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India, the new country of sports business

Second most populated country in the world and undisputed leader in several sectors such as IT, India is a real figurehead among emerging countries. If he is an example to follow for many, the country is still lagging behind at certain levels. Indeed, while it has so far only one individual gold medalist in its history at the Olympic Games, India can hardly be considered a big country in the landscape of world sport.

But things have been changing for a few years.

Difficult to talk about this change of course without addressing the subject of cricket. Introduced by English settlers in the 18th centuryand century, Gend Balla – his nickname in Hindi – is omnipresent in the press and in local life. It is this sport, which is relatively unknown in France, that makes the hearts of Indians vibrate. Since winning the World Cup in 1983, cricket has even become a real business in India. With nearly a billion potential consumers, some big companies have smelled the good shot. Thus in 2008, the national championship had the right to a total overhaul to revive its interest and above all to meet several economic and commercial objectives.

Money, stars and show

Initiated by Lalit Modi, the former vice-president of the Board of Control for Cricket in India (BCCI), the new championship quickly took the turn of the entertainment. The Twenty20, a simplified form of the game and an innovative operation were adopted and a new competition was born: the Indian Premier League. By limiting the duration of the meetings to 3 hours, a much more television format (before, a match could be spread over 4 days), the IPL quickly made sure to capture the interest of the television channels.

“I was convinced that India needed a sports league similar to the NBA in the United Statesconfided at the time Lalit Modi. And I wanted to find a way to merge sport and business for the greatest benefit of sport. I believe we have effectively created an overall cricket entertainment product that will thrive to the delight of fans and sponsors alike.”

The sequel: 8 cities are selected to host franchises before being auctioned. Exit the teams of Baroda, Railways or Bombay. Hello Royal Challengers Bangalore, Kolkata Knight Riders or Delhi Daredevils.

In 2008, the first eight franchises of the IPL were acquired by local companies, but also by icons of Indian cinema. Oil conglomerate Reliance Industries snapped up Bombay franchise, the Mumbai Indians for a then-highest sum of $111.9 million. The sale of the 8 teams brings a total of $723.59 million to the BCCI. An unprecedented amount in the history of Indian sport for a sports federation. For the rest: show, and more show. Movie stars in the stands, cheerleaders in the field and American-style staging, it’s all there.

Six years have passed and the IPL is now considered the greatest success story in Indian sport. With the competition lasting only seven weeks of the year (around April), the IPL ranks second among the leagues with the highest average weekly earnings in the world after the NBA. In 2013, Mahendra Singh Dhoni, the star player of Chennai Super Kings, appeared on the 16and rank of the highest paid sportsmen in the world with annual salaries of 3.5 million dollars and pharaonic advertising contracts with companies like Pepsi or Sony (around 28 million dollars).

The latter have also signed colossal sponsorship agreements with the BCCI (last year, Pepsi paid approximately 74 million dollars to become the main partner for 5 years). And the TV rights flew away: the broadcaster Sony Entertainment Television dropped 1.6 billion dollars to be able to retransmit the matches exclusively in the country between 2009 and 2017 (for comparison, this is equivalent to the TV rights of Ligue 1/ Ligue 2 sold in France over the same period). Not to mention the negotiation of TV rights abroad…

Growing interest in football

The economic success and the enthusiasm surrounding the IPL inevitably attracted investors from all walks of life, such as Rupert Murdoch, CEO of News Corp, which acquired the rights to ESPN India and focused its offer on cricket. In 2012, the Australian-American billionaire even got his hands on the digital broadcast of the IPL. A colossal potential gain given the constant increase in the use of new media. Following a deal with Google, the IPL has also become the first sporting event to be broadcast live on YouTube.

This openness to the outside for cricket has also allowed Indians to become aware of other sports. Especially in football. With the breakthrough of the middle class who have televisions, digital tablets and smartphones, it has now become much easier to follow European competitions. According to a survey by the TAM Media Research institute, the average television audience during football matches increased by 60% in the country between 2005 and 2009. Figures which have been confirmed by another survey by the institute Nielsen carried out in 2010 which revealed that 47% of Indians now describe themselves as “soccer fans”.

According to the daily Times of India, more than 50 million Indians on average followed the Brazilian World Cup. A significant figure if we consider the late schedule of matches (between 9:30 p.m. and 5:30 a.m. local).

“Football is very popular hereexplains Antoine, 23, a French business student in Bombay. People follow the Premier League which is shown on TV. Manchester United is by far the darling of the Indians. I remember when the Red Devils qualified for the quarter-finals of the Champions League at the start of the year, people were screaming and jumping all over the bar where I was, it was incredible.

The problem is that the I-League, the local championship, flopped. The level of play is quite low, the distribution of teams is geographically unbalanced (13 clubs, but 8 just for the two cities of Goa and Kolkatta)… A picture far from attractive for the locals.

But after a false start in 2012, a new competition will begin next October. Driven by IMG Reliance, a subsidiary of the sports management group, the Indian Super League is inspired by cricket. Quickly, the organizer announced the signing of former football glories to promote the competition (David Trezeguet, Robert Pires, Joan Capdevilla, Fredrik Ljundberg, Alessandro Del Piero, to name a few), then a draft to select players foreigners and indians is announced.

It was enough to arouse the curiosity of several local companies, Bollywood actors and even Indian cricket stars who acquired the rights to 8 franchises spread throughout the country.

Drafted in first position by the Chennai Titans, the former Parisian Bernard Mendy (member of a contingent of 8 Frenchmen) will receive 80,000 dollars, one of the highest salaries in the championship (more than 10,000 dollars per week of competition). This without taking into account the top players of each team who should receive much more (figures around 500,000 dollars have circulated for Pirès…).

Latest, Nicolas Anelka:

A very winning set

But football is not alone in following the IPL’s lead. Earlier this year, Mahesh Bhupathi, a former Indian tennis player and multiple Grand Slam doubles winner, announced the creation of the International Premier Tennis League. The first vintage will see 4 major Asian cities go to pieces at the beginning of December 2014 (Singapore, Bombay, Manila and Dubai).

A match format in a winning set with the presence of former players like Pete Sampras or André Agassi. The concept should be a hit and given the amount spent to attract certain players like Rafael Nadal, Novak Djokovic or Maria Sharapova, it is better to be sure of your shot.

If India is at the origin of these various initiatives, it is because the desire to develop a market around sport has taken on real importance in this country. The economic potential is huge and the way to put India back on the map of world sport has been found.

Beyond cricket, football and tennis, the national competitions of badminton and hockey, the two other historic sports, have also undergone a facelift. The desire to be present internationally is also beginning to be felt in athletics as India is expected to organize more and more races on its territory and as a local IT giant, Tata Consultancy Services, has signed a partnership with the New York Marathon.

Since 1er April 2014, Indian companies following certain criteria related to turnover are obliged to spend at least 2% of their net profits in societal actions (CSR). Sport being eligible, the boost will not be insignificant, as explained by Stéphane Audry, founder of Mediaghart India, a service provider in the world of sport and the media.

“The purpose of this maneuver is to inject private money into the sport as India is the only one of the Brics to lag behind in hosting big events and ranking in major sports. If mentalities are slowly changing, especially with the arrival of a new generation of leaders, it is money that will make the difference. The social impact of sport with CSR, already supported on the ground by many, albeit disparate, initiatives, will be a key factor in India’s success in sport.”

Freed from the risk of promotion and relegation in this private league system, sports franchise owners in India can pursue profit maximization as true business owners. Just like in the United States, auction and draft systems are put in place at the start of the season, which creates a form of competitive balance, which makes it possible to preserve the interest of the public over time.

If the guarantee of making money is there, this should also benefit the country on a purely sporting level in the long term, since the clubs will develop and should logically invest in training and structures. Knowing that India already has some fine infrastructure (the Salt Lake Stadium in Calcutta with a capacity of 120,000 seats), its path seems clear.

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