Vijay Mallya’s UB group signed a new Rs15 crore, five-year sponsorship deal with the Royal Western India Turf Club Ltd for the Indian Derby, the country’s most famous racing event.
The agreement, which keeps the high-profile race within the United Breweries fold, comes just months after Mallya lost the race to become the club’s chairman to Cyrus Poonawala.
Mallya has been sponsoring the prestigious Indian derby for over 20 years but faced a serious challenge from liquor business rival Diageo India.
Diageo is believed to have offered to pay significantly more than what Mallya had been paying and, while it di-dn’t prevail in the end, it managed to significantly raise the cost of sponsorship for Mallya.
The deal will also translate into better facilities and infrastructure, including more stables for the horses, air-conditioned enclosures for the sponsors and better facilities for the members at the Mumbai and Poona turf clubs.
A series of discussions and negotiations between Mallya and Poonawala also led to an agreement that will set aside 40% of the sponsorship money for upgrades to the club’s facilities. Poonawala said UB has already paid 10% of the money, with the rest to come over the next four years.
UB’s new deal underscores racing’s growing importance as an avenue for certain kinds of corporations seeking to develop their brands.
“It was difficult to market racing because of its connotations as a sport associated with gambling, but that has changed over the last two years and we have any number of sponsors this year for the entire season,” said Vivek Jain, chairman of the club’s marketing and media working group.
Jain’s confidence is backed by data. The club’s Pune racing season, slated to begin at the end of July, has already collected its highest ever prize money—more than Rs5.5 crore, up some 30% from last year—from liquor companies, real estate developers, automotive and lifestyle companies keen to be associated with the racing season.
Says Asif Adil, managing director of Diageo India: “Racing and Johnny Walker have a long lineage and both involve thoroughbreds. The challenge for me was how best to bring lifestyle into a sport that is traditionally viewed as gambling.”
Diageo did that by introducing oodles of Bollywood glamour, fashion and models to the 2000 Guineas Classic racing event in December. The company also has a three-year deal to sponsor the 1000 and 2000 Guineas races. The company will spend Rs1 crore on the Pune racing event this year which, insiders say, is a fraction of what it spends in Mumbai, which remains a must-attend social event in the city for the A-list of society. Nifty bargaining by the club also means that sponsors have to pick up the entire tab for the event, including its marketing.
A Pune-based real estate developer is sponsoring one of the events and is offering a pair of tickets to the Dubai World Cup racing event as a prize. In return, the developer is looking to promote a premium apartment project overlooking the Pune club.
The list of corporations queuing up for a slice of the action on the race course also includes wine maker Chateau Indage, which has been using the event to showcase its range of premium wines. The last couple of years have seen the wine maker use the Mahalakshmi Race Course in Mumbai and several races there as the backdrop for its wine crushing.
Smaller firms such as Nitco Tiles are also in the race to be part of the Derby.
In the financial sector, HSBC Bank and Yes Bank Ltd have been sponsoring races in Mumbai and even the relatively staid State Bank of India had joined them last year.