ISL team balance sheet: Detailed look at sustenance strategies that teams need to adopt (Part 2)
- ISL team balance sheet: Detailed look at sustenance strategies that teams need to adopt (Part 2) - Sukhvinder Singh continues his analysis of the ISL and the teams and what they need to do to progress
Part 1 of the article helped us to get an overview of the business scenario particular to the revenue generating factors. Let’s try to look at the key solutions and strategies that the teams need to adopt going forward in terms of balancing the sheet and sustaining the team’s business:
Clubs need to become a brand
The campaign is off to a great start and thankfully, today my relatives do not question the nature and future of my job as a football consultant. The teams have done excellent work to launch and promote their team identity. These are new-age clubs who are looking at setting new-age standards for an ideal football club and all this is in the backdrop of the history and legacy of clubs like Mohun Bagan, East Bengal, Dempo, Salgaocar etc.
From here on the clubs need to focus on initiatives that make them truly a football brand ingrained in the minds of the community and fan groups. These initiatives need to go beyond the two and a half months of the tournament and need to be followed by grassroots development, youth development and fan engagement.
Event needs to extend into year round engagement
As an experiment, the initial ISL season was great but for it to become the elite league in the country, it needs to be a longer term league running for at least 6 months of the year. This shall make it possible for the clubs to work on the areas described in the above point and strive to become stronger community brands.
Even FIFA have publically expressed their views on the need for leagues to be long term and clubs to be year round engagement hubs. Critically, a longer league shall enable the teams to demand higher values from their sponsors.
Creation of club assets
Well, after having spent around INR 55 Crores., the clubs would still not have their own playing pitch or ownership of the stadia. It’s like a big event that took place in a rented facility and imagine the cycle being repeated for next 9 years. Every club would have spent INR 550 Crore which would not have resulted in the creation or owning of new infrastructure.
This amount of money, can, in the current times help acquire ownership of certain clubs combined with infrastructure in certain developed footballing nations in Europe. My hope is that if not the stadia, then at least the clubs need to have solid modern training facilities that becomes the home to their other key assets i.e. the players.
The players are currently owned for a short period. There is a need to create a supply chain through youth development and community outreach which puts in place the feeder system. One look at the balance sheets of Manchester United and Real Madrid will indicate how important the player assets are to the team’s financial performance as well as revenue generation through player transfers.
Increase revenue options
No brainer but still needs a lot of work. This is also connected to a couple of points above. The longer the club is operational during the year, the longer the window for commercialization. Also, ownership of infrastructure and player assets shall lead to higher number of commercial opportunities.
The ticket sales shall be directly proportional to the number of matches that a team would play which includes the league, the Cup and other pre-season matches.
We have witnessed typical Indian enthusiasm and hospitality being served so far. This has certainly led to planned and unplanned costs. Key areas where there is a scope of rationalizing the expenditure is on player recruitment and logistics. The player draft is an irrelevant idea and should be done away with, giving more flexibility to the teams to select, recruit and transfer their players in line with the FIFA Transfer Matching System.
Changes in the calendar lead to last minute logistical nightmares and increased costs especially during the last quarter of the year. I see this cost head becoming better as teams become more organized.
With a great bit of time that I managed to spend with certain important stakeholders, given below is the immediate line of thought that I would encourage the ISL and team owners to follow:
ISL teams should participate in the I-League with regional players
The longetivity of team activities is very important and hence the clubs should think about the competition options post the ISL. The longer the teams perform on pitch, the longer they stay in the hearts and minds of the fans. How could this be possible? The answer to this question is rather simple.
The AIFF has already accepted more teams directly into the I-League 1st Division against a guarantee of investment by the club in football development upto INR 3 Crores plus their commitment to creating match infrastructure in the next 5 years. These are a couple of things that a football club should be doing anyways, and hence the ISL clubs could look at creating a team consisting of players from their respective regions.
The cost of such participation would be not more than INR 5 Crores and if the ISL teams continue to organize the I-league matches even with half the intensity that we see in the ISL, I see the gate receipts contributing to revenues good enough to recover the cost of running the I-league team.
Grassroots and youth development
A longer operational window shall enable the teams to shape their grassroots and youth development efforts which I have time and again emphasized on. These two pillars are paramount to the success and growth of any football institution. It also makes economic sense from cost reduction on players and revenue generation from transfers.
The need to the hour is to get the house in order but before the order, the house needs to be built. That house for me is the infrastructure that the club owns and operates. We need the Theatre of Dreams and the Stadium of Light to be created in India to make sure that India also has temples of football where the religion of football spreads the joy of this beautiful game.
I would like to state that this 2 part series article has been a broader analysis of the current business and indicative strategy for the long term future of the ISL teams. I shall be back with much more detailed report and a suggestive implementation strategy as well very shortly. For any specific query or clarification you can e-mail me at sukkhi[at]gmail[dot]com or visit my FB pagePublished 10 Nov 2014, 17:17 IST