The funds made available by the Indian government for sports development are clearly not enough. Corporate India has to step forward and support sports development in order to sustain India's journey towards emerging as a sporting nation
Indian Prime Minister Narendra Modi has clearly articulated that Corporate India has to contribute aggressively towards building a nation of the future. Obviously, he worries that close to 40% of India’s population is under the age of 20 years and therefore there is a need to channelize youthful energy to creative pursuits.
While the Sports Ministry in India has initiated a few policy changes and launched the ambitious Khelo India Program, much more needs to be done. If India has to build itself into a sporting nation and institutionalize the outdoor habit, India needs an innovative approach towards funding this movement.
GOVERNMENT'S ROLE IN SPORTS DEVELOPMENT IS LIMITED
In 2017, India spent roughly INR 3,200 Crores (USD 500 million) on sports infrastructure & training through its annual Union & State Budgets. Compare this to the United Kingdom’s (UK) spend of INR 9,000 Crores (USD 1.5 billion) and one will appreciate why UK won 67 medals at the Rio Olympics & India won only 2 medals.
With the Finance Minister, stretched between the many priorities of a developing economy, the Indian Government can only spare so much money towards sports development. And this is where Corporate India needs to step in.
CORPORATE ROLE IN SPORTS DEVELOPMENT NEEDS TO EVOLVE FURTHER
Over the last decade, Corporate India has seen merit in leveraging sports through association. And this association has today moved beyond cricket to other sports such as Badminton, Wrestling, Hockey, Football & Kabaddi. In 2017, Sports advertising spend was 12% of the total advertising expenditure of INR 61, 233 Crores. Sports sponsorship rose to INR 7,300 Crores in 2017, a growth of 14% over the previous year.
The spend was categorized across 5 broad categories including - Ground Sponsorship, Team Sponsorship, Franchise Fee, Athlete Development, Media Spend. While this meets the commercial interests of sports development, it only benefits a few. Corporate India has to deliver a bigger and more significant impact.
GRASSROOTS SPORTS DEVELOPMENT FOCUS IS SEVERELY LIMITED
However, the point to be noted here is that not even a minuscule component of this spend is going towards grassroots sports development, be it building awareness, promotion, participation, infrastructure, competitive platforms, services, programs, athlete & sports ecosystem development.
If we have to emerge as a dominant sporting nation, we have to start supporting Sports through Corporate CSR funds.
SPORTS DELIVERS STRATEGIC BENEFITS TO ALL STAKEHOLDERS
Corporate India will soon realize that “#PurposeBeforeProfit” delivers a lasting corporate legacy, tangible social benefits, patronage & reputation and deeper community engagement.
Increasing consumers are becoming averse to buying products and services from companies that display a narrow profit-centric orientation.
Research available in the public domain indicates that Corporate India spent about INR 9,500 crores on fulfilling their Corporate Social Responsibility (CSR) Objectives, of which only about 1% was allocated to Sports Development across 4 categories - Olympics/ Paralympics, Rural Sports, Youth Development & Sports Infrastructure.
BARRIERS THAT PREVENT DEPLOYMENT OF CSR FUNDS IN SPORTS
Corporates I speak to are keen to support this direction but stop short of calculating the financial return on investment. Committed organizations, on the other hand, view this as a way of transforming lives and sustainable community development and measure the social returns on investment.
In addition, limited understanding of the impact through sport, access to professionals to guide and advise on sports, lack of a unified agenda on sports and the fact that no one internally championing the case for sports are other factors that prevent corporates from exploring this direction.
BUILDING A SPORTING NATION
This may sound radical to some ears, but it's one way to fund sports development in India and meet many social objectives in order to drive in one unified direction towards building a sporting nation.
BROADEN THE POLICY DEFINITION FOR GREATEST SOCIAL IMPACT
SIGNIFICANT & SUSTAINABLE IMPACT ON SPORTS DEVELOPMENT
Ensure alignment between sports development priorities, a structured and planned approach towards both design and implementation, unify action and efforts across different groups, national accountability and deliver a ‘bang for the buck’ in both the short & the long term.
India needs to envision a long term agenda for sports development that balances performance excellence and grassroots sports development priorities. Our sports policy, programs, platforms and actions have to be seamlessly coordinated for greatest benefit and impact
Indian Sports Lacks a Long-Term Agenda & Unified Action Game Development Program
Sports has the power to heal, build character, resolve differences, unite people and create cohesiveness within a nation. With close to 45% of India's population under the age of 20, sports can be effectively leveraged to build life skills.
Change through sport creates a deeper granular impact that prepares future generations and helps integrate people, culture and religions.
With this understanding in mind, the Indian Government has initiated a number of policy & program changes to promote sports towards two objectives: -
INDIA SPORTS DEVELOPMENT MODEL IS LOPSIDED
The sports industry in India is estimated to grow at a 20% clip over the next decade. Seeing this opportunity, big corporates and entrepreneurs are actively evaluating & investing across the full spectrum - incubating leagues, broadcasting, athlete performance, technology and the support ecosystem. However, the sports development model seems lopsided and suffers from:
BENEFITS OF INVESTING IN SPORT
All stakeholders benefit by investing in sports but the greatest benefit accrues to India.
KEY INVESTOR CONCERNS
Over the last decade, sporting leagues have popped up across Badminton, Hockey, Football, Wrestling & Kabaddi and many more are planned across other sports such as Athletics, Golf, Boxing, Volleyball & Basketball. However, almost every league is struggling with key fundamental questions that include:
These questions can be addressed in the long term only if India has an
INDIA'S FIVE POINT AGENDA TOWARDS SPORTS DEVELOPMENT
Statistics indicate that India’s level of participation in sports is less than 2% of our total population versus the USA & the EU at 32% while Asia-Pacific Region is at about 15% of total population.
While the Ministry of Youth Affairs & Sports works to develop the National Sports Policy, including the Sports Code, the National Sports Federations need to get their game plan in place. Over the last decade, the private sector have participated in sports development but their impact and focus have largely been felt in Cricket. Sports promotion through Corporate Social Responsibility (CSR) is one way. Corporate India's CSR outlay in 2017-18 was roughly INR 9, 275 Crores of which only 0.67% (or INR 122 Crores) was towards sports
UNIFIED ACTION GAME DEVELOPMENT PROGRAM
Provide Sports promoters the opportunity to positively impact the development of the sport by integrating efforts across the vertical.
Creating sports leagues is not the only way. Its impact is limited since the benefits are shared by only a few at the top end of the sport. Sports needs to be encouraged and promoted at the grassroots level; youngsters and their parents have to see sports as a financially viable career option, the packaging of the sport needs to be slick, digital mediums have to be used to engage with audience and the fanbase and local communities have to find a way to participate. Only then will the impact be long-term and sustainable.
Unless the game keepers of Indian sport begin to form a comprehensive view of sports development, sporadic reform and minuscule changes will continue to happen but will be unable to deliver long-term sustainable impact.
It is critical to understand and appreciate the realities of Indian sports before a change agenda can be framed towards long term transformation
As the sports ecosystem continues to develop, mature and professionalize, there are some key emerging themes that provide character to this journey. Although 18 elements below seem too many, my efforts through this article are to capture all core elements that define the character & the nature of sports in India.
While all long-term indicators point in the right direction, it is critical to take cognizance of the reality and then build from there.
(#1) NATIONAL SPORTS POLICY DOCUMENT
India still doesn't have a National Sports Policy Document, although a draft policy document is rumored to be under finalization and is scheduled to be tabled in the Lok Sabha in the second half of 2018.
(#2) INDIA'S MIDDLE CLASS HOUSEHOLDS - SPORT SPEND BY 2025
India's 267 million middle class households will grow to about 547 million households by 2025. At a conservative estimate of INR 15, 000 (USD 225) per household, one participant per household & 30% participation rates, India's annual spend on sports & recreation activities will balloon to about USD 3.7 billion.
(#3) FITNESS & SPORTS IS NOT A TOP PRIORITY FOR THE MASSES
Research by Statista indicates that about 10% of India exercises less than one hour per week. Another study by Puma last week indicated that 57% of India hasn't played a sport even once in the last 12 months. Overall, less than 2% of the Indian population participates in Sports.
(#4) ATHLETES ARE STILL NOT THE CENTRE OF SPORTS DEVELOPMENT
Athletes are at the mercy of the Sports Federation and suffer their apathy as well as their lack of understanding of the nuances of the sport or the realities of being an athlete. Instead of being treated as national treasures and national icons, they struggle for basic institutional support and a few words of encouragement. Rather, the federation uses its powers to control selection to national camps, bilateral tournaments, access to specialized coaching & selection to iconic international events.
(#5) THE GOVERNANCE OF NATIONAL SPORTS FEDERATIONS
Key characteristics include - politicians continuing to be involved, infighting, lack of athletes and very low women representation in governance appointments, limited transparency & disclosure, no formal vision document on sports development and extended tenure of appointees. In addition, sports federations exist to further the agenda of key personalities rather than develop the sport keeping the athlete at the center of all decisions. And this is exactly where the plot is lost.
(#6) STRUCTURED PROPAGANDA TO BUILD AWARENESS & PROMOTE SPORTS
A multi-year campaign to direct youthful energy to creative pursuits is critical in a country like India, where 42% of Indians are under the age of 20. Otherwise, we will suffer the social repercussions and consequences of the same. A 'Swachh Bharat Campaign' like effort to promote sport at the country level, directly spearheaded by the Prime Minister is what is needed.
(#7) CORPORATE FUNDS NEEDED TO AUGMENT PUBLIC MONIES TO DEVELOP SPORTS
As the Sports Minister recently indicated, there is enough money to support Indian sport but it needs to be spent wisely and as part of a structured and monitored plan. In addition, Corporates need to find a way to support the development journey of a sport over an extended period of time and thereby create patronage, brand loyalty and enhance reputation.
In addition, under the CSR umbrella, make it compulsory for Corporate India to allocate a small percentage towards sports development. On top of that, put a 'sports tax' on all vice based industries including cigarettes, alcohol and gambling. This will automatically create a fund pool to accelerate sports development in India.
(#8A) INDIA"S SPORTS EQUIPMENT MARKET SIZE
In 2016-17, India's total output was USD 228 million of which 60% was exported. UK, US, UAE, Australia, South Africa and Germany were the major export markets for Indian sports goods. Jalandhar (Punjab) & Meerut (UP) account for about 70% of our total production. Major export items include inflatable balls, cricket bats & leg pads, rugby balls, sports nets and gymnasium & athletics equipment.
(#8B) PROFILING THE INDIAN SPORTS EQUIPMENT INDUSTRY
The sports manufacturing industry in India, especially the MSME sector is largely fragmented, unable to scale & under severe cost pressure. It is dominated by 10-12 large manufacturers with the balance engaged in contract manufacturing. These smaller players lack access to funds, skilled manpower availability and direct connects with the marketplace are available to only a few.
The industry is characterized by lack of thought leadership, inability to innovate and lead market demand. In addition, the industry is unable to externally leverage and then internally apply industry learnings due to poor ecosystem connects & lack of interaction platforms. Most importantly, there is an urgent need to enforce testing & product quality standards & a product certification process.
(#9) SPORTS RETAILING IN INDIA
The Indian sports retailing market is growing at a healthy rate of 9-12% and is projected to grow to USD 6 billion in 2025 (ICRIER). About 2% of goods are sold through specialized online sports retail channels, about 3% are sold through multi-product mass online retailers while about 12-15% are sold through on ground stores. Market research reports (source: npd.com) indicate India is the 11th biggest market for sports apparel and footwear in the world, with an estimated INR 400 billion being spent every year, growing at a rapid pace of ~30% YoY. Recreational sports also fall in the unique intersection of health/fitness/wellness space and leisure/recreation space, both of which have projected market size in excess of INR one trillion.
(#10) LIVE EVENTS STRUGGLE TO GENERATE REVENUES THROUGH TICKET SALES
Having attended a few events across badminton, kabaddi, cricket and football across multiple venues in different cities, the reality is that the contribution of ticket sales to the revenue pie is not even 10%. Tickets have to be gifted to the municipality, police, government officials, sponsors amongst many others. And even after doing this, 70% of the arena remains empty.
(#11) YOUNG ATHLETE DROP OUT RATES ARE ALARMING
Close to 82% of individuals drop out of competitive sport between the age groups of 15 - 18 years. The drop out rates are even higher for girls. Contributing factors include academic pressure, declining interest levels, lack of career opportunities, lack of financial support and high-performance pressure. And the dropout rates increase with higher age groups in India.
(#12) DOPING RUNS DEEP IN INDIAN SPORT
In 2018, the World Anti Doping Agency (WADA) watch list features India on the 6th position with regard to doping violation. Between 2013 - 16, India featured at the 3rd position on this list. This improvement in ranking is not because of strict enforcement of regulation or on account of greater athlete awareness but because the quantum & frequency of testing has been reduced by (National Anti Doping Agency) NADA. In addition, at the Khelo India School Games in 2018, 12 athletes were found guilty of doping violations.
(#13) KEY CONSUMPTION TRENDS
(#14) LIMITED IMPACT OF SPORTS LEAGUES ON HOLISTIC SPORTS DEVELOPMENT
Cricket has benefitted from IPL in the sense that backward integration across regional and state cricket has improved participation & viewership, strengthened the talent pipeline across formats, brought in fundings & sponsors, created multiple properties, built the institutional support system at the grassroots level and created financial sustainability for athletes. This fundamental impact & benefit has not percolated downwards in other sports where sports leagues have been incubated. This should have been a 'by-product' but the league design never permitted this to happen.
(#15) GRASSROOTS SPORTS DEVELOPMENT STILL IN ITS INFANCY
The reality is that agencies driven by passion for sports development are the only ones involved at the grassroots level. Companies motivated by profit and quick returns are unable to penetrate this space or make an 'on the ground' difference. The federations and the state level machinery at the grassroots level is only as effective as their intent & their vision.
(#16) POOR SPORTS INFRASTRUCTURE, ACCES & UTILIZATION
If India could just improve access to available sports infrastructure for the masses, one-third of the agenda would be addressed. If more people have access to sporting facilities at an affordable cost, utilization rates would automatically increase. And this would sort out another one-third of the agenda. And rather than create new infrastructure, if we could upgrade our current facilities, the balance one-third of the agenda would get addressed.
(#17) BROADCASTERS UNDER STRESS TO COMMERCIALIZE & MONETIZE ASSETS
Each sport has a unique nature to its commercial potential based on multiple factors such as viewership, participation rates, brand potential, fan following of the sport and its stars, the history of the sport over time and India's international success in the sport.
In addition, the commercial model of the sport takes time to mature and stabilize before delivering returns to its investors. Yet, league promoters have the tendency to blindly copy the IPL template and completely ignore the realities of their sport. On top of all of this, the broadcaster, who is a critical driver to monetizing this asset, gets caught up in his efforts to expand his sports content & portfolio and therefore pays a hefty premium while acquiring the broadcast rights. All of the above puts the commercial model under severe pressure and impacts all stakeholders in different ways.
(#18) INDIA NOT BUILDING ICONIC INTERNATIONAL SPORTS PLATFORMS IN INDIA
While looking to develop sports, India needs to build out its sports properties beyond the leagues. The city-based events such as the Mumbai & Delhi Marathons are one way and have surely delivered spectacular success over the last decade. Sports promoters need to evaluate the viability of other iconic international sports platforms such as The Tour De France, The Iron Man & Spartan to add to our country kitty. Even better would be if we build our own events on the same lines to promote localization - culture, food, heritage and tourism.
We have to look back and critically evaluate our journey to date, in order to plot our way forward. As they say, "Who You Are Tomorrow, Begins With What You Do Today."