While Indian sportsmen have time and again won laurels for the country, no sports enthusiast will venture to attribute this to the avail-ability of good infrastructure. On the contrary, it is widely believed that much of these accolades were despite the lack of basic facilities.
Despite the government?s efforts of creating various schemes to promote sport facilities, doubts over the long-term financial viability of such assets in the absence of grants or from not-for-profit bodies still persist. While the government?s role in nurturing sportspersons and attract investment cannot be understated, it is equally important to underscore the role of the private sector in bridging the gap. If India has to promote private investment to create world-class sports infrastructure, due importance must be given to return on investment.
Corporate ownership has started making headway in sports and is bound to increase exponentially in coming years. This interest in sports is not about social responsibility or an altruistic belief in sports promotion, but a calculated business decision. Like any other business, these ventures will also reel under the pressure to generate a healthy RoI to remain afloat. It?s quite simple: sports infrastructure must not become a white elephant; it must be built on pragmatic commercial models, so that the asset is managed, maintained and upgraded over time without becoming a burden to the community or society, least to the private investor.
The Indian Premiere League is a great example?though not the only one?of corporate involvement in sports. However, most franchisees are now focussing on the bottom line. The real issue is that revenue models cannot be stretched beyond a point. The larger issue is that none of the franchisees today have ownership of sports infrastructure. Given that franchisees will only be able to leverage assets for a brief duration over the year, the appetite for making significant investments on such leased grounds will predictably be low. Without elevating the facilities of the stadia and investing to meet the ever-increasing demand of hospitality and add-on services from spectators, franchisees will find it challenging to generate increased revenues.
Private investment in sports is made to harness the potential from sports assets. This could be by leveraging player contracts via sponsorship and licensing arrangements or through the infrastructure by way of gate receipts, naming rights, in-stadia advertising, concessions, etc. Clearly, the player endorsement market in India is coming of age with not just cricketers signing lucrative brand endorsements deals, but also the likes of Sania Mirza, Vishwanathan Anand and Abhinav Bindra, to name a few.
The unresolved issue, however, is to leverage infrastructure in a way that generates revenues. In India, there aren?t many examples of this. We should strive to learn from nations at the other end of the curve. One such example is the new stadium for the New York Yankees, which opened in April 2009. Built at a cost of $1.6 billion, it is expected to increase luxury box revenues from $157 million in 2005 to an estimated $253 million in 2009. This increase is attributed to investments in creating an improved spectator experience and enhanced facilities. There?s also a robust plan to leverage assets extensively for pro football, political assemblies, concerts and championship boxing matches.
Like the new Yankee stadium, private investors in India will have to explore multiple options to enhance revenues from their investment in sports facilities other than the conventional streams. The nation cannot solely rely on the government and the country?s sports ?block? to provide the vital lifeline of infrastructure. According to published figures, nearly one-third of all sporting venues in India are for cricket, which clearly gives rise to the need for investment in sports facilities by the private sector.
The fact is that it may not be possible to make large investments in all sports, but at least private players can start exploring opportunities in games where the international sports community has shown an interest and where there is considerable action envisaged in the near future. Infrastructure cannot be a bottleneck in India?s progress in sports?it has to be an enabler, and for that it?s time for a new innings.
?The writer is partner, advisory services-infrastructure, real estate, government, Ernst & Young, These are his personal views