THE INDIAN sports industry was jolted this week with news of the joint venture between RIL and IMG, essentially planting an 800 pound gorilla amidst the untended dense grasslands that till now represented sports in India. Like many other facets of the evolutionary phase of Indian sports, this joint-venture between the two behemoths shot way ahead of the queue, quite likely registering an 8 on the Richter scale if the impact was in any way measurable.
The aftershocks of course are likely to be felt across the entire sports industry over the next few years. This isn’t just a situation where a corporate and a sports management firm synergize to avail the first-mover advantage in a nascent industry, and see how it goes. Rather, by taking the bull by the horns and essentially privatizing coaching, technical skills-building, conceptualizing of leagues, and above all, asset-building through the development of sports infrastructure they have set the benchmark, and essentially imposed suitable barriers to entry for other competitors in this sphere.
Sport in India until now has to a large extent been dependant on the support of the Central and State governments along with their designated federations and sports bodies. While there has been the advent of private players in these areas, the public sector has definitely been somewhat of a rainmaker in the spheres of coaching, funding, and crucially, facilities. Until now, that is. What has been crippling for the development of sports in India thus far has been the fundamental economics problem of scarcity of supply and the consequent overreliance on state-owned facilities, which apart from being discretionary in their availability and fraught with unwritten barriers to entry (read: ICL), are also few in number, and woefully inadequate in their level of sophistication and suitability. The trickle down effect has been more than glaringly apparent in the quality of our athlete talent pool, and the quality of competitions and events that India hosts.
While the CWG, the Hero Honda Hockey World Cup, and the Cricket World Cup coupled with the IPL have been beneficial and assisted the up-gradation of the existing facilities, there has always been a chasm between the demand for, and supply of venues. There can be no exponential improvement in the Indian sports environment and culture without parallel development of the infrastructure and facilities. The simultaneous development of coaching and competition facilities are positively correlated, or for lack of a better analogy, Siamese twins. There is a limit to the scope and scale of opportunities for, and eventually success of local talent if there is over-dependence on foreign training and exposure, or on government funding, for reasons ranging from myopic outlooks to limited finances. For India to become the nerve center for sports in Asia at a level comparable to China, it needs to develop its infrastructure. Home-grown and raised talent is the only tangible way to create and foster value-added human capital resources. The goal must be to become the Focal point of Asia for sport-this will set the base for development, and will also ensure that there is no tapering off after the CWG and CWC.
While nurturing and developing human capital resources are meritorious considerations however, the true value in sports, and the aspect that this joint venture presumably aims to target, is that of asset creation. This, in and of itself, is the driving force behind investments in sports. India over the last few years has witnessed a unique phenomenon whereby teams in the IPL not only maintain their value, but in fact increase exponentially in value despite the short competition window, limited ticket revenues, a nascent merchandising initiative, and above all, despite ownership of literally no tangible assets.
The IPL being what it is, this is a revenue model that has thus far worked for it, and probably will continue to do so, simply because of cricket’s exalted standing in the hierarchy of value in the Indian sports context. This however is an anomaly when one looks at the global context. For sustainable, tangible, quantifiable, and eventually lucrative value creation in the sports domain, assets in the form of infrastructure are the lifeblood of the industry. That IMG-RIL venture combines deep pockets and incomparable influence/outreach with irrefutable expertise and vision makes this a win-win for all concerned- the vested parties, the athletes, the spectators, other corporates looking to invest in sports, and even the state-run and funded organizations and authorities.
By joining forces, the global pioneer in sports management along with arguably the most influential Indian corporate with some of the deepest pockets are defying the age old adage of treading with caution. This isn’t a tepid foray into an untried and untested space; rather it sets the benchmark for private sector presence in the most dynamic segment of the economy. The platinum standard has been set, and with it, the sports juggernaut is now flying at the speed of light. Unlike before however, the castles being built are no longer hovering in hankering clouds, but are grounded in tangible and quantifiable reality. Literally.
