The world over, the sports ecosystem—players and athletes, equipment, events, sponsors, training academies, and agents—has been a procreator of business opportunities, raking in billions of dollars. Though unorganized, this sector is fast-emerging in India with several players willing to bet their time, resources and cash on it.
The burgeoning economy has increased discretionary spending powers within the middle class. Moreover, satellite television has introduced a variety of sports into the arena coupled with the rapid growth in advertising has local and international companies eyeing this lucrative, underdeveloped market. The sponsorship market is estimated at $250 million per year, while TV rights worth over $350 million per year—a total amount ($600 million) that almost equals FY 2009-10’s union budget estimate for the Sports Department by the Ministry of Youth Affairs and Sports.
Obvious opportunities abound at every side of the field, as long as you play the game right. “There is a positive cycle built around sport, and people want to play,” says Charu Sharma, commentator and sports management consultant. “However, we need people to create more training facilities right now.”
According to Nandan Kamath, Director, GoSports (a Bengaluru-based career management startup), “At a basic level, we have an opportunity to change the way sports is perceived and make it a potential career.” GoSports identifies and manages talent, bringing the focus back to the athlete from administrators—as has been the case over the years—with a long-term of goal of improving the sporting environment. The core of its mission stems from bare facts: for a nation with 1 billion people, India has produced a negligible number of successful sports icons. “We need new breakthrough talent to create trail blazers,” he says.
Sport, in India, is largely synonymous with cricket, and maybe tennis. A career in sports, however, is still questionable as opposed to, say, a high-paying, low-risk job at a multinational company. “Right now, there is no obvious return on investment for an athlete,” adds Kamath. Identifying this to be an opportunity, GoSports has structured its business model to work like a venture capital firm, earning a service fee from the athlete or a percentage of sponsorship. “We treat athletes like our assets—we appreciate their value and invest in them,” he says, referring to his firm as a product development company. “In 5-10 years, we can maybe take a stake in their career.”
Alongside, sport associations have evolved as power centers, given the close involvement of politicians, leaving the game neglected. “Associations are suspicious of outsiders; they aren’t wise enough to accept the benefit of partnerships,” emphasizes Sharma.
Root Sports—a 2007-startup dedicated to improving the scope and status of football in the country—comes in where associations and clubs have seemingly failed. For instance, it works with the Sports Authority of Andhra Pradesh, earning a commission from marketing tournaments like the SAAP Premier League. In addition, it has a consultancy arm that works with football events across India, such as the Budweiser 6VS6 International Cup. The firm has also responded to the lack of coaches in India with its Football School, which offers training to kids under 16. It follows a structured curriculum while simultaneously creating platforms for the students to compete. “We want to develop more amateur and professional level football tournaments as our sole properties,” says Bappaditya Bhattacherjee, Co-founder, Root Sports. Five years down the line, the company wants to be synonymous with any football event in India.
For pioneers of the sector—like SPT Sports Management Pvt. Ltd., founded by Amit Saran in 1998—organizing inter-school tournaments was the first preference; establishing a sports academy was a natural corollary. “I experimented with various sports at the grassroot level and found my calling in football and golf, knowing there was greater success here,” says Saran. The SPT academy, set up in Bangalore in 2004, identifies and trains children with potential in the age group of 5-15 years. In turn, its tie-up with the National Scouting Report (NSR) helps facilitate sports scholarships for those interested in pursuing a sports career. “We spot talent, track their academic performance, and then send referrals to colleges overseas through NSR,” adds Sarin.
Mumbai-based sports academy The Sports Gurukool found a similar start, too, in 2004. Capitalizing on the city’s congestion, Jay Shah set up India’s first full-sized tennis court on a school terrace in Santa Cruz as an open center for children to develop their talent in sports. Since then, it has established five academies across Mumbai as recreational centers for children and adults to play a variety of indoor and outdoor games. “India does not have community centers for sports. Our objective is to create a culture of sport through activities and infrastructure,” says Shah. These centers also cater to schools with no sports facilities—another income generating avenue for the startup.
Outsourcing school curriculum has become increasingly popular, especially with new international schools mushrooming in metros like Mumbai and Bangalore. Moreover, schools are recession-proof—a big selling point for many. For instance, take Edu Sports, the business vertical of Bangalore-based Sportz Village. Way back in 2003, Saumil Majumdar saw a basic consumer need for playing facilities for kids; this propelled the launch of his sports venture in 2008. The firm set out to convert 30 plots of land into playing fields for children. Running on the back of a retail model, it charged Rs. 800 a month as entry fee. Unfortunately, bad access to land in urban areas didn’t do the vertical any favors; it shut down in three years.
Nevertheless, Sportz Village developed Edu Sports and it now services the sports and PE curriculum for 5,000 kids from KG to Standard IV across 13 schools in India. In a way, this led Majumdar back to his early desire to use PE as a pedagogical tool. “Sport is a powerful tool to solve disputes and develop team building,” affirms Majumdar whose firm’s value proposition lies on health and fitness. “Indians are ‘sporty’, but not necessarily into playing sports seriously. I found that this was a huge opportunity.”
Sports goods and apparel retailers can carve their own niche in this segment, too. For Ramakrishna R.K. Kalluri, founder of Playgroundonline.com, the sports industry presented a lucrative opportunity to distinguish himself from his counterparts. And he did so via a specialized online store. This web portal sells branded sports merchandise—everything from equipment, apparel, books and footwear to fan merchandise—through a network of partnerships with manufactures. This eliminates the risk of offering spurious items. Having a technology-based business also allows Kalluri to cater to tier II and tier III cities, like Cochin, Mangalore, Jaipur, Coimbatore, Surat and Ahmedabad. “These regions are good growth areas for us, as they have no access to branded, quality goods,” Kalluri explains.
In addition, Playgroundonline.com is looking at the NRI market overseas and the gifting arena as two other areas of opportunity. According to estimates, the domestic sports goods and apparel market is pegged at Rs. 2,500 crore. “We will also be targeting the B2B market—schools, academies, corporates and housing complexes,” says Kalluri.
While these ancillary activities generate revenue, the big bucks still come from corporate events. “Tapping corporate events made our business model viable,” says Saran. Corporate firms are scheduling time for team building and wellness activities, as well as inter- and intra- corporate tournaments. For sports management firms, this has provided a good medium to promote games like tennis, table tennis, badminton, football and golf, with a set number of events organized each year. “We are soon going to enter the corporate sector, and we want to franchise the concept with our brand,” says Shah.
Root Sports used this as a launch strategy in 2007 with a tennis ball cricket tournament that had 32 companies compete with each other for a big cash prize of Rs 1.2 lakh. Sportz Village, too, jumped straight to corporate events in 2004 after its first vertical bombed. Being a sports consultant to corporate events generated a flow of money, while Majumdar experimented with multiple models, staying connected and flexible with the market. “Each model made sense at that time; we felt it won’t stop making marketing sense, hence kept it,” he says, referring to the four different businesses incubated under Sportz Village over the last six years.
Intgrating technology into business, Majumdar launched Mera Sports in 2006-07 as a multi-channel, social networking platform in sports. The beta model is slated to go live in a few months, while the help line is already live for queries. In the same year, he added another vertical: ticketing. He bought rights to be the hospitality agents for 2007-World Cup. Since then, he has extended this arm to Formula 1, too. Giving this opportunity an extra edge is Saran’s SPT, currently the only player in the sector with a full-fledged sports tourism arm. This vertical organizes everything from tickets, travel logistics, and stay to international events like the British Golf Tournament.
As a parallel business opportunity, Kamath is now in the process of developing a training program for retired cricketers—a post-career management communication program for becoming sports commentators and coaches. Similarly, Saran’s SPT has tied up with the World Golf Federation, training retired golfers to become instructors. “With the number of golf courses growing, there is a massive shortage of trained instructors.” says Saran.
While the non-obvious opportunities are gaining traction in the sector, Sharma believes that the growth curve will be slow. Moreover, as the government’s priorities are focused on amenities and infrastructure, very little that can be expected by way of funds for the sports fraternity. “This industry has to be driven by the private sector—and a lot of passion,” claims Sharma. “Startups should get hold of a good fund, not a VC.” Alongside get the media heavily involved in your events and activities. Numbers always make for good viewing—this is where the untapped opportunity in tier II and tier III cities comes in.
While each sport-related venture and vertical seems to have found a target audience and is spinning money with it, the key question remains: who can churn out the best formula for success. “Companies should under promise and over deliver,” suggests Sharma. The trick, then, is to toy with your audience’s passion and boycott any returns on investment—for some time, at least.