India: Still a Small Player in Sports

09 Mar,2020

 

By Indrani Sen

 

Around fifty years back, sports used to be played just for the sake of excellence in sports and not for any financial gain. The advent of television followed by satellite telecast created a global audience for sports and changed the business of sports totally. The second and perhaps more crucial change happened with the introduction of the World Wide Web and internet with sports reaching the remote corners of the world riding on the new media technology. Today, million dollar deals back big sporting events with promises of big money to all the stakeholders.

 

Recently, Media Partners Asia (MPA) released a report Asia Pacific Sports Media 2020.. The report predicts sports revenues in TV and online video will grow at a 6.7% CAGR to reach US$7.2 billion by 2024. According to the report, OTT accounted for 21% of sports media revenue generation in 2019 in the 11 Asia Pacific markets. This is likely to almost double over the next five years to reach 40% by 2024. Excluding China, OTT will account for 23% of sports media monetisation in 2024 across the measured markets, up from 12% in 2019.

 

The MPA report further notes: (1) Sports rights costs and revenues are seasonal and lumpy; major global events typically occur every 2-4 years and can either inflate or adversely impact sports economics on a year on year basis and (2) Global sporting events in 2020 (i.e. the Tokyo 2020 Olympics scheduled in July 2020 in Japan, etc.) will be key drivers of value in Asia Pacific markets. Currently these events are subject to risk given the global spread of the Coronavirus. Japan has already cancelled a few pre Olympic schedules and is taking extra precautions for the torch relay.  The torch is scheduled to be lit in Greece on March 12 and handed over to Japan on March 19 at Athens.

 

Sports rights investments in China, India, Australia and Japan are driven by a strong domestic sports ecosystem. Rights costs in China are driven by growing appetite for domestic and international football as well as basketball with domestic baseball and football driving growth in Japan’s sports rights market. Cricket continues to drive more 85% of India’s costs and the trend is likely to continue irrespective of growing popularity of some other sports.

 

In 2018, Sanjay Gupta (then MD of Star India) predicted that Indian sports industry can become a $10 billion industry in next five to seven years while speaking at the CII Scorecard Forum. Gupta said, “Over the last few years, the kind of activity around the business of sports has been tremendous. There are now over 15 domestic leagues in the country – across kabaddi, football, wrestling, boxing, badminton – from just 2 five years back…… And in my mind, this journey has only begun. Sports is still at 0.1% share of our GDP, while globally the industry is sized at around 0.5% of GDP share” (https://www.exchange4media.com/media-tv-news/indian-sports-industry-can-become-a-$10-billion-industry-in-next-5-7-yearssanjay-guptamd-star-in).

 

We will still have a long way to go even after becoming a $10 billion dollar sports industry to make any mark in the APAC sports market as well as the global sports market. As per research by ResearchAndMarkets.com the global sports market reached a value of nearly $488.5 billion in 2018, having grown at a compound annual growth rate (CAGR) of 4.3% since 2014, and is expected to grow at a CAGR of 5.9% to nearly $614.1 billion by 2022 (https://www.businesswire.com/news/home/20190514005472/en/Sports—614-Billion-Global-Market-Opportunities). In spite of the media hype which gets created every year around IPL and over ICC World Cup every year, India will remain a small fish in a big pond as far as sports business is concerned unless we can improve our standards in other sports and get higher fan following across different sports to build up audiences for TV and OTT platforms.

 

In March 2019, PWC along with ASSOCHAM published a report “Sports infrastructure: Transforming the Indian sports ecosystem” which highlights not only the lack of sports infrastructure in India, but also the lacuna in government’s policies and funding for promoting sports. As per PWC, collaboration of private and public sectors is required in order to uplift the standard of sports in India. If the government allows investment in sports as a part of Corporate Social Responsibility (CSR) projects and permits few companies to participate jointly in large projects, then we can probably hope to see substantial improvement in near future.

 

 

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