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Rajasthan Royals | From underdogs to millionaires

Rajasthan Royals | From underdogs to millionaires
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First Published: Tue, Feb 17 2009. 12 55 AM IST

Updated: Tue, Feb 17 2009. 12 55 AM IST
Devoid of stars, corporate patrons, icon players and Bollywood brand ambassadors, Rajasthan Royals was not the most impressive team in cricket’s Indian Premier League, or IPL, line-up last year. And after a humiliating nine-wicket defeat at the hands of Delhi Daredevils in the very first match, it was written off.
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The game, however, changed dramatically thereafter. By the end of the tournament,
Rajasthan Royals, the Jaipur franchisee that was one of the eight teams comprising the IPL squad, had won the maximum number of matches and had the highest net run rate of 0.632, with runner-up Chennai Super Kings at -0.192. With Sohail Tanvir taking a single run off Lakshmipathy Balaji’s last delivery of the innings on 1 June, the day of the final IPL match, Rajasthan Royals became the first champions of IPL, arguably the most spectacular and commercially successful consumer product launched in recent times.
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“With that victory, we achieved in the first year of our business what we had aimed to achieve after three years,” says Manoj Badale, chairman and co-owner, Jaipur IPL Cricket Pvt. Ltd, the company that owns Rajasthan Royals. “We broke even in our first year of operation. The second season has yet to begin and we are already profitable.”
Big win: Rajasthan Royals team members celebrate after winning the first IPL T20 championship at the DY Patil Stadium in Mumbai. Shirish Shete / PTI
Not many new businesses, however solid and sure-footed, can make such claims, especially during an economic slowdown.
To be sure, there was an element of surprise in what Badale and his team managed to achieve on as well as off the field, yet many of its rivals dubbed their success “a sheer coincidence” and “a stroke of luck”.
“Cricket is a game of uncertainties. They just got lucky,” says a senior executive of a rival team, who did not want to be named. “It was just a stroke of luck.”
Agrees Adhiraj Singh, chief executive officer, Equisport Management Pvt. Ltd, a New Delhi-based sports management and marketing company: “It was all about luck for Rajasthan Royals. I don’t think they had a game plan in place.”
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A casual bet?
Many thought buying Rajasthan Royals was a casual bet on the part of Jaipur IPL. First, unlike other franchises, none of the consortium’s partners had any serious business interests in India. Badale, a serial entrepreneur who incubated 17 businesses along with his partner Charles Mindenhall and sold off 10 in the past two decades, is based in the UK. Six of his seven businesses operate out of London. The India business, which comprises an information technology outsourcing firm and a technology firm catering to the hospitality industry, is small and operates in the business-to-business sphere with little exposure to local consumers. Suresh Chellaram, another partner in Rajasthan Royals and brother-in-law of IPL chairman Lalit Modi, runs a trading business from Nigeria and has modest business interests in India. The third partner, Lachlan Murdoch, son of media magnate Rupert Murdoch, has made some investments in the media and entertainment space in India but they are too small to chart.
The second reason for misjudging the Jaipur IPL partners’ commitment was their approach to spending on building the team. “Theirs was the cheapest team bought. They spent the least amount of money in buying players. They had no stars except for their captain,” says the executive from the rival firm.
The partners made the smallest bid of $67 million (about Rs325 crore) for their team—compare this with the highest bid of $111.9 million by Mukesh Ambani’s Reliance Industries Ltd for Mumbai Indians and the second lowest bid of $75 million by actors Shah Rukh Khan and Juhi Chawla for Kolkata Knight Riders. They also spent the least amount of money, $4 million, in buying players, compared with $6.4 million spent by Kings XI Punjab and at least $6.2 million by Kolkata Knight Riders (see chart on Pages C2-C3). Third, they spent merely Rs8-10 crore on marketing and promotions while many of their rivals had marketing and promotional budgets running to Rs40-60crore. “We did not have any brand ambassador. We didn’t have any icon player. We didn’t launch any high-decibel, high-budget advertising or marketing campaign to promote our team,” says Utkarsh Singh, head, business development, Jaipur IPL. By Badale’s own admission, Rajasthan Royals had the “tackiest logo last year”.
“The owners of RR (Rajasthan Royals) made little investments in the team. So they really didn’t have anything to lose and their team went out to play without any pressure on them,” says Mahesh Ranka, general manager, Relay Worldwide, the sports specialist service of Starcom MediaVest Group. “Other teams had spent fortunes on buying the franchise and the players and their marketing, etc. So both the owners and the viewers had a lot of expectations pinned on them that may have put a lot of pressure on them.”
Badale, however, argues that frugality in spending and prudence in posturing—the factors cited as weaknesses by rivals and observers—were the cornerstones of the strategy that helped the team emerge a winner.
…Not really!
“The fact that we didn’t splurge doesn’t mean we weren’t committed. On the contrary, it only meant that we were really very serious,” says Badale.
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While most other franchisees bought teams to either build a marketing platform for their brands or a direct and feel-good connect with consumers, “for us IPL was a serious business and we treated it like one,” says Badale. “We had a clear business plan with a strong focus on our investments and the potential return on that.”
Badale says the partners didn’t have unlimited budgets to burn, “so we bid only what we thought was the real business value of the assets we bought, and spent only as much as we thought will help us in pushing our business plans”. The results of the strategy are there for everybody to see. Victory was a dream for most IPL teams; for Rajasthan Royals, it was a business target to be achieved. “It was our stated goal that we had to reach the semi-finals,” says Raghu Iyer, chief marketing officer. “That we reached the semi-finals, thus, was no coincidence. Though luck did favour us on the way.”
To achieve this target, the team decided to focus on only the first two of the five Ps of marketing—product, positioning, packaging, promotion, and pricing. “We wanted to get our product, our core offering—cricket, the game—right. That was central to our strategy and execution,” says Iyer. “If you don’t get the product right, no amount of packaging and promotions can see you through. Also, it would be wasted expenditure if the product failed to click.” And the team could not afford it.
One only has to look at the fate of some of the most aggressively promoted IPL teams to understand what Iyer means.
The first step towards getting the product right was having a strong leadership team in place. The management went out and bought one of the greatest cricketing talents globally, Shane Warne, for $450,000 to lead the team. And then, instead of splurging on more stars, it invested in getting an experienced coach, physiologist and psychologist on board. “It was important to have a strong team off the ground as well,” says Badale. “What you do on the ground is what you have learnt off the ground.” As for not buying stars as other franchisees did, Santanu Chari, head, player services and operations, says, “We didn’t want stars, we wanted performers.”
Jaipur IPL thought it had put together a winning team for the game but not everybody was impressed, especially the sponsors and celebrities who were approached to become the team’s brand ambassadors. “Everybody turned us away. They said we didn’t have any stars, so (we) did not stand a chance on the ground,” says Singh.
The team did not have a single sponsor or brand partner till a fortnight before the tournament. It managed to sign on four sponsors and partners just two days before the launch, and a consistent performance through the tournament saw it finishing with seven sponsors and brand partners, including Kingfisher Airlines Ltd, Reebok India Co., Bajaj Allianz General Insurance Co. Ltd and energy drink Boost owned by GlaxoSmithKline Consumer Healthcare India Ltd.
The final tally
That Warne and his boys outshone all the stars on the ground and that Rajasthan Royals became the first IPL champions is well-documented history now. What is however, not so well known is the fours and sixes the team owners scored off the ground. By Badale’s own admission, Jaipur IPL turned profitable in the first year against a target of three years. According to the management, 40% of the team’s revenues last year were earned independently and half of these were through sponsorships. “The IPL kitty (the revenues generated by the IPL management through sponsorships and media rights, among other things) contributed only 60% to our revenues,” says Badale. According to a media buyer, each of the teams got approximately Rs35 crore from IPL’s central pool.
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“The biggest learning from Rajasthan Royals is that if you don’t sweat it out on the nets, you are going to bleed on the ground,” says Darshan M., vice-president, commercial operations, Deccan Chargers, the IPL team that was bought by Hyderabad-based media company Deccan Chronicle Holdings Ltd for $107.01 million.
The win saw the team’s valuation vaulting at least two times, from $67 million last year. London-based entrepreneur Raj Kundra and actor Shilpa Shetty recently bought a 12% stake in Rajasthan Royals for $16.8 million, thus giving the team a valuation of $140 million. Shetty’s coming on board has also lent the much needed glamour quotient to the company. “We have taken a strategic approach by investing in Rajasthan Royals, whose brand values we associate strongly with,” said Shetty at the time of the announcement of the deal. “Cricket is not a sport in our country, it’s a religion. I am very passionate about cricket and who better to invest in than the current reigning IPL champions. It completes the success story for the IPL team by merging with Bollywood.”
Shetty is currently working on a music video for the team which is likely to be launched soon.
The road ahead
Having established the Rajasthan Royals brand through sheer performance, the team this year plans to launch various marketing and advertising initiatives. “Now, we would like to build the Rajasthan Royals brand locally as well as internationally,” says Badale. As for sponsorships, says Iyer: “Currently there are 10 brands in the fray to pick up the team and associate sponsorships. We will announce the final names soon.”
The team is launching an extensive licensing and merchandising initiative across India, the US, UK and Australia. While it had offered various products such as jerseys, practice T-shirts, bags, sporting goods, team caps and autographed bats as merchandise in the first season, it’s planning these initiatives on a much larger scale this year.
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It has also set up an online merchandise platform through its official website Rajasthanroyals.com—prices for these range from Rs1,000 to Rs1 lakh. It is looking at launching co-branded products with some consumer product and children’s product companies.
Recently, the team also launched a five-tier Royals Army fan club membership programme in India and abroad. The programme has five fan categories—Maharaja Club, Captain’s Club, Royal Lions Club, Royal Bugles Club and Young Royals Club—with membership fees ranging between Rs2,500 and Rs1.5 lakh. The benefits for members include season tickets, autographed bats, official team jerseys, preferential access to tickets sold online and invitations to the season-ending party.
“We also plan to build a strong consumer connect this year through various engagement programmes launched locally,” says Badale. “Talent hunt, consumer activation programmes and meet-and-greet cricketers, and interactive sessions with fans are also on our agenda.”
Rajasthan Royals are no longer the underdogs. Will this affect their performance? That will be seen on the field. What is obvious, however, is that their managers will make more profits this year.
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First Published: Tue, Feb 17 2009. 12 55 AM IST