ISL team balance sheet: In-depth look at revenue generation factors (Part 1)

The ISL team owners with their marquee players at the glamorous inauguration ceremony at the Salt Lake Stadium

Diwali did come early for millions of passionate football fans in the country. The ISL opening on the October 2014 saw the Salt Lake lit up only by the visual extravaganza but also by the shine of the celebrities present in the football mecca of India.

After a long wait, since IMG-R stepped into the world of Indian football in 2010, finally the birth of the footballing nation and that of the Indian Super League happened. The combined strengths of Reliance Industries, IMG and Star India was the right mix that was needed to give shape and success to the brand new football property. As per the latest numbers from the media groups, the ISL opened with viewership exceeding the English Premier League as well as the very popular FIFA World Cup.

So finally, to a lot of people’s surprise and after many insiders’ predictions, the ISL has arrived and that too in style.

The event has created some much needed profile as well as recognition for India in terms of football, which should lead to more investments and participation at all levels of the sport, subject to the right steps that all the stakeholders take in the long term interest of the beautiful game.

One of the key stakeholders of the ISL have been and will be the 8 franchisees and hope that this number grows in the future. After all, these were the passionate, resourceful and well-known groups and individuals who took the leap of faith in the initial days.

After a glitzy start, it is time for the franchisees to have a serious look at the P&L as well as the balance sheet. The wave of enthusiasm shall last only for so long before the financial numbers become a matter of concern for the business houses and the company boards.

Going by the initial analysis on the franchisees’ side, all the 8 groups were and are mindful of the fact that it’s going to be about continuous investment and absorbing significant losses for at least 3 to 5 years.

Let’s have a quick look at the expenditure side of these clubs:

(average figures in INR Crore)

FRANCHISE FEE	OPERATIONAL EXPENDITURE	TOTAL ANNUAL BUDGET
Base Price of INR 12.5 (average bid value was around 15)	40	55

(*Non-audited figures collected from various sources)

For some reason, it was also observed that a majority of these teams predicted sponsorship and revenue figures to be at the same levels as the IPL.

Below is the summary of the sponsorship landscape as it stands today for the ISL and it’s franchisees:

PARTICULARS	TITLE	ASSOCIATE	PARTNERS
ISL CENTRAL SPONSORS	Hero	Maruti Suzuki Samsung	Amul Puma Muthoot Pepsi Nise
CHENNAI	Ozone group		Reliance Digital
DELHI	Freecharge	Skyworth	Cisco Lotto Den Boomband
GOA	Videocon D2H	Kenstar	Usha Ponds Gadre Marine Adidas
KERALA	Muthoot Group		Synthie Air Asia
KOLKATA	Aircel		Lux Cozi Apollo Munich
MUMBAI	Jabong.com		IDBI Bank
NORTHEAST	HTC	Haier Garnier Men McDowell's No. 1 Soda	Concept Education Adidas
PUNE	DHFL		Pramerica Life Insurance Avanse Dheeraj HRX

While the TV ratings went through the roof, the revenue numbers were limited due to various factors such as:

- Wait and Watch approach

A lot of brand marketers for whom cricket was the only sport in the country are still trying to understand the relevance of football as a part of their marketing mix. The nature of the sport is different and hence the visibility channels too. With a couple of postponements already behind the launch of the ISL, the corporate world took the wait and watch approach. In fact the thought process is still going on as the first set of viewership numbers are coming out.

- Lack of existing benchmarks

Apart from the I-League and the erstwhile National Football League, Indian football property did not have any previous benchmarks for the sponsorship and ROI figures. Comparisons with the IPL would be a case of comparing apples to oranges as cricket was certainly the apple of the eye amongst the brands. Hence, for ISL it is a matter of hit and trial.

- Diwali budgets

With the festive month having begun before kick-off and Diwali just around the corner, it was a bit difficult for the brands to prioritize football over festivities. The ISL campaign was very smart with the ‘Yeh Diwali, Football Waali’ campaign and managed to keep the interest in the ISL intact.

The “Yeh Diwali Football Waali” campaign was very well received by fans

- Lack of expertise within the corporate world with regards to sports marketing

Let’s accept it, the Indian sports marketeer has yet to learn about life beyond cricket marketing. But I do see a lot more expertise flowing into the corporate psyche to handle not only football projects, but also other sporting projects.

The entire pitch on any sporting property starts and ends with the figures on ‘eyeballs’ and ‘dhamaka’. Football could be used for impact that none of the media or advertising campaigns can create and this angle of social and community connect is something that India is going to see a lot more in the coming times. And hopefully, with the ambitious ISL grassroots focus, brands shall see a lot more meat in this property at both the central and regional levels.

- Reduced benchmarks due to the title rights being sold at lower than expected value

While the media experts were waiting and watching, Hero Motocorp did take the leap of faith and came on board as the title sponsor. There was a lot of speculation around the sponsorship figures and the guesstimate was that it went for 40% of the IPL title rights sold to DLF in the inaugural IPL season. Hence, the equation of 2/5 became the benchmark which left a lot of the franchisees dismayed, as it did not match the targets that they had for selling the team packages.

The fact is that ISL has established itself as a great football property and certainly promises a lot in the years to follow which shall impact various domains of football industry. In Part 2 of the article, I will delve a little deeper into the analysis of the team's business plan and initiatives needed to become a footballing brand in true sense.