‘We don’t have a profit motive. Our biz is to promote the game’8 min read . Updated: 06 Nov 2007, 01:45 AM IST
‘We don’t have a profit motive. Our biz is to promote the game’
‘We don’t have a profit motive. Our biz is to promote the game’
Lalit K. Modi has changed the business and face of cricket worldwide. Since taking over marketing at the Board for Control of Cricket in India (BCCI) in 2005, he has packaged and monetized the game—and says there’s much more to sell. Modi and the BCCI face a match later this month that India has not seen before—in the form of Zee TV’s parallel Indian Cricket League (ICL). In an interview with Mint, Modi talks about the competition and plans to improve his own game, as well as Team India’s. Edited excerpts:
Let’s get right to it. How rich isthe board?
It’s not as if the board is rich. Yes, the board earns a lot of money. We also have a large expense, 80% of the money we earn in a particular year is spent the same year.
Can you quantify turnover?
Then there is Sahara (which is the team sponsor) revenue, Nike (apparel sponsor) revenue... comes to a million dollars per day per match. Ground sponsorship revenue is between $1.6 million and $1.7 million per day.
And then ticket revenue would be depending on venue, could be as high as $3 million a day. Guwahati (the site of the first match in the current series between India and Pakistan) may be on the lower side. And there are other streams… We have partnerships with hotels (Taj), airlines (Jet offers a 45% discount)… It all adds up.
This is for ODIs, right? Are ODIs keeping Tests alive?
Tests and ODIs are pretty much the same. In Tests, ticket sales are over five days, we get similar revenues in Tests; we don’t calculate figures but there’s a treasury office and I don’t do that.
How do you fashion yourself in regard to cricket, a fan or a businessman?
I’m a fan who’s motivated. My business background has helped get a better understanding of how BCCI can monetize the game
You have also “brokered" telecast rights.
Yes, I started (sports channel) ESPN in partnership with them in 1994, I got a very good understanding of the broadcasting market, of the TV market in general. That helped in knowing what value cricket should be from (the) advertisers’ perspective, rightsholders’ perspective, broadcasters’ perspective
Post-World Cup, advertisers’ confidence was down…
They must have handed that to you, they never told us. It’s the perspective of the media; (marketers) have come back to us and have added more value. There will be some sentiment (if India loses) but if you look at the one-day English series or Twenty20 (T20), the market is on fire, spot rates have never been that high, ad rates have never been that high. Advertisers are looking at ratings, and cricket is delivering ratings.
Was there any kind of navel-gazing exercise after the ICC World Cup loss? A “where do we go from here" moment?
It’s a game. You win some, you lose some. It’s a religion across the country. The fan base is so large that with each disappointment, (reaction) is magnified, but if we win it’s also magnified multifold. When the T20 team returned (after winning the T20 World Cup), it was raining in Bombay but millions of people were on the road. It was amazing how they embraced the team.
Is there a danger of losing passion for the game as you monetize?
See, monetization, revenue has nothing to do with passion. The more passionate the game gets, more eyeballs reach the game, advertisers will want to be part of it. As far as BCCI is concerned, we are a nonprofit organization and 100% of revenue that we earn goes back into the game... The more money you make, infrastructure gets better, better facilities will be provided to the people.
But outside the new, still under-construction stadium in Jaipur, you haven’t done much in this area.
See, there’s a misconception here… Stadiums are not built overnight, infrastructure is not created overnight, revenues for BCCI started coming in only this year. We had signed the contracts only last year, so last year we had no money… Now going forward, over the years to come, all stadiums will be upgraded to international standards, we have a plan for the next three to four years…till about the 2011 World Cup. Facility upgradation costs a lot of money. It has to be phased over a period of time. The total cost of infrastructure and upgradation in the next few years will be between (Rs)3,000-4,000 crore. It’ll be spent by BCCI though the state associations, there are stringent guidelines on what’s required for the World Cup. And we’ll have same sort of fan experience you see anywhere in the world... Hospitality facility, food facilities, press. There will be different pricing for different people.
In your marketing strategies, you rely on several agencies: World Sport Group, Percept D’Mark, International Management Group. Why so many?
As many as we can target. Anyone who wants to be associated with cricket wants to be partners with BCCI. They have the expertise in the game of (marketing) cricket, and ours is a tendering process... The game has a long sustainability. We are not talking of matches. If we lose, our partners lose. It is part of the game. Our target is to monetize the best we can.
You had said Nimbus will make $200 milion profit on its $612 million purchase of BCCI’s broadcasting rights. But sponsors and media buyers are not interested in Ranji or Deodhar trophies, but say they will look at ICL and Indian Premier League (IPL, BCCI’s T20 league).
Ranji is not to make money. It’s a form of tournament, Ranji or domestic cricket; it’s not as if all avenues have to make money. As far as Nimbus is concerned, I’m sure they are going on expected lines, as per their business plans. I don’t see them deviating from their business plan right now.
Is there any problem with Nimbus over dues?
In any partnership, there are always delays and dues. They are behind in certain payments but I am sure they"ll make it... It’s a matter of days, not weeks or months.
Is there a profit motive in domestic cricket?
We don’t have a profit motive at all. Again you’re coming to capitalization and profit-making. Our business is to promote the game, enhance the game of cricket. If it costs us more to do so, so be it. You pay from one pocket, you make money in another pocket. That’s why we don’t like to talk to business newspapers. Your entire line is business, but our line is not business.
Wasn’t there some talk of having a CEO of the BCCI?
We have a chief administrative officer. We have a whole team of management coming underneath him. We are hiring more people, and that’s a long process, these people are all professionals.
IPL has city-based teams that haven’t yet been chosen.
No, they’ll be chosen by the franchisees.
Some cricket-mad city may lose out because it didn’t find franchisees.
Maybe. So be it.
How will bids work?
It’ll be a tendering-cum-auctioning process, and it’ll happen in January. The basic paper will be ready in the middle of this month.
Then it’s not clashing with ICL (starting 30 November).
We are not concerned with ICL. So many tournaments happen. We are not a Buchi Babu tournament (a tournament where corporate teams and clubs participate).
But ICL has chosen the cities and is trying to fan regional passions.
Does naming a team create fan base? I can name any city and play the game in Chandigarh, you don’t create a fan base in Bombay. ICL has nothing to do with inter-city tournament. An inter-city tournament is played in a fan-based city, fans come over, as it’s “my city". Look at Manchester United, Liverpool (English Premier League clubs), they are city-based teams, teams play on a home and away basis. So you generate loyalty in that city. Fans identify with players from that city.
So, if I say I’ll do that, it’s necessary to play matches in that city. I can’t have all those cities where I’m saying I’ll have the teams in, make the team, name the team myself and go and play the game in another city altogether... That’s not an inter-city tournament. I don’t see where’s the comparison between the two, ICL and IPL. There’s absolutely no comparison at all. Ours (IPL) is an inter-city tournament. We are playing across eight cities to start with, on a home and away basis, like the English Premier League, any European and American leagues, where you try to build a fan base in that city, create an interest in that city. You need local stars. If I put a Sourav Ganguly and put him in the Bombay team, there’ll be a problem.
How will you divide the players into teams?
We are just contracting them right now. The owners will choose their teams. There’s also a regional bias, that so many players from a region will have to be in that team, then under-21. There’s a whole lot of different structures to make sure credibility of a region is taken forward.
You have ruled out Zee Sports (for telecast). Is Ten Sports (50% owned by Zee) also ruled out? Who do you have then?
Yes, Ten Sports is ruled out. But we have ESPN Star Sports, Neo, Sony. We have new entrants and can’t disclose all the names. A lot of news channels have shown interest, and if they want to come on board, we’ll be... happy to take them.
What’s the base price for a team?
It’s $50 million, and I’m sure it’ll go higher. It’s for 10 years... They will own the teams perpetually, after 10 years it’ll become a royalty payment, we’ll get a percentage of profits.
Suppose buyers say we won’t go above a price?
Don’t worry about that. We’re very good at breaking cartels.
Do you follow other sports?
I follow football, tennis, motor racing. It’s very good F1 (Formula 1) is coming here, it’s about time.
Any properties left to sell?
Oh yes, quite a few. The official credit card, transportation, mobile rights... We are waiting for the 3G (third-generation) spectrum.
What about marketing of women’s cricket?
Women’s cricket is part of BCCI. We have a full marketing plan, right as we do with the (men’s) India team. By the end of the year, old contracts will come to an end. We have to deal with Sahara or someone else. We’ll look for sponsors. We’ll look to monetize it.