Despite recent successes, Indian sport hasn’t yet reached the markets
As sports acquires financial heft in India, it is time for companies in the business to test the markets
Last Sunday some kind of sporting record was set in the premier league match between table toppers Manchester City and misfiring Chelsea. On the field were 22 men on whom their clubs had together spent nearly half a billion dollars. This year, according to Deloitte the two clubs, on display at the Etihad Stadium in Manchester that night, have been the highest spenders among English clubs.
How far their spends have been justified, is debatable. While City’s £220 million investment in the likes of French centre-back Aymeric Laporte as well as defenders Kyle Walker and Benjamin Mendy, has put them in clear sight of the premier league title as well a shot at the Champions League trophy, Chelsea after spending £155.4 million on the likes of Alvaro Morata, has been languishing in fifth place in the league.
Premier league clubs spent a record £1.47 billion in 2017-18 which clearly shows what a mega bucks business sports has become.
And it isn’t restricted to Europe or the US. Over the same weekend even as City was busy snuffing out Chelsea’s weak challenge, young Indian golfer Shubhankar Sharma was scorching the golfing greens at the WGC – Mexico Championship where he led veterans like Phil Mickelson and Sergio Garcia till the final round, eventually finishing ninth. Just 21, Sharma already has over $500,000 in earnings this season from a game which is still on the periphery of popularity in India.
In fact, late starter India finally has a sporting ecosystem spread across a large enough section of the population playing and watching a cross-section of games from cricket to kabaddi. In the Indian Premier League, it also has one of the world’s richest leagues and players like Virat Kohli, ranked among the top 100 on the 2017 Forbes list of ‘The World’s highest paid athletes’. According to global valuation and corporate finance advisory Duff & Phelps, IPL in its 10th year is worth Rs34,000 crore ($5.3 billion) which compares quite favourably with the richest sports leagues like the National Football League (NFL) and Major League Baseball (MLB).
Yet strangely, for a country with over 5,000 listed companies, there are hardly any sports-based listed companies in the country. A few adventurous souls have tried to go public with sports as their proposition, but have met little success. Even in the start-up space where you would expect more such activity, there are very few sports entrepreneurs. The few that have tried are mostly into managing sporting facilities or providing analytics support.
Indeed, broadcaster Star India may be India’s biggest sports company. It is shelling out nearly Rs27,000 crore for the television and digital rights to the next five IPL seasons as well as ICC Tournaments for nine years from 2015 to 2023. Nor is its interest restricted to cricket. It is spending large sums on other sports too. But entertainment still accounts for a majority of its business and in any case it isn’t listed either.
In the US, there are a number of publicly traded sports-related companies. Many of them like Nike Inc., Callaway Golf Co. and Lululemon Athletica Inc. are into sportswear, equipment and accessories. But fans of the Knicks or the Rangers have the option of investing in the publicly traded Madison Square Garden Co. Manchester United Ltd, another in the list of publicly traded companies presents another great investing option. For all its woes on the field, it has great assets. According to a Duff & Phelps report the club’s Old Trafford ground is the ‘most valuable stadium’ in the world. Just the market naming rights to it could achieve over £26 million a season for the Manchester club. The wildly popular wrestling brand World Wrestling Entertainment is another listed option.
As sports acquires financial heft in India, it is time for companies in the business to test the markets.
Sundeep Khanna is a consulting editor at Mint and oversees the newsroom’s corporate coverage. The Corporate Outsider will look at current issues and trends in the corporate sector every week.
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