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Betting on sports

Betting on sports
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First Published: Mon, Jul 23 2007. 12 07 AM IST

Sam Balsara, chairman and managing director, Madison World
Sam Balsara, chairman and managing director, Madison World
Updated: Mon, Jul 23 2007. 12 07 AM IST
In the reams written on cricket, arguably the most controversial has been a syndicated column by former cricketer and star commentator Sunil Gavaskar. But last month, the column and the entrepreneur behind it made not the sports section, but the business pages. Communication agency Madison World, along with Selvel Outdoor Advertising, acquired a dominant stake in Professional Management Group (PMG), India’s first sports management agency set up by Gavaskar in 1985.
Sam Balsara, chairman and managing director, Madison World
Madison’s chairman and managing director Sam Balsara has big plans— beyond syndicated columns and media content, he plans event sponsorships, custom sporting events and management of sports personalities.
The takeover of PMG came on the heels of another announcement from Percept D’Mark (India) Pvt. Ltd, which has been selling the business of cricket for a dozen years. In May, it started a separate division called PDM Sports to exclusively market cricket and other sports. Plans are under way to spin off PDM into a separate company.
Despite managing or marketing sports for years, several media firms, advertising agencies and public relations companies are starting new sports management divisions with separate identities. While there’s little agreement on the future of cricket sponsorship, everyone seems to agree that the overall sports market will only continue to grow and that it warrants separate treatment from other media properties.
“It’s the right time to invest in sports,” says PDM Sports chief operating officer (COO) Roland Landers. More global companies are entering the country, money is pouring into sports, and sports investments are offering strong returns, he says.
Foreign-based sports management firms such as Havas Sports of France are also entering India, posing competition to local companies on their home turf. The new outlets say they do not feel threatened, but that sports marketing and management require specialization and an innovative approach.
“If you say these new divisions are being set up by the agencies because of the new entrants, it is not true,” says Prashant Singh, business head of Ogilvy Sports, itself a new outfit floated by advertising agency Ogilvy & Mather. He credited the tremendous growth in media across the board for making sports so lucrative.
The total media business in India, straddling the television, radio, publishing, film and advertising industries, is believed to be around RsRs43,772 crore. In March, a report by audit firm PricewaterhouseCoopers said the sector could experience annual growth of 18.5% over the next five years, or grow to Rs1 trillion by 2012. The sports marketing sector is believed to represent Rs850-900 crore, but the potential is much greater, says Farokh T. Balsara, partner and national sector leader, media and entertainment practice, at Ernst & Young.
Placing the bets
Ogilvy’s Singh says sports form an intrinsic part of media consumption, especially for affluent men; sports mirror brand values and command recall more than any other media.
“At the end of the day, we’re in the business of communication and sports is a platform to communicate,” Singh says. “It’s an added resource for building brands.”
Similarly, Hiren Pandit, managing partner of GroupM ESP—the new entertainment, sports and partnerships division of media buyer GroupM—describes sports as a communication vehicle to reach consumers. It’s also another source of revenue: ESP is exploring sponsorships, and athlete and event management.
Finding new sources of revenue is a key factor for these outfits, says Farokh Balsara. He adds that the traditional 15% commission structure for advertisement agencies is on its way out and the trend is towards flatter, uniform fees. At the same time, costs haven’t changed and this has squeezed margins.
Ogilvy Sports may have been formed 10 months ago, but Singh says the sports sector isn’t an unfamiliar terrain for O&M. Three years ago, it signed up Indian cricket team captain Rahul Dravid as a brand ambassador for Hutchison Essar Ltd. It has also organized sports events such as a corporate cricket tournament, sponsored by Pidilite Industries Ltd to promote its Fevicol adhesive brand.
But, with the surge in interest in sports, a professional set-up such as the division he heads had become necessary to explore brand-building opportunities through sports, he says.
Concurs neutral observer Shashidhar V., executive editor of USP Age, a marketing communications magazine published in Mumbai. “It makes business sense to have a dedicated unit rather than a sub-unit,” he says. “There’s a whole lot of activity outside of cricket now, and that’s why people are looking into this area.”
PDM is one such instance. The company, which counts the Board of Control for Cricket in India (BCCI) as a client for the past four years, brokered the Indian cricket team’s sponsorship with the Sahara India group for Rs414 crore over four years. BCCI and the International Cricket Council are looking for ground sponsorship—another area that PDM Sports plans to exploit.
The other ones
Roland Landers, COO of Percept D’Mark’s new division, PDM Sports
The newcomers also are tapping new sports such as cycling. Last month, PDM Sports signed a three-year marketing deal with the Cycling Federation of India (CFI) to market cycling events across India.
“Only the top 10% of companies can invest in cricket,” COO Landers says, explaining the deal. “We have to look at new age sports such as cycling.”
Landers concedes cycling as a sport has an obvious limitation—its lack of appeal in India. But he says if packaged well, it could catch on.
PDM Sports plans to start a Tour of India on the lines of the Tour de France, the world’s best known cycling race that lasts three weeks and covers most of France, and often, neighbouring countries.
It is also talking to CFI to brand the velodrome of TI Cycles of India, the country’s leading cycle manufacturers, best known for the Hercules cycle brand. Additionally, PDM has struck a title sponsorship deal for Hercules with the Himachal Adventure and Sports Organization for its 10-day mountain biking race in Himachal Pradesh.
There’s more than just opportunities in sports that has goaded multi-interest communications groups such as Percept to float separate sports divisions, says Ernst & Young’s Balsara.
“With sports added on, these companies can offer integrated offerings to the customer,” he says. “They don’t want to lose customers, they can mind customer more and customer gets a single-point contact”.
Apart from Percept Holdings Pvt. Ltd, the umbrella organization, the Percept group has 19 companies, including four advertisement agencies, three public relations firms, one event management company and one celebrity management unit. A sports division would ensure a complete bouquet of services, says Balsara.
The early players
One of the earlier media communications agencies to enter the sports market was Starcom MediaVest, which started Relay Worldwide, its sports practice. “Everyone knows sports is the future. Do we join now, or wait?” asks Mahesh Ranka, Relay Worldwide general manager. “Starcom is in the communication solutions space. The business of sports is here for brands to take.”
When it started off in 2003 with a working title, Starcom Sports, the division didn’t have much of branding, and began by trying to create a business model. “We wanted to be different from existing vendors,” says Manish Porwal, Starcom managing director, India, West & South.
“They first create or source a property, then find a client and sell property to it… all were into this. But we, as middlemen, play the role of an evangelis,” Porwal says.
He defines “evangelist” as the marketers tasked with “seeding a thought”—instead of creating a property and selling it to corporate houses. Relay identifies properties that already exist and then advises Starcom’s clients on how these properties would serve their interest. It ensures the client’s interest isn’t sacrificed, he says.
The position is similarly advocated by GroupM ESP’s Pandit, who says a sports marketer can’t be both buyer and seller. “Is there a proper, rational revenue model here?” he asks. “How does the client know he’s not being cheated? ESP won’t own property, it’ll be a procurer.”
There’s a key difference, says Yannick Colaco, senior vice-president, sports marketing, at Nimbus Sports, a division of media and entertainment company Nimbus Communication Ltd. “The principle behind sports management is maximizing revenue potential and developing sports…if anyone can say we can do that, it’s a sports management company, otherwise it’s a broker.”
Latika Khaneja, director, Collage Sports Management, which represents cricketers Virender Sehwag and Gautam Gambhir, says most sports management companies were in fact mere marketing agencies. “It’s just a notion. Media firms are setting up sports divisions, but these companies do not invest in sports, or set up sports academies.” Even the revenue model remains commission-driven, she points out.
Madison’s Sam Balsara, however, feels that sports can be the new medium that can break through the current clutter in the Indian advertising scene. “Plain vanilla advertising in print and TV has limited impact. Brands need to engage consumers through activities of interest to the consumer. And that is where sports comes in,” he says.
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First Published: Mon, Jul 23 2007. 12 07 AM IST