Bosman was a player for RFC Liege in the Belgian First Division in Belgium whose contract had expired in 1990. He wanted to change teams and move to Dunkerque, a French team. However, Dunkerque refused to meet his Belgian club's transfer fee demand, so Liege refused to let him go.
In the meantime, Bosman's wages were reduced as he was no longer a firstteam player. He took his case to the European Court of Justice in Luxembourg and sued for restraint of trade citing FIFA's rules regarding football, specifically Article 17. On 15 December 1995 the court ruled that the system, as it was constituted, placed a restriction on the free movement of workers and was prohibited by Article 39(1) of the EC Treaty (now Article 45 (1) of the Treaty on the functioning of the European Union). Bosman and all other EU football players were given the right to a free transfer at the end of their contracts, with the provision that they were transferring from a club within one EU Association to a club within another EU Association. Prior to the Bosman ruling, professional clubs in some parts of Europe (but not, for example, in Spain and France) were able to prevent players from joining a club in another country even if their contracts had expired. In the United Kingdom, Transfer Tribunals had been in place since 1981 to resolve disputes over fees between clubs when transferring players at the end of their contracts. The Bosman ruling meant that players could move to a new club at the end of their contract without their old club receiving a fee. Players can now agree a pre-contract with another club for a free transfer if the players' contract with their existing club has six months or less remaining. The Bosman ruling also prohibited domestic football leagues in EU member states, and also UEFA, from imposing quotas on foreign players to the extent that they discriminated against nationals of EU states. 6.3. Commercial characteristics of the modern football firm: Many experts of the game address the economic globalization in football by considering the world’s leading clubs as “global” transnational corporations. They affirm the utility of sport in advancing our empirical and theoretical understanding of globalization processes. Croci and Ammirante state (1999) that football clubs are more and more turning into publicly owned stock firms responding to the logic of the market. The clubs are selling an increased amount of products, not just the soccer match, far beyond the local ground, to supporters that are simultaneously defined as consumers. This type of neo-liberal restructuring has already taken place in other regions of the global economy. Modern day football clubs are characterized by high diversification based on a new proactive approach towards commercial opportunities. More and more, top clubs have increased the range of commercial 58
features, merchandize and facilities to supporters and increased the range and scope of their commercial actions.
In acquiring capital the fan or consumer is essential. Hence marketing, and more specifically branding, is a very important theme in the development of professional football clubs. Sport clubs produce an emotional response from their supporters that is greater than in any other industry, excluding actors and singers. In the attempt to capitalize of the emotional relationship they share with their supporters, professional sports clubs try to position themselves as brands. By having a powerful brand, clubs can potentially build and take care of supporter’s loyalty. And this assists in creating additional revenues by transaction of a range of goods and services. 6.4. Business model in modern football: The finances of a club are an important factor for achievement in football. Empirical research specifies there is a positive relation between budget and team performance (Dejonghe, 2004). In order to examine the elements that contribute to increasing budgets and consequently success, the concept of cumulative causation by Myrdal can be applied. Myrdal devised the theory of cumulative causation with the aim of to explain the diverse development paths that areas and countries may follow. The concept was applied by Dejonghe (2004) to the football industry. The model in figure 1 is by Dejonghe (2010) and it is shown below:
6.5. Commercialization and supporter contentment:
Figure 11: Commercialization and supporter contentment. Source: Google Images
6.6. Case Study 1: Manchester United vs. Barcelona FC: In this segment, we have taken a case study on commercialisation- with the help of analysis of various variables of commercialisation through the two of the most famous sports clubs- Manchester United and Barcelona FC.
Manchester United: The English Manchester United Football Club (MUFC) is a very successful club in football. It was established in 1878 as Newton Heath LYR Football Club, and in 1902 decided to alter its name to Manchester United. Its prizes include 19 English top division league titles and 3 European Cup/Champions League titles (1968, 1999, and 2008). Club ownership: Manchester United is structured as a business company with a limited amount of owners in control. There is no form of member ownership at the club. Business has always played a role at Manchester United. By as early as 1902, business and football had become inseparable in England. Sporting events were sponsored by local businessmen and newspaper publishers, while 62
entrepreneurs organized clubs as limited companies. In 2005 the Glazer family, large North-American entrepreneurs, purchased Manchester United and de-listed it from the stock exchange. The Glazer family carried out a ‘leveraged’ buyout of the club. They borrowed the money to purchase the club and after the acquisition moved an important amount of the debt on the balance sheet of the club. The future revenues of Manchester United are utilized to finance their own acquirement of the club. Considering that Manchester United used to have a reputation for having no debts, this development was an important change.
Commercialization: At the start of the commercial strategy analysis, we have done a revenue outline in numbers. Manchester United revenue outline. Data gathered from Deloitte reports (2005; 2013) Season 2011/2012 Season 2003/2004 Net total 367 m E 259.0 m E income/revenue Matchday 120.3 m E 92.4 m E Commercial 114.5 m E 72.1 m E Broadcasting 132.2 m E 94.5 m E At the start of the 1990s commercial activities accelerated at the club. In 1991 it was the first British football organization to float on the London Stock Exchange. In 1993, Manchester United Football Club plc raised its operating profit and turnover significantly, largely due to merchandising and brand extensions such as ‘Champs Cola’. The club imagined that selling the brand was a more stable source of revenue than depending on winning football matches on a consistent basis. In 1994 a Megastore was launched at the club`s ground Old Trafford. The ground itself was as well largely upgraded for £13 million. By the end of the 90`s the club was in a large capital contract with electronics company Sharp. Also, together with the other English clubs, United had a five year £743 million broadcasting contract with BSkyB and the BBC. The club carried on entering new area`s for commercial exploitation purposes. An online store sponsored by Lotus and Sun Microsystems was 63
established in the late 90`s. And the club opted for strategies to gain more popularity in Asia. Since 2005, the brand value of the club has more than doubled and the club is now classed as the “most valuable sporting team in the world” (Forbes, 2012). According to BrandFinance (2011) the Glazer Family has utilized their marketing experience in the American football business, by applying a strategy of “on field performance underpins financial success” at Manchester United. Since the acquirement of the club by the Glazer family, with the aim of to cover their debt payments, ticket prices at the Old Trafford stadium have increased even more. More and more traditional supporters of United, who have low budgets, cannot afford anymore to attend matches of their club. This decreases the traditional core of support that drives the atmosphere at the stadium. The new higher income fans visit the stadium more for the event than for the affection of the team. They are in the stadium more to be entertained than to support their team. At current, commercial deals are extensive at Manchester United, with the club currently having more than 20 worldwide partners who pay large amounts of money to be affiliated with the club (Deloitte, 2011). Manchester United has a reputation for being Europe`s most innovative club regarding the expansion of its commercial strategy. And it is also the most profitable. One of the objectives of the club is “Treating fans as customers”. This is also stated in the Annual report of the club (2011). The principal sponsor of Manchester United is Aon. Aon is a global provider of risk management, insurance and reinsurance brokerage, and human resources solutions and outsourcing services. Clothing sponsors are Nike. Other sponsors include DHL, Chevrolet, BWIN, Singha etc. Product merchandize is extensive. In 2012 the club signed a 5 year sponsorship agreement with American automotive company Chevrolet. The logo of Chevrolet will be visible on several attributes of the club, including signs, scoreboards, player benches, backdrops and chairs in interviews. The collaboration intends to bring Chevrolet’s fans “closer” to the club. Commercial director, Richard Arnold, states that aligning with an American automotive partner and the increasing popularity of football in America, hopefully makes it possible to increase the club`s fan base in the country (Marketing Week, 2012). The club has an official TV channel, MUTV, which is accessible as a subscription service (£6 or €8/month). It broadcasts exclusive documentaries, players interviews, the manager`s weekly press conference, match analysis, as well as other issues. The TV channel is obtainable around the world on diverse TV channels. Besides MUTV there is also MUTV Online, 64
which is a highlight service that can be viewed on the pc. MUTV Online consists of interviews, news and match highlights. But as of 2014, The Premier League is not the only table that will make grim reading in the Manchester United boardroom, after Deloitte's annual Money League showed the club had been leapfrogged by Bayern Munich in terms of revenue generated. Commercial revenue has surged in recent years as the club has signed a raft of regional sponsorship deals across a range of categories. But the annual report, which measures the income of the biggest clubs in Europe, shows United fell out of the top three in 2012-13 for the first time since the list was compiled in 1996-97. United topped that first list but have been overtaken by first Real Madrid and then Barcelona in the past nine years, largely as a result of the ability of the Spanish giants to negotiate their own TV deals – which weakens the competitiveness of La Liga but boosts the pair's own coffers. Bayern Munich's stellar 2012-13 season, in which the German dominated European football, helped boost their revenues by 17% to £396.6m. That growth allowed them to leapfrog United, who earned £363.2m. Barcelona FC: Spanish football club FC Barcelona was founded in 1899 by Joan Gamper with assistance from Catalans and foreigners. Catalan culture is important at the club, hence the motto "Més que un club" (More than a club). The club has won the Spanish league 21 times and the European Cup/Champions league 4 times (1992, 2006, 2009 and 2011). Club ownership: An essential characteristic of FC Barcelona is that it was originated as a membership club (Annual Report FC Barcelona, 2011). This is a sharp distinction with most top football clubs, Manchester United for instance, that are owned by local business people of industrial families. Now in the 21st century this is still the case, with the club attaining a total global membership of 145000 in 2006. The name for the members is “socios”. Every member pays a yearly membership fee that lets them, among other things; vote in the presidential elections of the club. These fees are an important source of revenue for the club and president Laporta recognized it as holding opportunities for considerable revenue expansion in the future. Because of this membership structure, in contrast to most other clubs in the world, Barcelona really replicates the wishes and desires of its supporters. The club’s members can also vote on topics such as the permission of shirt sponsorship, which has occurred in the past. 65
Commercialisation: At the start of the commercial strategy analysis, we have done a revenue outline in numbers. FC Barcelona revenue outline. Data gathered from Deloitte reports (2005; 2013) Season Season 2011/2012 2003/2004 Net total 450.7 m E 169.2 m E income/revenue Match day 110.7 m E 57.8 m E Commercial 156.3 m E 45.3 m E Broadcasting 183.7 m E 66.1 m E Barcelona, under President Joan Laporta (2003-now), has been successful to market the club worldwide while staying loyal to its sociopolitical background. FC Barcelona, with its ‘More than a club’ motto, represents the culture of Catalonia, while at the same time being one of the worldwide largest sporting brands. In their positioning the clubs tries to stay away from the wildly commercial reputation that many English clubs, i.e. Manchester United, are known for (Chadwick & Arthur, 2008). Barcelona states the objective to raise revenue should be performed without decreasing the members’ social and democratic rights. However, just like other top clubs, Barcelona has a very commercial strategy. The club is aware of the requirement to work in the worldwide market. It increased commercial activities and has been extensively attracting markets like Asia (Annual report FC Barcelona, 2011). The difference with other clubs is that Barca`s commercial strategy is founded on strong cultural and social principles. Currently, the main sponsors/partners of the club are Nike and Qatar foundation. Other sponsors/premium partners: Audi, Turkish Airlines, Estrella Damm, La Caixa, TV3 Catalunya. Product merchandize can be described as extensive. FC Barcelona has an official television channel. Barca TV provides information about the club and entertainment. Barca TV is provided worldwide by pay-per-view channel on satellite and cable networks. Since 2008 Barca TV is broadcasted for free in Catalunya in order to “bring it further into live with the needs and desires of the club`s members and supporters” (Barcatv, 2012)
Unlike most other top clubs, Barca does not maximize ticket prices to prices the market would bear (Annual report FC Barcelona, 2010). The Barca Board is required to be accountable and remain popular with the supporters. As a result ticket pricing at Barca is low in comparison to other top clubs. By doing so Barca does not exploit the loyalty of its supporters. One of the traits of the brand identity of the club is enclosed in the appearance of Barca itself instead of star players. The transfer policy is founded on the Catalan asset of shrewd financial management. At Barcelona there is no free spending like there is at clubs like Real Madrid. Barcelona uses an economic approach to buying players who however have a fine reputation. The most important is the team, instead of a group of world stars. At the finish of the 2005/2006 season, Barcelona was the only top club globally that did not have a sponsor’s logo on its shirts. At first sight this appears to be unprofessional, considering the miss of a large quantity of revenue. However, Barcelona is giving a powerful sociopolitical statement, that has large value and increases brand equity, by not having a business logo on its shirt. Since 2006, the shirts featured the logo of UNICEF, emphasizing the objective of both organizations to address the problems of children in vulnerable situations. Barcelona receives no payment from this relationship. Barcelona donates 1.5 million euro yearly to UNICEF. More than other clubs, FC Barcelona is using new media and social media to reach potential consumers. The new media strategy of the club is focused on websites like Twitter, Facebook, Youtube, as well as the supply of phone apps. Since the year 2006 FC Barcelona has been conformed to the ‘Millennium Development Goals’ of the United Nations and gives 0.7% of the revenues from FC Barcelona to the Foundation for its projects. Since 2010, the playing squad and the training personnel from the professional areas of the club are also giving some of their income. They grant 0.5 % of their salary to the Foundation. As of 2014, in Deloitte's annual Money League Barcelona came second only after Real Madrid posting revenues of £413.6m. 6.6.1. Analysis of the above Case Study: The individual cases have been investigated. The next step is to compare the individual case results with each other. To start, the compared results are summarized in a table: M. United 67
Supporter influence Commercial strategy
Corporate business style Intermediate
Traditional football identity style Highest
(Commercial) revenue amount Level of Lowest Highest supporter satisfaction Table : Cross case results. Prepared on the basis of Analysis of Deloitte Reports Next, an explanation of these results is given. A comparative analysis is made regarding the commercialization strategies of the cases and a revenue comparison. Commercialization strategy comparison: When investigating the commercialization strategy results of the three case clubs, two different approaches were found in this research. I name the strategy of Manchester United a corporate business approach, while I name the strategy of FC Barcelona a traditional football identity approach. The traditional football identity approach: The construction of a traditional football identity to attract fans and thereby indirectly maximizing revenues. Most football clubs have social origins. They are organizations that were established as entertainment/sport by people for people; they served the needs of the community. In the traditional football identity approach the community aspect is considered the most important. According to Brand Finance (2011) Manchester United applies a strategy of “on field performance underpins financial success”. Thus, buying the best players leads to sport success, which leads to financial profit which subsequently can be investing again in better players. The commercial strategy of the club can be characterized as focusing on maximizing revenues from all sources. Not everything is about business at Manchester United: The club aspires a good relationship with its supporters and community, as illustrated by its CSR community projects and policy. It looks at its supporters as an important source of income. This is illustrated in the annual reports of the club. At Manchester United, “Converting fans into 68
customers” is one of the four core strategies (MU Annual Report, 2003). The club is aiming to have a consumer relationship with its fans. The club aims to maximize revenues by establishing large contracts with sponsors, treating fans like customers by extensive merchandizing and high match day ticket prices and the securing, collectively with the other clubs in the English Premier League, of large broadcasting contracts with media enterprises. The commercial plan of FC Barcelona is of a different nature. The club aspires to attain a good mixture between maximizing revenues at one side and acting as an ethical responsible world citizen at the other side. However brand identity constitutes an essential role at Barcelona. All professional football clubs have their own identity, though at Barcelona special emphasis is placed on its brand identity. FC Barcelona attempts to create a club image that professional football is not just about money, but also about cultural values, the beauty of the game and regional identity. The club distinguishes itself from most other professional football clubs by its membership structure were the supporter has power of control, its cultural sophistication, and the ideology that football is not just about business by for instance making statements like presenting itself without a shirt sponsor and the partnership with Unicef. With these traditional ‘romantic’ values FC Barcelona distinguishes itself from the majority of other professional football clubs that act like profit seeking corporate businesses. In fact, FC Barcelona succeeds to attract fans all over the world with this image and consequently the club`s revenues increase. Comparing Manchester United and FC Barcelona it can be argued that the former club`s commercial approach is of a more direct nature by transforming the club into a corporate business and exploitation of the club`s fan base. The latter club aims to create a cultural sophisticated club image for itself and thereby attracting fans worldwide that as a result bring revenues for the club, making it a more indirect approach towards the generation of income.
Comparison of club revenue data: 500
350 300 Man United (in Mn Euro)
250 200 150
Barcelona FC (in Mn Euro)
100 50 0 Net total Income
Comparison of Financial Data -Man United vs. Barcelona (2011-12). Source: Deloitte Reports 300 259 250 200
169.2 Man United (in Mn Euro)
94.5 72.1 45.3
Barcelona FC (in Mn Euro)
0 Net total Income Match day
Comparison of Financial Results -Man United vs. Barcelona (2003-04). Source: Deloitte Reports The club with the highest supporter influence, FC Barcelona, has the highest commercial income and highest total income. Thus, assumption 2 is not necessarily correct. 70
When analyzing the revenue data in the cases, it is observable that total revenue streams and commercial revenue have increased significantly at all three clubs. This illustrates the increasing commercialization in the sport. In 2004, Manchester United had significantly higher total revenues and commercial revenues than FC Barcelona, though in 2011 FC Barcelona had significantly higher total revenue and commercial revenue streams than Manchester United. Thus, the commercial strategy of FC Barcelona has in seven years time closed the gap and passed the commercial strategy of Manchester United. This illustrates that the traditional football commercial strategy of FC Barcelona is financially very successful and therefore shows that it is a successful alternative to the modern corporate business approach of football club management. In the case results this can for instance be seen regarding the development of ticket prices. Especially at Manchester United, ticket prices have extensively risen in order to gain extra revenue. The ticket price increasing results in the situation where many traditional low income supporters cannot afford to visit the club`s matches anymore. These traditional fans are known to invest their emotion in supporting the team and the atmosphere in the stadium is to a great degree dependent on them. They are also known to keep supporting the club in difficult times when sport results on the field of play are lacking. The new high income match attendants are often of a different nature. Many of them visit the stadium to be entertained and are less loyal to the club Thus, higher ticket prices leads to a trade off defined by: Increased match day revenue, but less stadium atmosphere, which usually affects sport results in a negative way, and less brand loyalty from the new supporter. Risk: Threat long term stability of the club. Suggestions and Conclusion: Concerning the strategy of commercialization two different approaches are discovered. The non-membership club uses a corporate business approach that directly maximizes revenues by exploiting the market and environment. The relationship with its supporters can be defined as a customer relationship. While business features are present, the strategy of the membership club shows more traditional football elements. This club positions itself as an organization that states professional football is not only about finance, but also about cultural values, the art of the game, regional identity and acting as an ethical responsible citizen. This identity helps to attract football fans worldwide to the club. The strategy of the partial membership club can be defined as intermediate of the above strategy`s. 71
Furthermore, the findings illustrate that for membership clubs it is possible to be financially competitive with non-membership clubs. In fact, the club in the case group with the largest commercial income is a membership club, which proves there are alternative routes to acquiring major financial capital than clubs that are set up as privately owned companies. The football supporter is of considerable importance to the future success of clubs. The social unrest and campaigns against corporatism at the non-membership club and to a lesser degree at the partial membership club and the lack of the aforementioned at the membership club, illustrates that the supporters of the membership club view their club more positively. The club appears to have found a balance between modern commercialism and traditional football values that works for the club.
6.7. Case Study 2: Indian Football:
Figure 12: Team Logo. Source: Google Images 6.2.1. Case Facts: The India national football team is governed by the All India Football Federation (AIFF). Since 1948, the AIFF has been affiliated with FIFA, the international governing body for football. In 1954, the AIFF became one of the founding members of the Asian Football Confederation (AFC). At the peak of its success during the 1950s and 1960s, the team was automatically advanced to play in the 1950 FIFA World Cup (all the other Asian teams withdrew), but they did not go to the tournament in Brazil due to the cost of travel, lack of practice time, team selection issues and valuing the Olympics
over the FIFA World Cup. They won gold medals at two Asian Games and one silver at the Asian Cup. In 1962 India went on to win the 1962 Asian Games where they beat South Korea 2–1 in the final. Then in 1964 India played in its most memorable tournament yet. The 1964 AFC Asian Cup where they finished as runners-up thanks to then-current manager Harry Wright. India won their first match against South Korea 2–0, then lost 2–0 to the hosts Israel then won 3–1 against Hong Kong which gave India second in the tournament. After the Asian Cup India went downhill. Failure in a many qualification tournaments meant that the next time India reached a quarter-final stage was as host in the 1982 Asian Games. Then all of a sudden India managed to qualify for the 1984 AFC Asian Cup after twenty years out of the cup. But India during the competition failed to make any impact. India would then fail to make the Asian Cup for another 27 years. In 2006 Bob Houghton was later appointed coach of team. His appointment saw a general progress in India’s performances crowned by victory in 2007 Nehru Cup in August 2007. Houghton then led India to the 2008 AFC Challenge Cup title as they beat Tajikistan 4–1 in August 2008. Winning the AFC Challenge Cup qualified India for the 2011 AFC Asian Cup for the first time since 1984. He also oversaw the Indian team to its second consecutive Nehru Cup trophy by winning 2009 Nehru Cup. In 2011, India started off their campaign by participating in 2011 AFC Asian Cup for which they qualified after 27 years. India lost all three matches but did manage to perform well in patches. In 2012, India won the 15th edition of Nehru cup by beating Cameroon 5-4 in penalties as the full-time score was tied at 2-2, making it the third successive Nehru cup win for India. Current Scenario: Football came into India way before Cricket. The Durand Cup, The Rovers Cup and the IFA Shield all were introduced in the late-1880s in India. In 1911, Mohun Bagan became the first Indian team to defeat a European team, when they defeated the East Yorkshire Regiment, 2-1 to lift the 1911 IFA Shield.
In 1960’s, Indian Football went through its golden age as we have already discussed above. But since then, it has been going through a phase of continuous decline. The Question is Why? To understand the situation and analyze the case study on the basis of above case facts- I first met Mr. Subrata Bose, Secretary of White Border Club and then Mr. Samir Paul Chaudhury, Assistant Secretary of the Club Avenue Sammilani where former India Footballer Prashanta Banerjee used to play. 6.2.2. Analysis: My main question to both the club administrators was why Indian Football is so underdeveloped even after 126 years of its inception in 1888. To this question, Mr. Bose had an interesting answer- he told me that the Indian Premier League (IPL) was actually meant for Football and the Former IPL Chairman Lalit Modi had proposed the same to the AIFF. But the proposal was rejected by the governing body and the rest as they say is history. Mr. Chaudhury however replied that while the clubs at their individual level were trying to take the game to International Standards- a centralized approach under the parent body was still absent. But he also maintained that the progress was satisfactory. He also stated, in reply to my question- whether more money should be invested in Indian Football- that the same was urgently necessary. At present, a part of the Government’s Education Grant is allocated for Footballbut the amount is too small. Neither the amount of Government Grants was sufficient. My next question to him was whether I-League should be modernized the same way as IPL. To this question, his reply was No. HE believes that IPL Cricket is no Cricket at all. My last two questions to Mr. Paul Chaudhury was regarding the Player’s Remuneration and Football Betting. His reply was the administrators are getting many benefits but due to nepotism at Government Level, the Player’s Remunerations as of now are shockingly low. In reply to my question on betting, his answer was that it existed but in a very smaller and different form compared to Cricket. The betting, he said, was more evident in First Division Games where the referee could be managed. Though he refused to elaborate, he hinted at the existence of Location Fixing and Date Fixing also. 74
6.2.3. Suggestions and Conclusion: In the questionnaire that I submitted to both the club secretaries one question was regarding reasons for underdevelopment of Indian Football. Their reply was a common and expected one- Lack of Infrastructure. In fact, both refused to admit that the Indian Footballers are deficient in skills compared to their European Counterparts. They also said that the Governing Body should nurture and provide facilities to the budding footballers. Only then the golden age of Indian Football can be reinstated. The administrators should wake up and take notice. It is suggested that to sophisticate the game in India, a centralized approach under the Parent Body i.e. the AIFF (All India Football Federation is necessary. Moreover, Mr. Paul Chaudhury also told me that Corporate Investments should be attracted and this was only possible if an improved infrastructure is developed. Recognition of Former Players as done in Foreign Countries should be a top priority. Both the Club Secretaries were equivocal about one aspect- the caliber of former National Footballers was in no way less than the Former National Cricketers. In view of this, it is necessary for me to raise a point- Infrastructure is necessary to groom the players. In Cricket, had the BCCI not offered a 15year old Sachin Tendulkar to represent the country at such a tender age and had they not nurtured him, he could not have become the legend he is today. As far as finances are concerned, more transparency and public accountability are the pillars to ensure improved finances. As already seen in the previous case study International Clubs very clearly publish their audited accounts in various websites. Similar systems should be encouraged here. Only rules will not help, practical implementation should be also ensured. Only and only then, the Golden era of Indian Football will be reinstated. As far as Football Betting is concerned, the prevailing rules must be made more stringent and the future generation of referees must be subjected to regular scrutiny and accountability tests in addition to the current ones. The current guilty referees should be also punished and permanently disbanded from the game. But suggestions are only meaningful if somebody listens to them. In India, every irregularity is temporarily resisted and after few days, people forget it and more irregularities crop up. The change in attitude is first required to introduce an overall change.
Chapter 7: Conclusion and Limitations of the Study Commercialisation of Sports was meant to promote the game and enhance the investment in the game. Inspite of few bad patches, it has been very successful in its purpose. There is a notion that has grown among modern scholars- Commercialisation is the death of sports. The argument is presented as follows: There is no absolute relationship between shampoo and a soccer player. Drinking beer has nothing to do with watching a soccer match. Yet, we always have the impression of men watching soccer with Carlsberg mugs in their hands and the image that soccer players use an expensive brand of shampoo to suit their status. The association of these products with sports is a result of commercialisation. Commercialisation, in this case, of sports started decades ago but it is only in the recent years that commercialisation of sports is becoming more evident, with new technology which are able to connect the world more effectively. It is hard for an athlete to resist a million dollar contract in exchange for just posing with a certain product for some shots. On top of that, sponsors are needed for major sporting events like the Olympics. With only 10 percent of an athlete’s pay coming from the profession while the remaining 90 percent coming from advertising and other non-sport related activities, it is almost always true that sport cannot survive without the sale of teams or the utilization of sports to generate income. However, it is also true that such commercialisation of sports could kill it, making sports not a means to achieve physical and mental excellence in a certain game or event but as a way to attain fame and riches. There is a trend that the breaking of world records in the Olympic games have slowed after the late 1980s, however, there is a need to generate attention so that people will be awed by the athletic performance of the participants, so that they would become idols and heroes of the masses and with the fame, clinch deals that are worth a hundred times a regular person can earn in their lifetime. Technology has answered the athlete’s call. In 2008, Michael Phelps won 8 medals with the help of the highly advanced swimsuit. In fact, 21 out of the 22 medals won were the result of the hightech suit. Intelligent shoes which can help convert running postures and open vents when ventilation is needed help to utilize the athletes’ energy efficiently. With these in place, it is no surprise that there is a surge of records in the 2008 Beijing Olympics. In another example, anabolic steroids were used to enhance the athlete’s performance; Cox returned her medal for her relay 6 years after the event. The need to win drives the athletes to look for alternative methods to enhance their performance. It is no longer a fight of the athletes’ genetic makeup which has been given to them since birth, it is not a fight of their mental and physical capacity but a fight of technology. This reliance on technology has caused sports to lose its original function, to 76
attain the highest of human performance. Likewise, the greed, the temptation which drove them to depend on the technology has caused sports to fail as a result of commercialisation. However, the riches that await the athletes could be an incentive for them to perform better and it may not be the athletes’ ultimate aim but as a mean of support for himself or herself and their families. 98 percent of the world-class athletes receive no payment for their contributions and achievements at the Olympic Games as only the medalists receive prize money. The income for these professionals with passion for the sport may be only equivalent to that of a regular office worker unless he achieved fame or clinched some medals. In this realistic world, it may be insufficient for the passion to keep the athletes going as they have to feed themselves and to provide for their families. Hence, commercialisation, the trading of sport and its commodities could be a good way to retain these talents in the field and may not necessarily cause to death of sport. Commercialisation also spreads and promotes certain sports to the world, showcasing the best of our species by letting them appear on shirts and talk shows. For example, many western sports are introduced into Asia with commercialisation. The products and merchandise of sporting teams which become increasingly popular helped to promote the sport and others who aspires to be like them may take on the sport, developing their innate potentials. Many famous athletes started off by being a fan of famous athletes and train to become like them. Ronaldo of the Brazil team for example, treated Pele, a retired player of the Brazilian soccer team as his idol and aspiration to become a great player. Hence, commercialisation could also work hand-in-hand with the industries such that it both provide revenue for them and promote sports. However, the Olympic Games, that stands as the epitome of sports in the world, have been criticized for selling too much of its power to companies that wishes to advertise their products when the world is watching the Games. The Olympic Games is large scale and the host countries could lose millions of dollars just by hosting it. In order to reduce such losses, the Olympic organizing committee may see the need to find corporate sponsors for the Games and these sponsors usually include private sectors. The CocaCola Company paid the Olympic organizing committee 21 million dollars such that only its product, not those of competing soft drink brands, can be advertised. Events such as tennis matches were scheduled to maximize viewership and the advertising slots available before, during and after the match could cost more than 10 million dollars. Rules for certain games have also been modified to increase the duration and repetition of breaks and time-outs so that more commercials can be shown. Instead of optimizing the periods such that the athletes could perform to the best of their abilities, 77
these factors were ignored to make way for revenue. Therefore, commercialisation could be detrimental to sport as least consideration was taken over the athletes doing their best on the field than to make money. In conclusion, even though many critics mentioned that commercialisation has caused sport to lose its function, to display the best of the athletes’ performance, sport still has to depend on the revenue generated by it to survive in this world. No matter how far the passion for the sport a sportsman could possess, he would require some recognition for his efforts and such recognition would be tangible gains generated by commercialisation as well as fame which he would receive. However, there is a need to control how much control is given to the private sector when it comes to games like the Olympics which stands at the top of all other forms of sports achievement, a symbol of the sporting world. If even this event has fallen into the hands of corporations as a tool for advertisement, there would be little hope for the future of sports. Thus while there are many debates as to whether commercialisation of sports is good or bad, one cannot deny it has revolutionized people’s perception about sports. Thus this project has helped us to draw the following conclusions:
Sports is no longer a pastime- run and organized by amateurs: It has become a business that competes for scarce resources and uses professional management techniques where performance is the only and last criterion to judge a team or a sportsman. The commercialisation of Sports has been driven by search for profit and among the State-funded Not for Profit Organisations, the push towards efficiency, effectiveness and value for money. A number of distinctive factors make Professional Sports a distinctive form of business including irrational passions generated, the tension between winning a game and making a profit, and the existence of general tolerance of cartels. Sports Sponsorship has rapidly grown over the recent years, bringing additional revenues and greater profits and publicity- although off late it shows a declining trend. Betting is one of the fastest growing sectors of Sports Business although it has raised significant ethical concerns.
Limitations of the Study: The most important limitation of this Study, as is for all other activities, is the limitation of time. The project has been prepared over a period of approximately 25 days. This, I believe is a rather constrained time for a project of this magnitude. Another important limitation was collecting financial data of all the IPL teams. While the data for most teams could be found, the financial data of teams like Mumbai and Chennai could not be gathered inspite of best efforts. Considerable limitation was faced during collection of primary data and conducting interviews. While I was not allowed to ask Mr. Gautam Dasgupta a single question on IPL betting, I also had reasonable difficulties in collecting primary data on Commercialisation of Football. I originally intended to interview Mr. Biswajit Bhattacharya, Former India Footballer and the Technical Director of Bengal Football Team for the 2014 Santosh Trophy, on Commercialisation of Football. But he delayed our meeting by a considerable time and ultimately I could not meet him as he left for the Santosh Trophy Tournament. I had also tried to interview a few former Footballers in vain before finally settling on Mr. Samir Paul Chaudhury and Mr. Subrata Bose respectively. But such hindrances will always be there and one cannot blame them in entirety. Overall I am deeply relieved that I was able to complete the project within the scheduled time.
Bibliography: Books: 1. The Commercialisation of Sport (Sport in the Global Society) Trevor Slack (Editor) 2. The Football Man: People and Passions in Soccer by Arthur Hopcraft 3. Soccer Syndrome: From the Primaeval Forties by John Moynihan 4. The Glory Game by Hunter Davies 5. Among The Thugs by Bill Buford 6. Only a Game?: The Diary of a Professional Footballer by Eamon Dunphy 7. Guide to Indian Premier League by Rakesh Pandey, Chetan Narula and Mukesh Kumar 8. Indian Premier League by Frederic P Miller, Agnes F Vandome and John Mc Brewster 9. Sachin Tendulkar: The Man Cricket Loved Back Hardcover by ESPNcricinfo (Author)
10. The Great Tamasha: Cricket, Corruption, and the Turbulent Rise of Modern India Hardcover by James Astill (Author)
Websites: 1. http://www.sports.yahoo.com/ 2. http://www.espn.com/ 3. http://www.bleacherreport.com/ 4. http://www.cbssports.com/ 5. http://sportsillustrated.cnn.com/ 6. http://www.nbcsports.com/ 7. http://www.sbnation.com/ 8. http://www.foxsports.com/ 9. http://www.rantsports.com/ 10. http://www.deadspin.com/
Appendix Interviews Conducted: 1. Interview with Mr. Gautam Dasgupta regarding Commercialisation of Cricket: In order to collect primary data on the subject, I conducted an interview with Mr. Gautam Dasgupta, Current Chairman of the Board of Trustees, CAB and Former Joint Secretary of the BCCI and CAB on 22nd February, 2014 at 10 a.m. at the YMCA Grounds. Details of the Interview are presented below and the Multiple-Choice Questionnaire is given in the annexure section. Q. Your Views on IPL? Reply: There has been a general deterioration of the game. Bowlers are bowling only 4 overs while Batsman are getting less time to get settled. However, it has turned into a lucrative pastime for the younger generation. Q. Your views on Commercialisation of Cricket? Reply: Commercialisation began in 1990’s with the Globalization era. IPL has not introduced the concept of Commercialisation newly. Infact, I can say that the Commercialisation aspect has reached a point of saturation through the IPL. Q. Has Cricket been benefitted? Reply: Yes, the game of T20 has been greatly benefitted. Q. But the solitary T20 World Cup win for India came in 2007 when IPL was not introduced. Reply: Yes but in general, T20 as a new aspect of the game has been promoted well through IPL. As far as our team’s performances in subsequent World Cups are concerned, I think the post-IPL fatigue is the reason for their failure at the World T20.
Q. Is there any pressure on the Cricketers owing to increased sponsorship? Reply: Sponsorship pressure is there. But the performances of the players have got better. They are required to give their best in almost every game. I mean at the recent IPL Auction (referring to the IPL Player’s Auction, 2014), players like Praveen Kumar and Munaf Patel went unsold. But they used to be premier fast bowlers of our country until very recently. So yes Sponsorship Pressure is there.
Q. Have the Team Owners been able to recover their investments and make any profits. What is your opinion? Reply: I don’t know exactly about the financial details but KKR (Kolkata Knight Riders) was into losses for its first 2 years. They broke even in the 3rd year and after that, they are making profits. This is what I have heard from their team representatives. But IPL has introduced the Franchise Model of doing Business. The Corporate Giants like Vijay Mallya and the Ambanis have not invested into the game only because they did not know how to spend their money. They are lured into the IPL due to the name and glamour associated with it. So, their Goodwill and Brand Value has increased though the Cash Profits are very negligible. Q. Finally has IPL replaced First-Class Cricket as a medium of Team Selection? Reply: No. Not at all. Playing for the Country is still a top priority for emerging Cricketers. IPL has not improved the standard of Bengal Cricket. But Shami Ahmed has made it to the team purely on account of good performance in First-Class Cricket.
2. Interview with Mr. Samir Paul Chaudhury regarding Commercialisation of Football: In order to collect primary data for my project I also conducted an interview with Mr. Samir Paul Chaudhury, Assistant Secretary of the Club, Avenue Sammilani on 23rd February, 2014 at 4 p.m. at the club office and the Multiple-Choice Questionnaire is given in the annexure section. Q. What is being done to take Indian Football to the International Standards? Reply: As of now, there has been no organized approach under the Parent Body. But an individual endeavor on the part of the clubs is there. Q. How would rate the progress? Reply: Satisfactory. Q. Should more money be invested for developing proper infrastructure to promote Football? Reply: Yes, it is urgently needed. I feel that it is very necessary. As of now, a part of the Education Grant of the total Budget is allocated for promoting football by the Central and State Governments. Moreover, the grants given by both the Governments are very little. So, corporate investments are needed at once. Q. Should I-League be commercialised the same way as IPL?
Reply: I feel that IPL Cricket is not Cricket. If a concept like IPL is introduced in Football, I don’t think it will be successful at all. Q. What do the Indian Footballers lack when compared to their International Counterparts? Reply: Definitely Infrastructure. I won’t say Indian Footballers are less skilled or the skill has totally vanished from the current crop of budding Footballers. The Infrastructure is surely absent. I mean it is underdeveloped. Q. Your views on Player’s remuneration? Reply: There is clearly nepotism at the Government Level. So far none of the Former Footballers has been given their due recognition by the Government. While in Cricket, Sachin Tendulkar has already got Bharat Ratna. There is no equal distribution of money. Administrators are getting too many benefits while Players are getting none.
Q. Finally does betting exist in Football? Reply: I can’t comment on betting at International Football but it does exist in Kolkata Football in a very different form. For instance in Third Division games, if you have power, the referee can be easily managed. But proving it is very difficult. For instance, most of our Club Footballers come from the villages. The practice games of the Club always clash with their District games. We have made several appeals to the Governing Body to alter the dates so that the Best Players are available for the Club, but they have always turned a deaf ear. This is probably done to weaken Club Football. Moreover there is Location as well as Date fixing but I won’t go into its details. But yes, they do exist.
Annexure QUESTIONAIRRE ON COMMERCIALISATION OF CRICKET Q1. How would you like to define the impact of commercialization on cricket? o A-Good o B-Great o C-Bad o D-No Impact
Q2. As a medium of selection of the National Squad do you think that the IPL has 85
taken over First-Class Cricket? o A-Yes o B-No o C-No Comments
Q3. What do you think inspires the future generation of Cricketers into the game? o A-Love for Money o B-Love for the Sport o C-All of the above Q4. What do you think is the priority of the new upcoming Cricketers these days? o A-IPL o B-Playing for the Country in all formats o C-All of the above Q5. Do you feel that the game is being diluted by OverCommercialization? o A-Yes o B-No o C-No comments Q6. What or Who do you think has popularized Cricket in India? o A-Performance of the Indian team over the years o B-Sachin Tendulkar o C-Commercialization of the game in our country through media, IPL etc. o D-Revival of Indian Cricket under the captaincy of Sourav Ganguly
Q7-What is the yardstick for measuring the quantum of success of a player post IPL? o A-The amount of money he fetches at the IPL auctions o B-His annual income o C-The number of brands he endorses o D-Performance at the top-level
Q8-Should Test Cricket be commercialized in the same way as T20 Cricket? o A-Yes o B-No o C-No Comments
Q9-What is the main focus of the IPL? o o o o
A-Glamour B-Money C-Exposure to new talent D-All of the above
Q10-Where do the upcoming Indian Cricketers differ from their International Counterparts ? o A-Mindset o B-Focus o C-Failure to prioritize between the Sport and the money involved. 87
________________________ ____________________________ (Interviewer: Avik Paul) the Interviewee)
QUESTIONAIRRE ON COMMERCIALISATION OF FOOTBALL Q1-Does Indian Football need a facelift through Commercialistion?
o A-Yes o B-No 88
oC-No Comments Q2-What should be used to popularize football in India?
o A-Commercialisation o B-The I-League o C-Better technical and coaching procedures at the top level Q3-Your views on the big money the International Clubs like Real Madrid pay for their star players? o A-Necessity of the Club
o B-Inspire the players to give their 100% o C-It is of no use at all Q4-What has kept the Indian tycoons aloof from investing in Indian Football?
o A-Lack of Infrastructure o B-Lack of Commercialisation o C-All of the above Q5-Your views on what can motivate youngsters in India to take up football as a sport? o A-Money
o B-Awareness of the game at the International level o C-Improvement of the Standard of the National Team Q6-What is the primary factor attributing to underdevelopment of football in India compared to International Level? o A-Lack of Commercialisation 89
o B-Lack of Infrastructure o C-Lack of skill and power Q7(a)-Are Measures being taken to make Indian Football at parity with the International Standards? o A-Yes o B-No o C-No Comments Q7(b)-If your answer to part (a) above is yes, how would you rate the progress so far? o o o o o o
A-Very Good B-Good C-Satisfactory D-Unsatisfactory E-None At All F-No Comments
Q8-Does the I-League needs to be more sophisticated through commercialization to promote Indian Football? o A-Yes
o B-No Q9-How far the media is important to build the awareness regarding Football in India?
o A-Very important o B-Moderately important o C-Not At All 90
Q10-Will bringing foreign coaches to train the Indian Footballers somewhat improve the current scenario and attract more mass interest?
o A-Yes o B-No
_________________________ __________________________ (Interviewer: Avik Paul) of the Interviewee)