Columns

Broadcasting Perspective: ‘Star’tling Impact

Desh Gaurav Sekhri — Tue, 23 Apr 2013 06:06:59 +0200

THE DELHI High Court matter between Star India Pvt. Ltd. (“Star”) the plaintiff, and Cricbuzz, Idea Cellular and OnMobile Global Ltd., the three defendants, has set the sports media world abuzz with a March 13th, 2013 judgement that is likely to have far-reaching commercial ramifications in the sports sponsorship and sports broadcasting domains.

And, while there has since been a status quo stay order passed recently, the matter is likely to once again gain relevance prior to the next hearing on the merits of the case - the next hearing of the Delhi High Court is on the 29th of April.

Framed on the basic contractual tenet of unjust enrichment and balancing it with public policy, the current judgment intends to honour the right to exclusivity that Star & BCCI agreed to in the media rights agreement on the 10th of August 2012 (“Media Rights Agreement”).

From a commercial perspective, a judgment granting Star the right to own, monitor and enforce its right to a comprehensive ‘bouquet’ of rights across the broadcasting spectrum is a shot in the arm for broadcasters in the sports domain. Until now, broadcast rights holders were for the most part, the victims of ambiguity when it came to enforcement. With a judgement singularly in favour of the rights holder, the sports event organizer’s ability to circumscribe the bundle of rights is certainly enhanced. And, the right of the broadcaster to monetize, commercialize, and enforce the entire bouquet of broadcast rights will stimulate interest in broadcasters looking for properties that have positive pecuniary benefits and synergies in the broadcasting spectrum. It also opens revenue streams from relatively inexpensive verticals, while also providing the right to sub-license or grant the right to charge a sub-licensing fee from mobile service providers. This could in theory subsidize the cost of acquiring broadcasting rights for popular properties. Or, if a relatively diverse player in the multimedia domain chooses to create its own verticals in this space, the current judgment helps clarify the rights holders’ exclusivity and ability to monetize and commercially exploit rights that it has paid for.

From a broader perspective, if the concept of ‘bouquet of rights’ in all sports and sports media contracts becomes an industry standard and acceptable in common-law parlance, then the ability to monetize and commercialize all sponsorship and endorsement contracts without the fear of infringement or brand dilution would lead to an exponentially increased interest in the sports sponsorship and endorsement domain, especially from international brands and domestic brands that are traditionally conservative in below the line or above the line marketing activities. To further sweeten the pie, within the ‘bouquet of rights’ that will now be offered in a comprehensive rights & benefits package, there could be the opportunity to sub-license or outsource the activations of some of the rights to either increase the return on investment, or reduce costs/subsidize the sponsorship fee that has been paid by the main rights holder/sponsor.

The intent of the judgment clearly favours the larger players, because unless tenders for broadcast rights are stratified based on the broadcast products/offerings, only those who are big enough to maximize and monetize multi-platform avenues will be able to enter the ring. Whether the focus on larger players leads to a squeezing out of smaller players who no longer have a play in the face of a monopoly, oligopoly, or monopolistic competition is anyone’s guess. This could of course trigger regulatory challenges, the outcome of which will depend on the nature and extent of unfair practices (if any) by the licensor or the licensee.

The concept of an ‘a la carte’ menu of individual rights as opposed to the comprehensive bouquet of rights, it has been reasoned, is an indication of the intent by Star to leverage the multimedia and mobile rights. There is likely merit in this reasoning, since the option of merely choosing certain individual rights as opposed to the comprehensive bouquet of rights is meant to be an inclusive measure as opposed to exclusive. However, given that the per match cost of the a la carte right to mobile rights and/or mobile activation rights was approximately Rs5m per match – it essentially means that the barrier to entry for smaller players remained, while for larger players, the value from purchasing the bouquet of rights would likely yield more benefit as opposed to individual rights.

Ceteris paribus, there are some grey areas in the judgement, which could be open to interpretation. One to keep an eye on is what may be a loophole for providers to use the ‘gratuitous’ exception, and provide the service free of charge. Although the Media Rights Agreement may clearly specify attempts to combat ambush marketing and competitors, one wonders if sponsored updates provided ‘gratuitously’ to the target end-user could in turn become revenue channels for smaller mobile services providers. Enforcement and vigilance will be key factors here.

It’s important to note that even today, if one looks at the broadcasting rights valuation for the Indian teams’ international matches, there’s no doubt that some quarters might feel that the broadcaster overpays. And if the end-game is to put a stop to leakage, free-riding, ambiguity or unjust enrichment, one must also look at the situation objectively - broadcasters will need to reap plenty wherever they sow to justify the investment in broadcasting rights.

Let’s see how all of this unfolds.

Essentially, this judgement and the upcoming hearings/litigation will likely have broad-reaching legal ramifications, and a few things are more than likely: (i) the term ‘bouquet of rights’ and the extent of such rights will be parsed and negotiated heavily going forward; (ii) either the federations/event organizers will find a way to stratify the rights offerings in a manner that successfully differentiates and monetizes each rights package, or else broadcasters/sponsors will become the conduits for ensuring that each vertical rights stream is monetized via third parties; and (iii) the broadcasters/sponsors will merely bid for the entire rights package and set about a strategic plan for recovering the amount spent- internally or through third parties.

Come April 29th, 2013, and we’ll see which way the wind is blowing.

The author is a Sports Attorney at J. Sagar Associates.

Inside Out runs every month. We welcome your comments at insideout@sportzpower.com

(The views expressed here are those of the Author and SportzPower need not necessarily subscribe to them)

Bahrain Grand Prix: Vettel Leads An All Renault Podium

Kunal Shah — Mon, 22 Apr 2013 05:11:57 +0200

SEBASTIAN Vettel reigned supreme in the Bahrain GP in Sakhir and claimed a comfortable and almost unchallenged win ahead of Lotus F1 drivers Kimi Raikkonen and Romain Grosjean. The podium finish, which was similar to last year’s, was also an all Renault lock-out, a first for the season. And given the circuit characteristics (long front and back straights), Mercedes have won only once (out of nine races) out here.

Talking of Mercedes, their German driver, Nico Rosberg clinched a surprise pole position on Saturday ahead of Sebastian Vettel and Fernando Alonso. While a Mercedes was on pole in China last weekend, few expected them to clinch pole in Bahrain especially given the laptimes set in the Free Practice sessions. And while Formula1 fans frowned at the lack of qualifying action in China, we had a full track in all sessions in Bahrain.

We probably have Pirelli to thank for this, who after much criticism decided to change their tyre allocations for the Bahrain GP. They ditched the soft compound and brought the medium one instead. While it seemed to work for Bahrain, one isn’t sure if this is the best approach for the remainder of the races. Also, there is news that Pirelli might change (or tweak) their 2013 compounds mid-season itself, which would be a complete no-no. The best part of the race, from a tyre strategy point of view, was that we saw drivers attempt 2, 3 and 4 stoppers to complete the race. And strangely, we had three four stoppers in the top 10.

Come Race Day, Rosberg’s Mercedes was unable to cope with the tyre degradation and slipped backwards to finish P9. Ferrari seemed the unluckiest of the teams as Alonso was hit by DRS issues early race and Massa with delamination on both tyre compounds (even more strange!). Alonso eventually finished 8th and Massa out of the points. Pre-race, from a tyre strategy point of view, Massa seemed to be the strongest driver on the grid (starting from P4 on hard tyres). In fact, Grosjean who used the same strategy as Massa, started P11 and finished on the podium. Had the Ferrari drivers been lucky, we would have had a good scrap for first place. And Raikkonen could have joined this scrap had he qualified his Lotus higher up than P9.

The icing on the cake for Indian Formula1 fans was when both Sahara Force India drivers qualified in the top 10 and started P5 (Paul Di Resta) and P6 (Adrian Sutil) after penalties to other drivers. While an opening lap puncture (after an incident with Massa) for Sutil compromised his race, Paul Di Resta made the most of his row 3 starting position and led the race after fighting for positions with the top teams.

Paul’s two stopping strategy saw him run in third position in the closing stages of the race only to be overtaken by Grosjean on fresher rubber. The British driver finished 4th, equaling his career best Formula1 finish and scored 12 championship points for Sahara Force India. The Indian owned team, who beat the Ferraris, Mercedes, Mclarens and a Red Bull in Bahrain, are now 5th in the Constructors’ Championship with 26 points, 3 points ahead of multiple championship winning team, Mclaren.

From an overall championship point of view, Vettel has cemented his place at the top of the Drivers’ Championship with 77 points, 10 ahead of the super consistent Raikkonen, but crucially 30 points ahead of Alonso. Red Bull Racing leads the Constructors’ Championship with 109 points, 16 ahead of Lotus, who managed to beat Ferrari to third with a double podium in Bahrain.

While the Formula1 teams battled on track, it was the off-track action in terms of large scale protests and demonstrations that also made headlines on the Bahrain GP weekend. The Formula1 race is being used as a platform by Bahraini locals to attract international media attention to promote the pro-democracy voice in the Kingdom of Bahrain. This was the third year in a row that the Bahrain GP was affected by protests. The circuit attendance was low and the traveling teams, drivers and media moved around the city under a heavy blanket of security. When asked by BBC Sport, Bernie Ecclestone termed the organisers (the royal family) as ‘stupid’ for hosting the Bahrain Grand Prix even though the FOM earns a whopping $40 million in race hosting fees!

I have been tracking Twitter India trends off late and on a day when Formula1 competed with the IPL (Mumbai Indians vs Delhi Daredevils; 4pm game) for attention we had two F1 related topics #DiResta and #BahrainGP trending in the top 10 with #DDvs#MI in the second spot. Not bad for a sport that is still finding its footing in a cricket obsessed nation.

And since the column started with Renault’s podium success in Bahrain, the news also is that with the new engine regulations (1.6L, V6) expected next year onwards, Toyota too is contemplating a return to the sport along with Honda. The more, the merrier…!

The author is a former racer who blogs on www.kunalsf1blog.com as well as www.isport.in. You can follow Kunal Shah on twitter @kunalashah.

We welcome your comments at pitstoppundit@sportzpower.com

(The views expressed here are those of the Author and SportzPower need not necessarily subscribe to them)

Malaysian GP: Vettel Wins Webber’s Race

SportzPower Team — Mon, 25 Mar 2013 02:15:10 +0100

MICHAEL Schumacher, Eddie Irvine and Ferrari set the precedent of team orders in the Malaysian GP during the inaugural Formula1 race at Sepang in 1999. Back then, Schumacher slowed down to let Irvine pass and win the race to gain a crucial championship advantage over Mclaren’s Hakkinen.

Cut to 2013, we saw team orders being dished out in the Malaysian GP which would’ve determined the order of the top 4 finishers. While triple World Champion Sebastian Vettel ignored the orders and overtook team-mate Mark Webber for victory, Mercedes’ Nico Rosberg followed his team’s orders and gifted Lewis Hamilton his 50th career podium in Formula1. A tale of two teams and four drivers!

The result of these team orders saw a grim podium ceremony where Vettel was unapologetic about his move whereas Aussie driver Mark Webber was himself – blunt and to the point! Lewis Hamilton on the other hand was thankful to Rosberg for granting him the podium. Given that the action on and off track was exciting, #MalaysianGP was trending on Twitter’s India trends. Yet another weekend where Formula1 out-paced Cricket, literally!

Post-race, fans and media were up in arms against Vettel for disrespecting team orders and denying Webber a win. While team orders are legal in the sport now, in my view, this is an absolute grey area to make a fair decision. While Vettel’s disobedience granted him a victory and 25 points in a race where Alonso suffered a lap 1 retirement, obedience denied Rosberg a worthy podium. Probably, it is this ruthlessness and extreme desire to win that makes Vettel the sport’s youngest three time World Champion (and a possible replacement for Schumacher too?). I have said this before and will say it again; you don’t participate in professional sport to be a good guy! You can contribute your time and money to charities in your off-time to be one.

On the Sahara Force India front, the weekend started off on a strong note with the VJM06 showcasing laptimes that merited top 10 positions for both drivers in qualifying. However, it was the advent of rain that caught Paul Di Resta (15th) off and saw Adrian Sutil manage 9th. Had the conditions been dry, it would’ve been possible to see them qualify higher up the grid as it was Sutil who managed to hold P1 in the Q1 session of qualifying.

Come Race Day, the team’s hopes of a double points finish turned into a double retirement, their worst after the 2010 Japanese GP. The multiple retirements were due to issues faced in their captive wheel nut system during their pit-stops. The Indian owned team still stands 5th in the Constructors’ Championship with 10 points, 6 points ahead of Mclaren and Sauber.

Between Australia and Malaysia, India’s first and most experienced Formula1 driver Narain Karthikeyan announced that he would be racing with Zele Racing in the opening round of the AutoGP World Series. The opening round was held in Monza and concluded yesterday. Narain, easily the series’ most experienced driver finished 5th in Race 1 followed by a mechanical retirement in Race 2. He currently stands 7th in the overall championship with 10 points. Narain’s team-mate is Akshay Luciano Bacheta who has Indian parents with Italian origins. Bacheta is the reigning Formula2 champions and finished 8th and 2nd in Races 1 & 2 respectively. He is 5th in the Championship with 19 points. It will be interesting to see how Narain performs against his much younger and lesser experienced team-mate.

Narain’s move comes as a surprise to many who expected him to move to America and participate in Indy Car. Although he might be a tad too late to confirm a drive, it might still be possible. Basis my understanding, Narain is yet to commit to the entire season of AutoGP, which means that he could consider a late switch. Either ways, Narain needs a series which acts as an alternate to F1; an open-wheel championship with a powerful engine! While he goes about searching for a good (and affordable) series, he knows that along with TATA’s money he does need a few (or more) race wins to impress the F1 bosses again and make way for his third stint in the sport. I am still checking if he would create history by doing so…!

And sticking to driver announcements, another Indian F1 hopeful Armaan Ebrahim announced that he would be racing in the GT1 World Series in 2013, making him the first Indian to do so. Armaan’s motor-racing career includes participation in illustrious series such as the A1 Grand Prix, Formula2 and more recently Indy Lights in America. To bring his single-seater career back on the path of Formula1, Armaan needs consistent wins and podiums in 2013 followed by a host of sponsors willing to back his talent. The driver himself declared that his move to sportscar racing is to survive in the expensive world of motorsport and single-seater racing.

Given that team orders have been added to the list of variables for teams and drivers to excel under, it will be interesting to see how action resumes in the Chinese GP in three weeks’ time. Till then, happy waiting!

The author is a former racer who blogs on www.kunalsf1blog.com as well as www.isport.in. You can follow Kunal Shah on twitter @kunalashah.

We welcome your comments at pitstoppundit@sportzpower.com

(The views expressed here are those of the Author and SportzPower need not necessarily subscribe to them)

Australian GP: Raikkonen Wins, Sutil Makes A Strong Comeback

Kunal Shah — Mon, 18 Mar 2013 01:25:33 +0100

KIMI Raikkonen won the 2013 Australian GP that most fans expected either a Sebastian Vettel or Fernando Alonso to win. His drive to the top step of the podium was a result of tyre management, tyre strategy and of course race pace. Stats indicate that the winner of the Australian GP usually goes on to win the Drivers’ Championship that year, however, basis a survey conducted by Money Supermarket, only 5.3% respondents believe that the Iceman will clinch his second World Championship in 2013.

While it is very early to make accurate predictions, especially given the mixed weather conditions in Australia, a few patterns did emerge. Red Bull Racing failed to showcase the menacing pace everyone expected pre-season. Ferrari, on the other hand, are faster than they’ve been at an opening round in the previous few seasons, the highlight also being Massa’s much improved form. Mercedes may be quick, but reliability does seem to be their Achilles heel. And Mclaren seem to be in trouble given their inability to deliver quicker laptimes with the 2013 challenger.

The other positive indication in Australia was Sahara Force India’s pace. Adrian Sutil, whose F1 career got a second life in 2013, led the race in two separate stints and was matching the front runners for race pace. This was the first time in the German’s Formula1 career that he led a race and the second consecutive time that the Indian-owned team led the proceedings at a Grand Prix event (Hulkenberg did so last year in Brazil). The team scored a double points finish with Sutil crossing the line in 7th, followed by team-mate Paul Di Resta in 8th. With this result the team opened their Constructors’ Championship account with a total of 10 points, ahead of Mclaren!

Sahara Force India was the only mid-field team to score points in the opening round even though there were 6 different teams in the top 10. Their result further emphasizes my point that a team needs a strong driver line-up where one pushes the other to deliver better results. Indian Formula1 fans would be keen to see what the team can do in Malaysia and be eagerly waiting for the team’s second career podium finish! And if the Money Supermarket survey is anything to go by, a few also voted ‘Sahara Force India winning a race’ as a surprise story for 2013!

The other interesting part of the Australian GP weekend was that it clashed with the proceedings of the India vs. Australia Test Match in Mohali. While TV figures wouldn’t have been divided given that both sports attract different target audiences, the Twitter audiences did make their choice explicitly known. Basis the ‘Trends’ indicated on Twitter, #AustralianGP was trending ahead of the #IndvsAus for the Indian region. More so, given Sahara Force India’s strong performance, #ForceIndia was trending worldwide along with #Sutil. While extremely raw data to analyze, this does indicate the sport preferences of Indians who follow sport on Twitter.

For TV audiences, ESPN / ESPN HD surprised (pleasantly!) the Indian and Asian audiences by changing their LIVE commentary feed to that of Sky Sports UK. The result of this change was an enhanced TV viewing experience for Indian fans, though most of them also complained about the increase in the no. of ad breaks during a live broadcast! (Is someone listening?)

Karun Chandhok, India’s second Formula1 driver who had half a season with HRT in 2010, has joined the FIA Driver’s Commission alongside former driver Emmerson Fittipaldi, Sebastian Loeb and others to represent the rights and interests of drivers in single-seaters. The Chennai-lad, who is yet to confirm his racing plans for 2013, does seem to be set for a successful innings in the management and administration of the sport, not to forget his successful stint on TV as an F1 Pundit. While it would be natural for Karun to take forward his father’s (Vicky Chandhok) good work in Indian Motorsport, in my view, Karun still has a few good years of racing left in him and potentially with a works team in the World Endurance Championship. And on the same note, Narain Karthikeyan’s plans for 2013 are unannounced as well.

For Indian motorsport fans, there were few important announcements made in the last few weeks. First, the Asian Le Mans series is attempting a comeback in 2013. Currently, the tracks are based in China, Indonesia and other Asian countries, but I am certain that in the coming years Buddh International Circuit will feature as well. Hopefully, a local race will also allow greater participation opportunities for Indian drivers. Second, the World Superbike Series, in which Mahi Racing Team (MS Dhoni’s two wheeler team) participates, is expected to race at the circuit in Greater Noida later in November this year. While the initial plan was to host the race in March, organizational issues led to the rescheduling. With the expected arrival of these international series in India in 2013, the calendar of the Indian Motorsport enthusiast is expected to get busy. And hopefully this aids the sale of tickets for the Indian Grand Prix, giving much needed respite to circuit owners, the Jaypee Group.

The Malaysian GP is to be hosted next weekend under completely different conditions from Melbourne. Heat and humidity will lead to more wear of the Pirelli tyres directly affecting race strategies. As always, the suspense that builds up to see who will come out on top is always fun! And of course, next week’s column to have further updates from Indian and International Motorsport, stay tuned!

The author is a former racer who blogs on www.kunalsf1blog.com as well as www.isport.in. You can follow Kunal Shah on twitter @kunalashah.

We welcome your comments at pitstoppundit@sportzpower.com

(The views expressed here are those of the Author and SportzPower need not necessarily subscribe to them)

What Companies Can Learn From The Dhoni Saga

Vinay Kanchan — Tue, 12 Mar 2013 05:50:52 +0100

MS DHONI has perfected the fine art of making his detractors seek alternative occupations. And after the first two tests against Australia, where he overcame question marks on both his test batting ability, and his captaincy skills in that form of the game; MSD is once again riding the euphoric wave.

There are many endearing facets to the Dhoni saga. The path he has tread to Indian cricketing immortality, has been quite different from that of many of his predecessors. But in terms of impact, his influence on the game and on the minds of a new generation has been absolutely colossal.

As modern day corporations gear up to meet the demands of a changing era, there are many insights they can import from the Dhoni story. From the almost anti-purist arc of his swashbuckling blade, to the unconventional calmness of his leadership approach, emerging from his vantage point behind the stumps; Dhoni illuminates a series of lessons for those in corporate think tanks.

Leaders in the white collar world could do well to heed these pointers from India’s very own Super King; because the place at the very top often belongs to those who endeavor to be daringly different.

Picking employees from less fancied places
The Indian cricket team historically has been dominated by players coming from the big cities. Usually cricketers from Mumbai, Delhi, Bangalore and Chennai populate the national lineup. For someone who played Ranji Trophy matches for both Bihar and Jharkhand, finding his way into national prominence was always going to be an uphill task. But once Dhoni made it, thanks in part to the BCCI’s small town talent spotting initiative; there was simply no looking back-both for him, as well as for Indian cricket.

Often organizations are obsessed with selecting recruits from only a certain grade of institutions. This policy, for some strange reason, never seems to get revisited, even in these changing times, where talent can be found everywhere. The example of the Indian cricket team, should serve as an apt reminder to captains in the business world. Not only do players coming in from smaller centers seem to try much harder, the variety in perspective in itself, makes them a valuable addition to the potency of any unit. Perhaps it is time for the corporate world to spend some serious time and thought, in terms of unearthing their own Dhoni’s. And this can only be achieved if all recruits, no matter what their backgrounds are, are placed on the same equal footing.

Elevating the salience of an ‘invisible’ function
Before Dhoni, the Indian wicketkeeper was meant to be the silent worker behind the stumps-ideally as visible as a blot on the sight screen. In a country obsessed with batsmen, not many children growing up, saw donning the gloves as a glamorous alternative. But the advent of MSD; put the spotlight on a hitherto unsung discipline. Perhaps following in the wake of the legendary Adam Gilchrist helped his cause. Whatever be the reasons, the perception of the Indian wicket keeper, has been forever changed by the swashbuckling exploits of Dhoni.

Many organization suffer from a rather lop sided functional perspective. In a sense they are either seen as strong R&D, or savvy marketing, or astutely managed financial units. And this bias in perception; is usually to the detriment of the company. It turns a blind eye to the strategic possibilities that efforts in the ‘other’ disciplines can present. For instance for a company famous for its innovative capabilities, turning up the ante on its marketing endeavors, can only serve its long term positioning better. In today’s ultracompetitive world, just as a cricketing team needs to extract more out of every player, so do new age corporations require every department to punch above their weight.

Sticking to one’s own game plan
It could be argued that Dhoni’s technique; is as far from the traditional coaching manual, as a new combat video game is from Sun Tzu’s ‘The Art of War’. But what is salient in his tale, is that he resisted all the temptations to drift towards cricketing conformity, as far as batting fundamentals were concerned. Hence the world was able to savor the ‘helicopter shot’, amongst other things. Dhoni’s staunch belief in his own methods however unconventional, in many ways laid the foundations for his journey towards superstardom.

Employees entering a corporate culture, feel an organizational pressure to streamline their actions, as per the ‘company code’. But in an age, where innovation is becoming fundamental to the success of any company, the only manner in which a culture of creativity can be stimulated, is by allowing these ‘behavioral outliers’, the freedom to be their own selves. Many new recruits intimidated by the pressure of the tried and tested systems, often abandon their endeavors to try and seek a different way of doing things. It is only those who have an unshakeable ‘Dhoni like faith’ in their unique skills; that succeed in hitting the innovation conundrum clean out of the park.

Reading and leveraging the changing trends
Surely timing has been a critical factor in the nurturing of the Dhoni phenomenon. Had he entered the fray a few decades ago, the very strengths we now marvel at might have been considered as glaring anomalies, almost impossible to overlook in those times. But his arrival on the cricketing scene, coincided with the period that the limited overs version of the game, really began to assert itself as the popular choice of the masses. And the strong trajectory of that perception really gave Dhoni, the escape velocity his career needed; to break from the gravitational confines of the traditional past, and launch into his own orbit.

The business world is all about anticipation. Corporate think tanks need to develop their sensorial inputs, in terms of what is likely to be the next wave. Changing societal, environmental, governmental and consumer trends; all have the power to completely disrupt ones carefully crafted business plan. What was once valued, can face the prospect of obsolescence because something changed-often at such a subtle level that almost no one has noticed its swell. For instance the success of reality television in our country today, is also down to the fact that the viewer’s attitudes and aspirations have greatly changed from before. Only those corporate players who like adept surfers, know exactly which wave to ride, will be the ones successfully coping with the oceans of change, sweeping the business world these days.
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To be fair this is just scratching the surface, as far as lateral revelations pertinent to the corporate world, emerging from Dhoni’s career go. His captaincy exploits definitely merit a separate mention (coming soon). But the very idea is to learn from his unorthodox approach. The intention is to draw inspiration from his unlikely success story. The aim should be to assimilate his contrarian ideas. All with the goal of ensuring that the search for new management insights, never quite leaves us stumped…

The writer is a creative thinking trainer and an independent brand consultant. He is the author of the book, ‘The Madness Starts at 9’ and also the patron saint of a footballing movement called Juhu Beach United, that celebrates, ‘the unfit, out of breath working professional of today’.

We welcome your comments at gamespeopleplay@sportzpower.com

(The views expressed here are those of the Author and SportzPower need not necessarily subscribe to them)

INSIDE OUT - Global Sponsorship Footprints: The Indian Blueprint II

SportzPower Team — Mon, 11 Mar 2013 05:00:06 +0100

WHILE Venky’s has had a traditionally unorthodox approach to Sponsorship from an Indian perspective, there are other Sponsors who historically have been, and currently are still somewhat involved in cricket, and also remain entrenched in marketing strategies that have an inward-outward sponsorship balance approach. These are instantly recognizable brands that have a significant market share in their respective products, and are also seasoned in evaluating the changing valuations & popularity of sports.

It is these Sponsors who have undertaken an effort to find brand dissemination through sports and properties with a more affordable price floor, and over time, a higher potential ceiling for returns to sponsorship money. From their perspective GBRI parameters are likely more relevant now, and cricket may not feature too prominently in their Sponsorship plans.

From that perspective, there are sports that are likely to improve Sponsors’ GBRI parameters, and on occasion, India is the nucleus/target market for the sports’ promoters. Such sports properties promote the sport in India, have a global footprint through international events & the Olympics, and above all else, fill a void in advertising space without emptying one’s pockets. Increasingly however, they are setting out the blueprint for getting global footprints in Indian properties. A perfect example of an affordable property in a sport that is likely to build a Sponsors’ GBRI is the Hero Hockey India League.

While cricket now has a ways to go before it’s even considered a global sport in the absence of the Olympics participation, there are other sports that not only have a semi-global presence, but they also target countries/continents that potential Sponsors could one day want to have a marketing strategy for. Bharti Airtel and Hero MotoCorp are two of the most respected corporations in India, and when it comes to sports, as Sponsors they have a uniquely expansive brand dissemination quotient.
Airtel has involved itself with global properties such as football and has increased its sponsorship of global properties such as marathons, and the EPL. Recently, it came on board as the associate sponsor for the Hero Hockey India League, a property that is likely to become a mainstay over the years.

Hero MotoCorp has of course been involved with Hockey for a while, but it’s now that its involvement in both club and country Hockey is starting to become its mainstay. As the global sponsor for FIH, and the title sponsor of the Hockey India League, Hero MotoCorp will now have a global footprint in a sport that is clearly India-focused.

Take the example of the Hero World League Round 2 - it isn’t often that a sport that is on its renaissance tour has as diverse a participation band as Japan, Oman, Kazakhstan, Russia, Malaysia, Ireland and China - for a qualifying tournament at that!

And with its deep and age-old involvement in Golf which is now set to become an Olympic sport, these are two sports that are value for money investments. Should it desire at some point to target its core business competency, Hero MotoCorp would be well-placed to tap into a target demographic where F-1 and MotoGP are being ably led by the successful BIC events owned by Jaypee. India has great golfers, and now it has extremely talented racing drivers both at the F-1 level in Narain Karthikeyan, Armaan Ebrahim and Karun Chandhok, as well as at the Karting level in Jehan Daruvala and the Maini brothers. Even Captain Cool (or “Mad Max” as he is known after his whirlwind double century) has his own motorbike team, so the rest of us can’t be far behind in realizing its potential.

The Sponsors’ successful strategies could be because they lend their brand to properties solely as Sponsors, and some of the success could be because they have built credible reputations for leveraging the return to sponsorship in any property that they support. Not surprisingly they at times support the same sports events, and similar sports. They are looking outwards without compromising on the quality of the sports events that they support in India, and in this tightening economy, they are finding a global stamp while reducing the cost implications of supporting pricey properties. Perhaps in the future they might look at football, motor racing, basketball or tennis, but the fact is that the global footprint starts at home, and when it comes to leading from the front in Sponsorships, it’s hard to question the strategies employed by Hero MotoCorp, Airtel, and to a slightly lesser extent, Venky’s. Smart strategies at a cost-effective price and with a sprinkle of good luck: it seems the icing is often the most lucrative part of the symbolic pie.

(CONCLUDED)

Global sponsorship footprints: the Indian blueprint I

Desh Gaurav Sekhri — Mon, 04 Mar 2013 02:53:24 +0100

WHILE any analysis on sports sponsorships usually begins with cricket or along those lines, in recent months there has been a trend that has little to do with cricket, and more to do with core business practices. Today, there are lessons that corporations dabbling in sports sponsorship or ownership models have learnt, and not all of them are mutually exclusive to corporations’ business strategies. But, business strategies and low-hanging fruit aren’t often synonymous with visionary market reach synergies, and today what seems to be a last ditch mass exodus from the pricey cricket club ownership and/or sponsorship models is instead more likely a long term vision set into motion by demand/supply considerations, and a recognition of inter-spatial growth ceilings.

Whether we like it or not, cricket will dominate every discussion when it comes to sports in India for many years to come. As a front-runner, and for the longest time the only contestant in the race to monetize the business of sports, it has earned the right and privilege to be recognized as the national sport of India. It has created stars, made household names of its sponsors/owners of its properties, and for any corporation that would like to make a bold and far-reaching statement with its domestic market strategy, there is no other such opportunity on this continent that can compete, despite its hefty valuation. So, for corporations such as Pepsi, Micromax, and Videocon to name a few, investing in cricket is undoubtedly the best way to disseminate brand recognisability through sponsoring cricket in any of its variants in India. One could contest the pricing or the artificiality of the valuation floor, but the fact is that cricket today has an inflexible and inelastic price floor, so it will likely not buckle in its estimated pricing, at least in the short term.

However, cricket is becoming synonymous with a domestic growth strategy because it appears to have maxed out its growth model and footprint across the world, and understandably so. It’s a technically counterintuitive sport to embrace for Asians, Europeans and both North & South Americans, and for those countries where Baseball or Softball are rooted in society, it’s a tough nut to crack. American football and the National Football League (“NFL”) in the US are facing a similar limitation to the sports’ growth. Clearly the most popular sport in the U.S. for the last 40-50 years, the NFL has become the most powerful and lucrative professional sports league in the U.S., expanding into new territories as its might increased manifold over the last four decades. But, a grim reality for the NFL is that the sport isn’t likely to increase its footprint and in fact may have maxed out its growth projections. Today, the league and its owners are bracing themselves for a much smaller revenue pie, and already the impact can be seen in the renegotiated broadcast dealings and the lower salary structures for superstars such as iconic quarterback Tom Brady of the New England Patriots.

The NFL has historical projections and precedents to lend it a more viable vision ahead of time, but the impact on owners, sponsors and teams could alter the dominance that the NFL had over the other North American leagues, and the international map is shrinking with respect to its expansion plans.

Cricket too will have its share of shrinking avenues, a natural and artificial growth ceiling and at some point the competition will get a look into sharing the pie, whether inter-sport or intra-sport (domestic or international). So, the future for investment in cricket will need to take into account a domestic-heavy stakeholder make-up and a ceiling on revenue generation. It will also need to take into account the metamorphosis that its traditional investors and its competitor sports will likely undergo sooner rather than later.

There is a change in the global sponsorship strategy that the leading corporate stakeholders are incorporating in this next phase of market penetration and footprints. And the first lesson that the top Indian corporations who sponsor sports with an international outlook (“Sponsors”) have learnt, is to stay away from owning and managing professional teams in Indian or international leagues. Not only is the Indian professional sports domain too narrow and restricted, it also does not have the fiscal and managerial growth model to justify running a professional team in India or abroad.

This may change over time, but a look at the most successful and imprinted Sponsors, shows the clearly demarcated sponsorship over ownership model that the Sponsors have deployed. Recognizing that advertising without immersing in a nascent sports domain is the best way to channel passion with responsibility, Sponsors have ensured that the valuations of the properties that they invest in, have a clear global brand recognition index (“GBRI”) that far outweighs the rupees or dollars that they put into the sports event.

Indians don’t have the historical expertise or knowledge of how to monetize sports properties or infrastructure, so we either have to test our skills and take our lumps along the way, or we have to outsource the management and sponsorship responsibilities to firms from sports jurisdictions where the expertise exists. The former often ends up being an inefficient and backbreaking lesson for some team owners/property owners, either in India or abroad (more on that later), and the latter is an expensive proposition and often may not help build the core business learning skills of young Indians in the sports management and sports events spheres. More importantly, ownership of a team doesn’t necessarily mean a viable revenue model, and as sports become competitive, this trial by fire may end up scorching some of the sports investors.

There are a few Sponsors that have shown a consistent side when it comes to choosing and supporting sports properties that are on the upswing, and which over time help their footprint yield positive GBRI’s from the get-go. Venky’s was the first to make an international statement by sponsoring international athletes, and by purchasing the Blackburn Rovers. While the latter has had mixed results due to a bevy of factors, the fact remains that Venky’s has, for a fraction of what global Sponsors pay, made an international footprint that supports its positive GBRI. Perhaps it ventured a bit too early into ownership and management of an EPL club with a hostile fan-base, but still, it had the vision to tread where other Indian firms had not. Its other forays into Sponsorship have also been futuristic and laudable.

(TO BE CONCLUDED)

Crystal Ball Gazing on India In The World Of Motorsport In 2013

Kunal Shah — Mon, 25 Feb 2013 02:50:05 +0100

HAPPY New Season! That’s the best way to start my first column of the 2013 season on SportzPower. This column started way back in mid-2010 and I am happy that I am entering my fourth F1 season for all SportzPower readers and subscribers.

Pre-season testing commenced in early February, however, it wasn’t before the sad news of HRT shutting shop came through towards the end of last year. The news is sad for two reasons; first, we will have one less team and two less cars on the grid, not to mention the few hundred F1 staff that will be unemployed! Second, Narain Karthikeyan, India’s only F1 driver in 2012, doesn’t seem likely to have a slot on the grid for 2013. In the past few weeks, there have been rumours linking him to India’s only team Sahara Force India, but these are yet to be confirmed.

This would also mean that for the first time since 2010, we could have no Indian driver on the racing grid. I wonder if this would impact ticket sales for the 2013 Indian Grand Prix or TV viewership of the sport in our country.

On the topic of TV viewership, the sport saw an overall decline in viewership last year. From 515 million viewers in 2011, the total figures for 2012 were down to a little over 500 million. Yes, while there is a dip in the audience reach, the sport still does reach out to about half a billion people around the world! The two primary reasons for this drop are programming clashes (primarily for the Chinese market) and a switch from free-to-air to pay-per-view channels (for the European markets).

While the first issue can be dealt with, it is the second change that interests the sports marketer in me. F1’s viewership figures have traditionally been built on free-to-air channels, but a move to the likes of SKY TV in the UK, have seen a drop in the numbers. However, there are two interesting pointers I take away from this. First, pay-per-view TV channels pay FOM more money for the TV rights, which in-turn increases revenues for the teams (they get a share of the TV revenues, remember?). Second, the profile of the audience increases significantly (more educated, focused, etc.) and hence could change how sponsors evaluate their sponsorship contracts with the teams. Given how sponsorship patterns are evolving, in my view, sponsors wouldn’t mind paying that extra buck if they know they are targeting a very specific audience with a higher rate of conversion towards using their brand / services.

Away from the business of television contracts in Formula1, I expect 2013 to be a very competitive season and that is because of the consistency of rules and regulations from last year. While we may not see seven different winners win the first seven races this season, I do expect competition to be closer than it was last year, both at the front and the middle of the grid. Pre-season testing in Jerez and Barcelona hasn’t revealed much and it will only be during the Australian GP weekend in mid-March when we will be able to pin-point the form factor for the first few races of the season.

Sticking to the point of form factor, Mahi Racing, Mahendra Singh Dhoni’s racing team in the World Supersport Championship won the opening round of the 2013 season at Philip Island in Australia. The team was guided to a hard fought victory at the hands of their Turkish rider Kenan Sofuoglo. The other Indian two-wheeler racing team, Mahindra Racing, has shown promise in the pre-season tests in the Moto3 season and I hope that 2013 is when they take the obviousness of ‘Mahindra Rise’ slogan and deliver podium performances. I am sure that the success of both these teams will spur the growth of two-wheeler racing in India.

On the four wheeler front, Sahara Force India will enter their 6th full season as a Formula1 constructor. While the team is yet to confirm their second driver alongside Paul Di Resta, the team is hoping to build on to the success they enjoyed in 2012 where they scored more than a century of championship points, their highest ever since inception.

Indian kart racers, Kush Maini and Jehan Daruvala have achieved early success in their categories in the World Series Karting races in Europe with Kush creating history to become the first Indian to win a WSK race. Saloon racer Sailesh Bolisetti has set his eyes on the Euro RaceCar Championship, whereas Audi’s racer Aditya Patel is yet to announce his plans for the upcoming season. While I might have missed out on mentioning other deserving racers, I am sure India will be well represented across the world’s best racing championships in open wheel, karts and saloon car racing. This also means that Indian companies will have a list of drivers that they can choose to support and sponsor in 2013. (Will they?)

And last but not the least, where will Narain Karthikeyan and Karun Chandhok be? For Narain, if he doesn’t get a seat in Formula1, I believe he will head to the USA where he has achieved past success in competitive racing. As for Karun Chandhok, I expect him to repeat a season in the World Endurance Championship with a works team (I hope!) and better his performances from last year. In short, 2013 will have the Indian Motorsport fan entertained more than he (or she!) has ever been before! Are you ready?

The author is a former racer who blogs on www.kunalsf1blog.com as well as www.isport.in. You can follow Kunal Shah on twitter @kunalashah.

We welcome your comments at pitstoppundit@sportzpower.com

(The views expressed here are those of the Author and SportzPower need not necessarily subscribe to them)

Matching The Fix: Good Governance In Sports

Desh Gaurav Sekhri — Thu, 21 Feb 2013 04:32:22 +0100

2012 WASN’T a great year for governance in sports, and the first couple of months in 2013 seem to be off to an even rockier start. With the Lance Armstrong ‘confession’, and anti-doping measures taking on a whole new meaning across other professional sports, the storm just doesn’t seem to abate. And now the football scandal that is still under investigation as Europol investigates the alleged match-fixing of approximately 680 football matches, include World Cup and Euro qualifiers, and even two Champions League games. While governance across the world of sports is being challenged, Indian sports aren’t far behind when it comes to the need to revamp good governance practices. In fact, good governance practices for sports administration in India are a serious challenge today. And, with the International Olympic Committee (“IOC”) recently suspending the Indian Olympic Association (“IOA”) there seems to be no real solution in sight.

Over the last century, there have been scandals that changed the very face of a sport, or the dynamics of the sports industry. Even the most sophisticated sports jurisdictions have faced challenges, and there could be lessons for Indian sports administration & governance from some of those scandals. Not every global sports governance scandal will have lessons for India, but there are some which may.

Perhaps the best-documented cleaning up of a sport was as a part of the rebuilding from the ‘Black Sox’ scandal that hit the North American-Major League Baseball in 1919. After allegations and eventual confessions of match-fixing during the World Series by eight players of the Chicago White Sox, the first ‘Commissioner’ of professional baseball was appointed with powers that extended to every facet of baseball governance and administration. Judge Kenesaw ‘Mountain’ Landis took the MLB Scandal and set an example of transparency, accountability and governance. The office of the Commissioner remains in Baseball and in fact most professional sports leagues across the world (and until recently the IPL as well) have their own offices of the Commissioner.

From the current IOA-IOC situation’s perspective, the most relevant scandal would be the Salt Lake City Winter Olympics 2002 (“SLC Olympics”), recently brought back into the spotlight by former U.S. Presidential candidate Mitt Romney, as an example of his ability to handle crisis situations and balance budgets. Until then considered corruption-free in over 105 years of its existence, the IOC was set back by allegations of bribery by the bid-city organizers of members of the committee, resulting in the eventual expulsion of ten members of the IOC, and sanctions on additional members.

The ramifications were swift and lasting, and eventually the make-up and formation structure of the IOC was re-evaluated and deconstructed, with more stringent term limits, along with higher representation of former athletes. The scandal almost scuttled the SLC Olympics, and took a heavy toll on fund-raising and infrastructure development. Eventually, the SLC Olympics were brought back on track through a corporate management and governance system, reduction in costs, and a sizeable federal stimulus so as to prevent any further delays or shortfalls. Essentially, the state and federal governments along with investors and sponsors found a way to bridge the gap and stem the tide, saving what would have been a catastrophic dent on the reputation and credibility of the IOC & event organizers, the U.S. administration, and investors/sponsors across the world. In many ways, this situation was similar to the Delhi Commonwealth Games 2010 controversy, with one major difference- for the SLC Olympics, a solution was found, and a measured response was initiated.

For the purpose of this article, “Indian Sports” shall mean- the Indian sports domain that includes athletes, federations/governing bodies, and investors/sponsors.

Despite there being striking differences between the international precedents discussed above and the scenario in Indian Sports, there could be some vital lessons to be learnt and applied to the Indian context.

Setting up an authoritarian office of the Commissioner as in the wake of the Black Sox scandal may not help Indian Sports, due to the vastness of the Indian Sports domain & its diversity, and also because a single-figure of authority may not be able to instill governance in perpetuity. In fact, Baseball remains mired in alleged scandal due to the performance enhancing drugs-era that has marred its success.

However, if for India the concept of the ‘office of the Commissioner’ is expanded to a board of directors and working sports committee(s) with powers to enforce and execute within the Indian Sports landscape, then there might be merit in this. The board of directors could consist of distinguished individuals with relevant experience in one or more of the following skills- administration, business, sports management, and sports participation (i.e. athletes). The board of directors would then empower and delegate tasks to the working sports committee in collaboration with the relevant stakeholder as the case may be.

Similarly, as was the case with the SLC Olympics, a single figure of authority may not be the solution for Indian Sports. However, by expanding the concept, a case can be made for establishing a board of directors along with a working sports committee to be able to action similar results and handle crises better than a somewhat disorganized sports administration and governance structure than currently exists in India.

In India, the role of the state and central governments will be more significant than in other jurisdictions, especially for infrastructure and funding. This will hold true -especially for amateur sports in the absence of a collegiate system such as the National Collegiate Athletic Association in the U.S. However, by involving the respective government representatives along with private sector individuals in the board of directors and the working sports committee, the focus should be on creating sports governance and administration overhauls that encourage and enable broad-based growth. Single catch-all legislation such as the draft Sports Bill will likely not have solutions for every governance issue that India faces.

So, it’s important to take the lessons from relevant international precedents, and find a situation-specific solution. Establishing a decision-making board of directors experienced in corporate governance, sports administration, and sports development, is a good first step. The board of directors should then create and delegate tasks to working sports committees with priority specific expertise.

Governance is about systems and compliances, so we will be amiss if the very way that we go about initiating change in Indian Sports, is done in a manner that lacks systems or organization. The fundamental of sports is about team work. The fundamental of governance in Indian Sports too should be about team work, and the contribution of every set of stakeholders in their particular areas of expertise. Involve each and every one of the stakeholders that ought to have a say, but ensure that they are provided the forums that give them in particular a chance to maximize their skill-sets for the greater social good.

Brand-Kill

Desh Gaurav Sekhri — Mon, 21 Jan 2013 03:38:04 +0100

IN WHAT has shaped up into the Grand Canyon of falls from grace, the once legendary Lance Armstrong is grasping for a semblance of credibility as his legacy turns to dust around him. On a tell-all with Oprah Winfrey, Armstrong confessed to being a performance-enhancing drugs (“PED”) user during his unprecedented run of seven Tour-de-France victories.

An erstwhile tale of courage and superhuman will-power, Armstrong is now confirmed as the single biggest ‘Brand-Kill’ in the history of world sports. Today, he has supporters and critics, and unfortunately his overcoming testicular cancer en route to being arguably the most revered athlete perhaps of all time remains a mere footnote to what was and will now never be. Armstrong was inspirational because he won despite the setbacks, and he was seen as the face of resistance in the wake of a killer disease, leading to the creation of the global behemoth charitable foundation - ‘Livestrong’. Very little now is left of Armstrong’s legacy despite his unreal fight against cancer, and the reason for this is his perceived reputation as a systematic ‘bully’, if you will.

Everyone loves the underdog in sports, and Hollywood (and now Bollywood) has made a mantra out of stories that trace the challenges and struggles of the bullied against the bullies. The haves against the have-nots. The clichés endure, but in Armstrong’s case, so did his legend and the greater good. Now however, as the United States Anti Doping Association (“USADA”) in its 1000-page report has conclusively proved, Armstrong was the epicentre of the systematic and wide-spread doping that sullied the sport of cycling since the beginning of this generation.

Not only that, as the report has shown, he stands guilty as charged of bullying and tormenting individuals into crossing the line in his favour. Now, no one for the time being knows what exactly took place, and while there are no innocents in a whistle-blowing/covering up of this magnitude, it is the perception of Armstrong as a bully who lied himself blue in the face denying his PED use, which is going to take a huge toll on his brand value.

A remorseful superstar may face challenges, but for the most part their brands resurrect with their humility and on-court achievements. Armstrong will not be granted that consideration, because an admission of PED use will push his life-time ban until he’s at least 50, even if truncated.

Athletes make mistakes, and are forgiven no matter how egregious the mistake may once have seemed. From the looks of it however, Armstrong may not have made a mistake here - in fact he may have been the perpetrator of the entire PED chain in cycling during his reign.

Since he is indeed guilty and has repeatedly lied about his PED use, there isn’t a rule in the fictional code of brand-endorsement that he hasn’t broken. There could be numerous fans of his who feel that his deception is minor when compared to what he has done to further the fight against cancer, or when compared to other athletes who are found guilty of assault, battery, or even more grievous crimes.

Had it been restricted to mere PED use to overcome the battle with cancer in a tainted sport, Armstrong may have been forgiven and reinstated. But, given the unjust enrichment, the coercive and bullying tactics, and the most damning of them all - the use of PEDs even before his battle with cancer, makes his case one of ‘Brand-Kill’.

And it extends beyond just Armstrong, because in the wake of his confession, there will be a serious investigation into whether or not cycling will remain an Olympic sport. The current wisdom is leaning towards cycling no longer being an Olympic sport, which in effect would ring the death knell for a predominantly amateur-driven sport with athletes experiencing an Olympics-success driven professional career. So, while Armstrong may not be entirely to blame for the seeming end of amateur and professional cycling as this generation has known it, his is the defining Brand-Kill that will seal cycling’s fate.

Sponsorship and endorsement agreements are an interesting construct. They tend to be onerous on emerging stars, and deferential towards established superstars. Commercially acceptable negotiation points have a large say in how an agreement is typically drafted and signed. Sponsorship agreements are where industry and sport-specific knowledge have the most value-addition during the entire process. However, if there is one clause in most sponsorship agreements that remains firmly embedded in the essence of the agreement, it is the clause where either party to the contract ensures that he/she/they must at no time do anything that is likely to adversely impact the brand, goodwill, reputation, or wholesomeness of the arrangement that both have entered into. Materially detrimental acts or omissions of the preceding sentence’s nature, transcend superstar status, relationships, or hand-shakes that are seemingly more solid ‘than oak’ a la Jerry Maguire.

So, when the seemingly most wholesome brand ambassador comes a cropper due to poor results on the field of play, or personal issues such as infidelity, the relationship between the sponsor and athlete often endures and survives. But, when the action, omission, or alleged conspiracy and systematic fraud has a material adverse impact on every aspect of the sponsorship arrangement, even the ‘bloodsucking lawyers’ (of Jurassic Park infamy) counsel is taken and adhered to - both within the construct of the agreement, and the termination of the once mutually beneficial arrangement.

And that is why the once seemingly impeccable and implacable brand that Armstrong had built is coming crashing down - because the allegations are impacting the reputations of those who supported him, and those who engaged him as their brand ambassador for all the erstwhile right reasons.

It will be well nigh impossible for him to come back from this - whether or not his confession was contrite or sincere (and there are not many that have bought into it), because his mistakes go much beyond repetition, knowledge and vindictiveness. And because a willful breach of contract is the most grievous breach there is in sponsorship agreements, as his lawyers must have told him.

Perhaps I’m wrong, and Armstrong will remain a divisive but popular icon, but if ever the odds were stacked against an individual retaining his or her brand, then this situation has got to be it.