8-point stimulus package to reinvigorate the economy of the Indian sports
- A blueprint of how the sports industry could be amongst the major contributors to the Indian economy.
- Cricket makes up around 85% of the Indian sports economy, with IPL alone contributing around 66 % of the ecosystem.
This is my open letter to the fellow Indians. We are in the midst of the pandemic and what many believes to be the worst crisis faced by humanity in more than a hundred years. Amidst the crisis, this is the season of the financial packages as well. As I watched our finance minister along with her team announcing financial package worth 20 Lacs crores in a series of press conferences, I wondered- why not anything for Indian sports.
I know that in the times when an economically emerging country like ours is facing a larger life and livelihood issues, even talking of a package for sports will be considered blasphemous by many. But still, I will do. For in a country of the size and demographic dividend like us- potentially, the sports industry could be amongst the major contributor to the Indian economy.
Broadly, there are two ways of approaching any crisis. For some, near-term survival is the only agenda item. But others believe in peering through the fog of uncertainty, thinking about how to position themselves, once the crisis has passed and the situation has turned normal. Like every other sector of the Indian economy, the Indian sports sector has to follow the second option.
We are not sure when we will come out of the crisis. But rest assured, when the storm will subside, the other side will not look like the normal of the recent years. The Indian sports industry has to be ready for the new normal. I propose an 8-point stimulus package to get prepared for the new normal.
What are the broad contours of the economy of Indian sports?
Firstly, when the crisis came, we were doing catching up act in other sport, but Indian sports economy was still majorly fuelled by cricket. In fact, cricket makes up around 85% of the Indian sports economy, with Indian Premier League alone contributing around 66 % of the entire Indian sporting ecosystem.
Football and Kabaddi were fighting for the second spot in the remaining 15% share. Secondly, 65% of the sports revenue came through broadcast rights, 30% through sponsorship and only 5% through the gate money. Even, the major chunk of the 5% gate revenue comes from the IPL gate money. Thirdly, there is a strong reliance for the global cricket on India.
In 2019, the global cricket economy was estimated to be around USD 19 billion. Of this, though India generated around 65% of the revenue, it realized around only 45%. Clearly, only stronger India’s participation could help the game to grow globally. This gives India a strong leverage position. If the Indian tour of Australia in December-January doesn’t happen- Cricket Australia will lose more than USD 250 Million.
If India’s tour of Sri Lanka in July gets cancelled, there could be no takers for Sri Lanka’s broadcast rights. If India’s proposed tour to South Africa for 3 T20s in August doesn’t materialize, Cricket South Africa will lose USD 12-15 Million. For the less strong countries like West Indies, Bangladesh and Zimbabwe- the broadcast rights find no takers if the Indian team is not involved.
Fourthly, IPL contributing around 1/3rd of the revenue remains a significant event for the global cricket economy. If we treat IPL as the separate body-totally divorced from BCCI- it will emerge as the biggest revenue generator- higher even than the combined revenue of ICC and ACC.
Lastly, in the last 5 years, the Indian government has consistently increased its budgetary allocations in Indian sports. In 2019, the government invested 300 million USD. In the sports other than cricket, interventions by the private organization in setting up grass root programs and academies were playing the role of the force multipliers.
What should the 8-point stimulus package look like?
Firstly, as cricket is the major contributor to the economy of Indian sports and IPL is its major revenue driver-all possible efforts should be made to find out a window for the event, once the crisis looks under the control. IPL should be pushed even at the cost of the T20 Cricket World Cup.
As the tournament substantially contributes to the global cricket and it’s an annual feature, cancelling the event would entail severe loss to the overall cricket economy. In contrast to this, World T20 may be deferred to 2022 and the overall revenue stream in the cricket cycle of 2015-23 will remain unchanged. Often, giving the right messages in critical times is critical.
In the first week of April 2020, when the pandemic led to the postponement of the leagues season in the United States, President Donald Trump talked to many US professional sports leaders about the impact of the coronavirus pandemic and looking forward to the resumption of the competition. The NBA, NHL, NFL and major league baseball were all represented by their commissioners- Adam Silver, Garry Batman, Roger Godwel and Rob Manfred.
Many of President’s critics called the meeting and the intent preposterous. But the message which came out from this was- all the stakeholders, be prepared, life has to move on. Similarly, the Korean league matches in the closed stadium and right noises from English and German football leagues are all indications for the broadcasters and other stakeholders. As India too has entered the exit lockdown mode, why similar meetings involving the varied stakeholders of IPL and some other leagues like PKL and HIL may not be called at the earliest?
Second, whenever and wherever IPL is organized- innovation and realistic target should be central to the entire planning and execution. If you have to organize IPL season in a closed stadium, try out with new streams of revenue generation. As the entire global and Indian economy is facing unprecedented stress- be realistic in your targets with all the stakeholders. If required, negotiate a fresh with the title sponsors, broadcasters and franchise.
Third, amidst the grim market and sales scenario, no activities could be planned by the title sponsor VIVO to monetize its investment of 40 crores twice in less than a year. Likewise, the franchise should be permitted to rework in terms of player’s fees and other obligations. The future of any robust league is dependent on sustained long term relationship between all the stakeholders.
The government should also provide all the necessary support in terms of interventions whenever required and relaxations and exemptions wherever applicable. If the sports leagues are nurtured in this difficult phase, it will go a long way in terms of giving it back to the economy in the years to come.
Dual scenario to run the world of sports
Fourth, the majority of Indian sports revenue- around 65%- comes from the broadcast rights. In order to sustain the constant flow of the revenue over a longer period of time, which is so crucial for the overall growth of the sport in the country, starting with IPL- the interest of the broadcast partners should be protected at all cost. In this grim market scenario, it will be difficult for sports rights holders to meet their sponsorship targets and so the priorities and targets should be reworked. This includes revisiting some of the existent clauses of the contract as well.
Fifth, BCCI should use the time to further consolidate its gain in the global cricket order. In his paper- ‘Impact of COVID 19 on revenues of world cricket on Indian Sports’- Sunder Raman- talks of two possible scenarios in the midst of the pandemic. Scenario 1- Sports returning to TV/ Digital platforms by July 2020 and fans in stadia by January 2021. Scenario 2- Sports returning to TV/digital platforms by December 2020 and fans in stadia by April 2021.
In the first scenario, India and England will be hit hard while there will be no major impact on Australia- as most of its matches are scheduled for the last quarter of 2020. The only loss for Australia will be loss of its gate money in the highly unlikely scenario of T 20 World Cup happening in the closed stadium.
In scenario 2, all the major countries including India, Australia and England will take a hit, but England will be hit the hardest- with its entire season wiped out. BCCI should start planning ahead and negotiating with all the major cricket boards of the world keeping both the possible scenarios in mind. Similarly, the other sports bodies having stakes in the competitive global sports should fiercely guard their own interest.
Sixth, BCCI should aggressively start pushing the case of Sourav Ganguly as the next ICC chairman. BCCI should seize the opportunity in terms of having its person in the helm of affairs when repositioning will happen once the crisis is over. BCCI should use the negotiations leading to the proposed tours of Indian cricket teams to the major cricket nations like South Africa, Australia and Sri Lanka and other nations like Bangladesh, West Indies and other countries- to garner support for Sourav Ganguly.
The former Indian captain has got the stature and pedigree to lead the global cricketing order in these testing times. In the post COVID world, two challenges will characterize leadership. Firstly, the need to juggle a growing series of paradoxical demand- do more with less, cut cost but innovate, think globally and act locally. Secondly, the unprecedented pace of disruptive change which will speed up the interaction of these demands and increase the pressure to adapt.
These challenges will require versatile leaders with more engaging employees and higher-performing teams. Sourav Ganguly has in him to draw out the requisite qualities of the versatile leader. And, in case he takes over the role of ICC leader, he should get the acronym BCCI changed to Cricket India- as the world control gives the archaic feeling of license-quota-permit raj.
Seventh, the government should announce a stimulus package- however smaller it may be to begin with- for the Indian sports industry. This will bring about a paradigm shift- in terms of the government taking sports as one of the vital sectors of growth and not merely the pastime. The ball may be set in motion by giving an initial package of 300 crores to the Indian Olympic Association to prepare for the Tokyo Olympics.
Eight, India has got the talent to win medals and trophies across the sport. But apart from this, India has got the large aspiring middle-class market- having exposure to be the best of the sporting infrastructure and ecosystem- to create more and more sports properties. If England could have English Premier League, Wimbledon, All England Championship and other world-class sports properties- why can't India have more properties like IPL.
But for this to happen, intervention by the government, governing bodies, federation and corporate in the critical areas of simplification in the process, use of the technology, cost optimization and synergy and co-operation needs to be injected with immediacy.
The eight-point stimulus is doable. If we show the intent, the sports industry in the post COVID times could come up as a contributor to the national GDP.Published 24 May 2020, 12:39 IST