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What spells success for Indian sports leagues?

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MUMBAI: The sports industry in emerging markets is changing rapidly today. Amongst the various changes that is impacting sports and its allied businesses, is the emergence of sports leagues.

According to a white paper released in collaboration between GroupM ESP and IIM –Ahmedabad, the success of the league is dependent on factors such as the sport and its fan base, the performance of the national team for the sport, design of the league, initiatives to build the fan experience, relationship of the league with relevant sports associations and the involvement of celebrities in the league.

By studying what worked and what didn't, the report brings to light best practices in the formation and running of sports leagues in a manner that will make them successful.

Sports - The game is changing

Over the past 10 years, the sports firmament has changed fundamentally. There has been an increase in the marketing of sports as well as a rise in the use of sports marketing purposes.

Research indicates that there has been a sharp increase in the governmental support to sports as it is believed to increase societal and economic welfare of the country as well as promote the nation on the global front.

Increased economic activity has also contributed to the growth of sports and its following. Today, sports serves two purposes: One, to be a platform to create marketing opportunities for brands and secondly, to actually create value for sports fans.

These twin purposes go hand in hand, and serve the business and industry as well as the sports fans. For brands and advertisers, it is a win-win situation, in so much as when they pay to sponsor or promote a sport; the sporting event offers them a platform to reach their audience.

As per an industry study report, sports industry in both mature and emerging economies has been growing at a rate faster than the GDP. As of 2011, the size of the industry was estimated at $620 million, growing at a rate of 6 per cent. While the sports economy has always been strong in North America and Europe; in the recent past, it is experiencing a major push in emerging markets.

The report further states that all the BRIC nations have shown impressive growth in sports (India – 17 per cent, China – 20 per cent, Brazil – 7 per cent and Russia – 53 per cent).The growth of sporting events in emerging markets has been accompanied with the rise of several sports leagues.

Professional sports leagues like the Major League Baseball (MLB), National Basketball Association (NBA), National Football League (NFL), English Premier League (EPL) etc have achieved great success in North America (US and Canada) and Europe.

The report states that these leagues have gained worldwide popularity and fan following and in turn has inspired the setting up of similar sport leagues in emerging countries such as India, South Africa, and Sri Lanka.

With a number of new sports leagues being formed in the recent past, the report highlights interesting set of differences.  Some of these leagues are in infancy, a few others are already defunct, and there are a few which seem to have attained some degree of maturity.

As per an industry study, it is estimated that in India, the proportion of spending by average household on education and recreation will rise from 5 per cent in 2005 to 9 per cent in 2025. This, coupled with the rise in middle-class segment (from 4 per cent to 41 per cent from 2005 to 2025) will present a huge opportunity for business of sports to cater to recreational needs of such a large population.

Interest in sports has increased with economic, educational and social advancement of the society. These trends underlie the development and popularity of sports leagues. A brief overview of the various leagues operating within sports in India was analysed as follows:

Hockey - Federation rivalry stymies the initial leagues

There have been several attempts to set up Hockey Leagues in India. The first such attempt was with The Premier Hockey League which started in 2005, but folded up by 2008. Then came the World Series Hockey in 2012. These leagues have been able to attract fans as they presented a more exciting format of the game through minor modification of the rules. However, they failed to sustain interest in the game. Reason: existence of two rival national hockey federations which were involved in disputes. This impacted the participation of players in the leagues.

The country currently has Hockey India, a national federation, which has started the Hockey India League (HIL) that has run two seasons and has performed better than the two earlier avatars.

Cricket - Success after a false start

The professional league trend in cricket began with the launch of the Indian Cricket League (ICL), which was started by Zee Group, a television broadcast company. The BCCI in its wisdom did not endorse ICL and banned players contracted with BCCI from playing in ICL matches. It also exerted pressure on the International Cricket Council, the international cricket federation to stop other national federations from supporting ICL.  With this concerted denial of support, ICL folded up in 2008, three years after it opened shop.

BCCI then launched Indian Premier League (IPL) in 2008, which forever changed the face of professional leagues in the country. IPL has attracted the best of the international players from across the globe.

Kabaddi - The Indian contact sport that has touched the heart of millions

The Pro Kabaddi League (PKL) was started in 2014 with eight teams from different cities. The league is supported by the national and international Kabaddi federations. The teams follow the system of salary caps and its owners are personages from the industry, movies, and sports business. The first season of PKL enjoyed unprecedented viewership and fan following. Another league - The World Kabaddi League which began at around the same time as PKL could not duplicate the success of the latter, even though it had a number of film stars as owners of teams in their league.

Badminton - Shuttling towards increased popularity

Badminton started becoming increasingly popular in India and attracted huge following with the emergence of some world-class players. The Indian Badminton League (IBL) is managed commercially by a sports management firm and has the backing and support of the Badminton Association of India. It started the competitive games in 2013, and was fairly popular as it was able to attract some foreign players, including the world’s number one. It failed though to get some of the best Chinese players. Indian Badminton League has recently been facing issues related to scheduling due to other international tournaments.

Findings

  • Fan acceptability of Leagues – Rather than financial viability, fan acceptability seems to be a better measure of predicting future success of leagues.  To sports leagues and businesses, sportsmen and others who are investing their time, effort and money in sports leagues, this is an important parameter to track and follow-up with concerted action to improve the chances of success.
  • Choice of Sports - The choice of sports can impact the success of a league. Higher the fan base of a sport, the more the fan base of the leagues in that sport. Also, better the performance of the national team, in a particular sport, the higher is the acceptability of the league in that sport. Managers, sports persons and sponsors investing in a league will benefit from analysing the two factors mentioned above, even as they analyse the probable future of the sporting league. Starting a league for a sport that has a large fan following and a national team that is performing at par may be a way to ensure its early survival and growth.
  • Design of the League - The design of the league, more specifically the salary structure can impact the success of the league. Salary caps tend to distribute talent across teams, and lead to more intense competition which has a positive effect on the success.
  • Team Location - Regional teams can help in building team character. Thus, regional team locations enable association with fans of that particular region resulting in a captive fan base, while providing a competitive spark with respect to other regional teams.
  • Game Format and Scheduling - Fans respond positively to minor changes in the game format, but are alienated by major changes. The timing and scheduling of games can impact the success of the league.
  • Fan Experience - The more the social media initiatives by the league, the more the fan acceptability.  Improve the TV viewing experience through engaging broadcast and improve fan acceptability. Employ greater in-stadia engagement for higher fan acceptability of the league.
  • Players - When top regional players, famous foreign players and world class sportsmen participate in the league games, what happens is a cascading of their respective following into the league following. So each of these people are stakeholders in enhancing fan engagement and acceptance.
  • League - Federation Leadership -The relationship between the league and the federation can impact the success of the league. Starting a league in harmony and full cooperation with the federation that controls the game is almost a hygiene factor for the success of the league.
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Celebrity involvement

Celebrity involvement is a key factor in increasing acceptability and marketability of the league. Stars in the game and stars outside the game are a good combination for league success.

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