Saturday, June 16, 2012

Indian Football Market: Potentiality and Opportunity

In my previous writings, I discussed the problems and solution of Indian football and its development. Then I have also discussed the vision and the following path. But it’s very important to understand the market analysis of Indian football, the opportunity in India for football. Before launching any product or service it is very necessary to know the potential market of that particular product. Here in this writing I am discussing the potential market of Indian football.

India is a powerhouse for the sport football, like many other countries in the world. With the talent coming from all different corners and with the brimming opportunities, we see India as a team moving forward. The passion for the game is spread all over India but is really high in many pockets, where football is equally or more popular than cricket, such as Goa, Kolkata, Kerala, Bangalore, parts of north India  and the whole northeast of India.

Indian football is currently going through a major transformation. Efforts are being made by the sport authorities, clubs, individuals and also corporate houses to bring this game into the limelight just like cricket. All India Football Federation (AIFF) has restructured their administration and money has been poured into the game, so more windows of opportunity are opening up. The AFC have also worked hard to professionalize football in India. They now insist on particular academy structure and management structure for clubs to be recognized and allowed to play in the national league. Ten years ago, this level of professionalism was nowhere seen. FIFA is also convinced of the huge potential of India in terms of football development. In 2007, FIFA launched the $8 million "Win in India" project to build a range of 12 football grounds across the country. In 2012, AIFF started 4 regional academies and 1 elite academy in India with the guidance and support of FIFA and its technical committee.

The corporate houses of India are taking special interest to develop and also give proper shape to football. Essel Group envisioned the formation of a professional football club and Mumbai FC took shape. Pune FC was formed by the Ashok Piramal group. United Sikkim FC was formed by our very own football icon Baichung Bhutia in coordination with Fidelis world, a Dubai based company, Kolkata based Computer Company Chirag is planning to buy maximum share of Viva Kerala but finally sponsored the team and re-launched the team with the name of Chirag Keral, Dubai based NRI organization Dodsal group is starting their football club named Dodsal FC from Mumbai by this season. Even many are showing interest to hold the stakes of various Indian football clubs. UB group is already holding a 50% stake of 2 Kolkata giants, East Bengal and Mohun Bagan, an NRI firm Anglian is holding the stakes of Shillong Lajong FC.  The Pailan group owns the team Indian arrows, full with potential Indian U-23 players formed by AIFF itself. The corporate houses have not limited themselves to just owning Indian clubs but they have also reached out for international clubs, like the Queens Park Rangers is co-owned by the Mittals, Venky’s own the Blackburn Rovers. The Ambanis in collaboration with Sahara wanted to buy Liverpool FC. The Indian company Jain group was in advance stage to buy Everton FC of UK in 2011-12. Steel giants Jindal Steel Works (JSW) are going to launch a professional football club based in Bangalore by the end of this year. Venky’s are also planning to start Blackburns Rovers India with an academy, from Pune soon. Reliance-IMG bought Broadcasting rights from AIFF for marketing of Indian football for the next 15 years. Bharti group also signed an MOU with AIFF for the development at the grassroots level worth RS.100 Cr by next 5 years. Panasonic came as a title sponsor of the Indian national team worth Rs. 5 cr per year, initially for 3 years with a provision of extension, 2010 onwards.

Indian football has so much potential that they have been attracting even international clubs. In India 47% people of 1.2 billion claimed themselves as a football fan. The figure is much higher than the population of any country in Europe. So automatically, top football organizations are trying to acquire the market of India. The far eastern, middle eastern country’s opportunities are already explored, but the Southeast Asia market has not been explored yet. India and China the two most emerging countries in the world, are the next target to open the new business opportunity. As China has some political issues within the country so, India becomes the first preference for the business clubs. Let’s see the recent interest of international organization in Indian market.

They are not only showing interest in the Indian football scenario, but are also contrbuting to promote it to the masses. Manchester United and their telecom partner of South East Asia "Bharti group" to produce a reality show called "Airtel-Rising Star" in India, Bangladesh, and Sri Lanka. The 3winners will get the chance to get a training in Manchester United Soccer School in UK absolutely free.(Initially the same concept was planned by Chelsea FC, they tied up with ESPN to produce a reality show called "Football Star" and wanted to take the winner of this show to their main academy in UK for training). Manchester United has a shop (merchandising) in the Mumbai- Pune highway, Bangalore and Kolkata. Bayern Munich wanted to set up an academy and their merchandising store near Kolkata, which however did not meterialized due to problems. But every year FC Bayern select 5/7 young players from India for few week camps in their international academy in Germany through different events.  Oliver Khan's last international match was played in Kolkata. Maradona, Rudd Gulit, and many international famous stars also came to India for the promotion of a various football events. In 2009, Britain's Liverpool FC joined forces with Indian educational institution Bharati Vidyapeeth and the English FA to launch the Abhijit Kadam Football Development Centre (AKFDC) in Pune. Liverpool FC has also started a football school (academy) in association with former Liverpool midfielder Steve McMahon at Delhi in 2011. Now Liverpool FC is planning to start their promotional store near Delhi. Premier League giants Arsenal, Manchester United, Tottenham Hotspur, Scottish champion team Celtic FC all have targeted talented Indian youths for training in their respective academies in UK or Scotland, while Chelsea has expressed interest in establishing a football academy in India. Italian football giant Inter Milan and Arsenal joined hands with Tata Tea and every year they select 11-15 young boys from India through various selection process, called ‘Tata tea Jago re’ contest for a camp of 2/3 weeks in their main academy. Even European champion club Barcelona FC’s COO had visited India to start an academy here and wanted to explore the hidden opportunity of the potential Indian market. They have even initially started their football school with the association of ‘Conscient football’ group near Delhi. All those international club’s football school fees varies between INR 2500 to 12,500 for each and every different kind of training, camps and programs, but all are very much successful and demanded in their corresponding markets. More than 300 kids between the ages 5-14, get training from each school, every year. Not only that recently, FIFA accredited internationally friendly match between Argentina and Venezuela, with all their international stars like Messi, Higuian, Di Maria, Aguero and all others played in Kolkata.

The viewership of the game is very high in India. This in turn attracts the advertisers who are also acknowledging the potentials of the game. According to the India-based TV ratings agency TAM Media Research, football in India today boasts of 121 million television viewers. Furthermore, a data study conducted by TAM Media Research between 2005 and 2009 found that India's football audience has increased by 60% within this five-year period. This trend was reinforced by a Nielsen survey in 2010 which found that 47% of India's 1.2 billion (2009 World Bank figures) population would describe themselves as football fans. In India EPL has around 90 million potential TV viewers. According to TAM research Football mostly watched by the male (around 83%), aged group between 15 to 35+ (around 93%), and section A and B (economically strong) (around 80%) group people. Even by looking at the market opportunity, advertisers started to look beyond cricket in India. In a recent data analysis, it has shown that advertising volumes has increased rapidly and now Soccer has become one of the primary sport to advertise for the brands. In India, only 17% aired programs of all sports programs are on the base of domestic football, which attracts around 55% of total viewership of sports and 12% of the ad revenue. Football has 76% of PR coverage in India, whereas cricket has around 24%. According to TAM report Telecom, services and auto industry is the top 3 industry which comprise of around 36% of the total ad volume during the football program in India. Hero, Bhart Airtel, and Emami are the top 3 private corporate who are showing interest in domestic football ad investment, where as for international football in this category top companies are Nokia, Tata Teleservices and HP India. Bharti ranks 5 among top 10 in this category. This 29% of investment in the advertisement gives 41% of ROI to these companies for investment in Indian football.

Not only that, even ‘On the ground’ the number of spectators is also increasing in India. There is  always around 100,000 fans present in the stadium in Kolkata for East Bengal Mohun Bagan match. Even the Olver Kahn retirement match consisted of 120,000 fans present within the ground. Even Argentina-Venezuela match played in Kolkata, was in front of nearly 100,000 fans. Baichung Bhutia farewell match against Bayern was played in front of 50,000 supporters in Delhi. In Guwahati for a friendly against Malaysia the ground was fully packed with 30,000 Indian supporters. Same happened in Delhi when India played against UAE in the world cup qualifier match.

Football is gaining momentum in India day by day due to the potential that is has within itself but much is still left to be explored. All foreign organizations are trying to explore the present opportunity of the Indian football market. But domestic organizations or clubs are lacking to do so. But an effort to give momentum to the game is sure to pay off not only in terms of financial gains but also with a name etched in history for joining hands in the revolution called "Football in India".

Monday, June 4, 2012

Football Business: How clubs can run like a business entity?


[This writing is based on the analysis of 3 project reports along with 2 case studies. Manchester United and Exeter city are the two clubs taken as cases and discussed the plans and opportunities of those clubs for their success. And all the data on Indian football are taken from a confidential report of the AFC on Indian football]

 
Sports is an industry. The companies own football clubs, this makes football clubs a BRAND
                                                                      ---Phillip Kotler (The marketing guru)

My previous writings on this blog are about identifying the problems in Indian football and trying to find the solution on that. But if we have the solution, then why AIFF or Indian football clubs are not implementing those solutions? Indian football is lacking with a proper vision and planning. With this writing, I would like to discuss two case studies about two football clubs. After reading this column, the readers will understand in a better way that where an Indian football club is lacking? Where we need to change? Even how the changes can occur?

Let’s start this discussion with a general view. Try to identify the costs-revenues model of a football club. [Based on A T Kearney football club business model]
Costs: Players wages, Transfer spending, Manager’s wage, Support staff wages, Merchandising, Asset maintenance, Administration or ground staffs wages.

Revenue: Various sponsors, Sales per activity- Match day ticket and program sales, Broadcasting television rights; By-products-Travel,Soccer schools, Real estate, Broadband, Finance, Catering services etc.; Asset Utilization-Stadium Significance and its right issues, Player transfer or sell, merchandising, and many other activities under the brand name of the football club.  

Now I am going to discuss the business structure of two different football clubs of different category.
My first case is on the world’s most model football club Manchester United, the world’s richest football club, which is worth GBP 1.4 billion. It’s not only a football club it is a business entity. That’s why their home stadium is called as ‘Theatre of Dreams’. Manchester United not only means a football playing club, it’s meant the Entertainment, the Business.
Manchester united have the largest fan base around the world. According to a recent survey Manchester United have around 659 million current fans all around the world, most popular football club in the world, and the number is still rising. Why they have such a strong fan base? 
Apart from football what else Manchester United means to us?
      Global Reach
      Continuity
      Visibility
      Recognition
      Trust
      Respect
      Brand Conscientiousness
      Propensity to buy

Now lets see how they earn so much money. They are running this club form basic things. The Management tries to earn from the smaller to smaller issues. Match day activity is the biggest thing to earn their money. Now see how a single match can earn so much money for the club.
         Match day activities (29%)
      Tickets
     Season and separate suites Tickets
     Travel, programs, Catering and Hospitality
         Broadcasting and Media (44%)
     TV deals for Domestic Matches
     TV deals for European Games
     TV rights Worldwide
        Sponsorship and Commercial (27%)
     Sponsorships
     Non Match-day Activities (Catering, Tours)
     Branded Products
     Other Activities (Finance, Betting)

The numbers of present sponsors of Man Utd are mentioned as below: 
      •     AON - Official kit sponsor
      DHL- Official logistic partner
      EPSON-official office equipment partner
      Hublot-Official timekeeper partner
      Airtel/STC/3/PCCW/TM/Globacom/VIVA/Turk Telecom/MTN/Zong/Beeline/Globul
                              -Official integrated telecommunication partner worldwide
         Nike - Official kit manufacturer
         Turkish Airlines - Official airline
         Thomas cook-Official travel partner
         Audi - Official automobile and dugout seat provider
         A.P Honda-Official Motorcycle partner in Thailand
         Betfred - Official gambling partner
         Singha/Casillero Del Diablo/Smirnoff - Official beer/wine/drinking partner
         Mister Potato-Official Snacks partner

Also Man Utd has special corporate suites and special facilitated seating arrangements within Old Trafford to watch a match. Lots of rich people spent a lot money to watch a match from those places and Man Utd earns a huge money by selling tickets of those special seats. Also Manchester United Soccer Academy and Manchester United Soccer Schools around the world is the biggest asset for the club to generate more revenue and establish the brand-Manchester United among the masses of the world. This activity makes them world’s one of the strongest brand.

The richest football club-Manchester united also shows us a great organizational structure to run a corporate house or a business entity.
Manchester United initially have 6 activities wings: Football club, Merchandising, Catering, Media, Hotel, and Other commercial activities. Each and every department have their respective officials responsible for more revenue in club funds. Football clubs earn from match day tickets and sponsors. Domestic and international merchandising of Man Utd with different local collaborations and sponsors worldwide. The catering service is managed not only on match day but also on non-match day on the ground or for private parties. The international broadcasting like MUTV, MU Now, or other telecommunication partners worldwide is managed through media department. Also websites are managed by this department. Example, Manchester United website enabling subscribers to take virtual penalties against their No 1 keeper. Other commercial includes Travel, Magazines, Resturant, Finance facilities. These are the special ventures of Man Utd to generate more revenue. MU Travel, MU Finance, MU coffee shop or MU Hotels are now spreading all over the world for more prospect and more opportunities. Recently in Singapore Man Utd is planning to issuing public shares and in India they have opened a soccer school and live coffee bar to grab more fan base. Even these all steps help Man Utd to recover from the debt very well and make them world’s richest football club.

My second case is a developmental  football club from southwest England, Exeter city FC, restructured after 2003 and back in mainframe in English football from 2008-09 season. ECFC Positioned at the ‘ heart of its community and with the Supporters’ Trust as its majority stakeholder, its leads the way in offering an ‘alternative way’ for top class football in England. All stakeholders in the club; staff, fans and business partners buy into the unique contribution. ECFC makes to the whole sub-region with it ‘family first’ approach to match days and 365 days a year usage of its leisure, shopping, meeting and social facilities.
At 2009-10 the management had put a vision of 20/20. And within 2020 they want to make the Exeter City FC a championship club with financial stability. I am going to discuss about their vision and plannings to ensure their goal.

Corporate objectives:
         To experience Championship Football by 2015
         To be an established Championship Club by 2020
         To be financially secure
         To retain Supporters’ Trust ownership

They have started to take actions for this. The actions are:
      Ensure appointment of independent non-executive chairman
      Agree corporate objectives and strategic plan
      Produce year one budget which is challenging but realistic with a baseline that is profitable
      Recommend organizational structure capable of delivering the medium term strategy and empowering management team
      Identify ways to transform non-match day revenue from bars and conferencing
      Build manageable sales campaign within which specific corporate customers can be targeted with relevant products
      Ensure season ticket prices are at a financially viable level
      Begin process of communicating with a fan base as individuals (CRM)
      Support the community base, raise profile with city and county councils and support the family focus of the club.

The Management has a very solid, unique and acceptable strategic statement to endure the vision for the entire ECFC community. The strategic statement is as below:
         The fundamental strategy of ECFC is one of continuous progress as a professional football club, with financial stability ensuring its survival in the football league.
         A solid infrastructure within the trust ownership model and strong business leadership will provide recreational and social services for the wider community of Exeter and Devon.
         This entails the development of the stadium, the people who run the club and the ongoing support of its many stakeholders.

ECFC  Board and Management Team Structure
(A) Chairman, Vice-Chairman, &Club CEO
(B) Chairman has direct control on: Secretary, Trust, Legal, Finance, and Ad-Hoc committee
(C) Vice-Chairman has control over: Manager, COE, FIC
(D) Club CEO has control over: Accounts, Food/Beverages, Promotion, Customer, Sales, Materiel, Security
(E) Also HR department works under CEO's observation.

The objectives behind the organizational structure of ECFC:

      To achieve 2020 vision strategic aims
      To streamline decision making process
      To provide leadership and management for club officials
      To ensure the future of ECFC is assured through control of expenditure and maximization of income
      To provide monthly financial statements to the Trust and Club non-executive directors
      To provide the executive directors with sufficient authority, responsibility and accountability to drive ECFC forward.

To reach to their 20/20 vision ECFC trusts have started different departments with different responsibility as their strategic plans. They have started their 7 different segments: Marketing, Human resource, Football and Youth, Community and Environment, Physical resource, Financial, and Communication. Also they have renovated their home ground and started corporate boxes and other facilities there. Actually they have started to commercialize their club for financial stability. And as a result ECFC have started to raise their turnover year after year. And during the 2009-10 season their turnover is increased by 49%. So they had also increased their football budget by 54% than the previous season.

Indian football clubs are in a like the situation of ECFC before 2004/05. So following the ECFC way can be very fruitful for the betterment of whole Indian football. A vision of 5 years and plan to commercialize the entire football club will be the biggest boost for the financial rise of Indian football. 

In a recent AFC report I have read that, currently the amount of revenue in Indian football is around $54,29,000. And the maximum amount of revenue comes from the clubs main(single) sponsor, which is  around 82.2% and form sub sponsor the clubs earn only 6.48%. Remaining revenues are from the areas like, merchandising: 0.15%, Gate receipt: 1.03%, Revenue from the league (provided by organizing authority) : 1.17%, and 8.97% is other income. But unfortunately the membership fee percentage is almost 0 in this calculation. 

When the average annual salary is increasing by almost 100% during the last 2 season, the source of revenue is still conventional like before by the Indian football clubs. Even they are not trying to discover the new ways to earn more money from various different ways as shown in 2 case studies in this writing. Even the whole revenue of an Indian football club is going only for the salary of players and coaching staffs. Nothing is used for the development of the marketing department or community development of those clubs. 

If we consider the profitability of any football clubs of India, we can see that apart from Mumbai FC ( in profit by a little margin), every club is bearing huge losses of around $ 12,00,000. Now readers can compare the entire Indian football market revenue analysis with a developed and a developing club of world football.  And they can also get the answers to my questions.

AFC have also given a few suggestions in that document to increase the popularity of football in India and the ways to increase the revenue for an Indian football club. According to AFC report Indian clubs need to establish few more departments in their football clubs like marketing, media & PR, finance. Suggestions are as below:
      Clubs to look into establishing marketing department to help boosts the club’s popularity and to increase match attendance
      Clubs to look into additional sponsors of the club instead of relying on singular sponsor. Possibility on I-League committee helps to negotiate a packaged plan with specific sportswear brand.
      I-League to help clubs to increase its brand value, acquire more fans and increase match attendance
      Ticket Sales
     Grant each club to sell the home match ticket
     Club understands the needs of their fans best
     Increase the club promotion
      Increase the inside and outside of the stadium and provide suitable Stadium Facilities to everyone
     Broadcast Facility: Increase the value of the League matches, clubs own tv shows.
     Hospitality Facility (e.g., corporate suites): Increase revenue and sponsor’s satisfaction
     Concessions to be fully controlled by the League: Increase revenue and provide better service to fans
      Merchandising
     I-League to explain and insist on club’s merchandising
     Necessity of centralized control by the league and the corresponding club
      TV Rights
     League to consider more effective distribution formula
     League to provide host broadcasting obligation to produce more live feeds
      Match day experience
     Clubs to create fan zone around the stadium during match days
      League to develop the branding program
     Stadium dressing, anthem
     Better services for supporters in stadium
      Have a qualified team media officer who can supervise all the media related activities and programs
     Media relations
     New Media
     Data & contents
     Public relations
     Team related media matters
      With an adequate plan, it is important to launch a website for every team.
     Production plan of contents
     Required resources
     Maximization of club’s communication capability through new media
      Clubs produce contents on/off line which can help provide rich and entertaining information to fans and media such as match day programme, fan guide book, club magazine and etc.
      The Pre-match press conference in a professional form of communication with the media. It is a tool to promote the match before the game
      Club builds adequate facility and equipment at team training sites which will help media work in a comfortable environment
      Under the leadership of I-League and AIFF, it is advised to find a solution in a possible partnership between the exclusive rights holder and local TV stations or with club’s official tv programme, which can help promote the games through broadcasting among masses.
      League (&AIFF) establishes a match data/report distribution system in cooperation with clubs which can help media receive an official data / report right after the match
      Clubs should exploit other source of income such as gate receipt and merchandising to increase their revenue.


Now it's high time to follow the AFC guidelines by our football clubs and break the conventional way and try to discover some new avenues for making a football club more professional and popular within their fan base. So that the clubs can be more financially stable in future. We want to see more professional football clubs in India to start, like the way of Shillong Lajong FC, United Sikkim FC, or Pune FC, or Mumbai FC,but not to close down the football clubs like on the way of Mahindra United or JCT FC.