On November 23, 2010, Pune?s Venkateshwara Hatcheries (Venky?s) completed the takeover of Blackburn Rovers for approximately ?23 million. By doing so, it has now become the first Indian corporate to own a professional sports team in a global league, in this case, the English Premier League (EPL). The Blackburn acquisition is a sound investment for a variety of reasons. The pedigree and proud history of the club, coupled with a successful track record, make this a value for money purchase. The acquisition will also help in brand building, recognition, and establish an international footprint for Venky?s core competencies. The Indian ownership of the team is also likely to promote city and team loyalty, and is a huge opportunity to target and win over the global Indian fan-base. The Rovers have a dedicated and growing fan base (19,000 season ticket holders) with potential to expand exponentially. Unlike the Indian Premier League (IPL), clubs in the EPL usually own their stadiums and training facilities. Blackburn is no exception, with recently refurbished and revamped training facilities and an outstanding stadium (Ewood). Blackburn is a club that is low on expectation but high on return and potential. Venky?s has taken a calculated risk and the rewards are likely to be significant.

Even among the bargain basement opportunities in the sports domain, Blackburn has been in the market as an undervalued yet high potential investment. It is a trading club, and not a buying club, so the wages remain manageable. Also, it now has the opportunity to meet its various obligations while optimising sponsorship and other revenue oriented verticals or synergies. Venky?s has a ?1billion turnover and made a profit of ?118 million according to its 2009-10 annual report, and has a long history of involvement in Indian and international sports.

More likely than not, this is an investment looking to tap both the ?glocal? and domestic domains. Pune is a robust and dynamic sports-oriented city, and soccer is likely to be the sport of choice for the young demographic. Pune also being a university town of sorts only strengthens the long-term sustainability and viability of establishing a football imprint on the city and its suburbs. For the most part, the EPL is the most-watched and lucrative sports league in India. It has solid revenue streams through viewership and licensed merchandise & premiums.

While it?s uncertain how the shareholders will react to this acquisition, the fact remains that kneejerk reactions and also ambiguity or wariness are part and parcel of cases of first impression and greenfield domains. However, once the dust settles, and the revenue models are disclosed and dissected, the shareholders will more likely than not settle back into cruise control mode. Besides, there is little risk of the Venky?s brain-trust going on an unsolicited and untenable spending spree. It is a conservative outfit, looking to make an international footprint for its core businesses in Europe: pharmaceuticals and poultry products.

Most acquisitions in professional sports leagues, with the exception of the National Football League (US) have conglomerate ownerships, albeit fronted by a high profile individual (like Steinbrenner, Cuban, Glazer, Abramovich). Corporate and professional ownership and management of a professional team is always better in the long run?for the club, for the league, for the players, for the shareholders, and of course, for the fans.

Besides, there are certain guarantees in the EPL: a lucrative broadcasting deal on a league-wide basis, merchandising and licensed core and collateral products and apparel (with 19,000 plus dedicated and committed season ticket holders). There is also the opportunity to target and expand the fan base made up of diverse socio-economic and ethnic communities. The TRPs in South Asia and among South Asians in Europe will rise exponentially once there is an Indian-owned and operated EPL club, along with the obvious expectation?Indian or South Asian players. This would be much easier to accomplish with a middling to bottom rung EPL club than with a Liverpool or Man U. The club?s trustees have also mentioned the affinity with a takeover funded with equity and not debt. Venky?s has clearly stated that it will not have an extravagant transfer/player wage budget unlike the ?100 million transfer budget promised by Ahsan Ali Syed. Besides, Blackburn has made a conscious effort over the last few years to lower its wage budget (i.e. player acquisitions and trades), and instead to target a sustainable wage expense to revenue equation. Put simply, it?s a trading team, not a buying team.

UEFA, European soccer?s governing body, will implement its financial fair play scheme by the 2012-13 season. It will ban teams that spend more than they earn from continental competitions. Clubs like Chelsea and Manchester City would be in danger of missing out on the tournament (the Champions League) that they spend so heavily to gain access to. Blackburn, however, should be able to hold its own in such a circumstance.

One should also realise the global positive pecuniary externalities: free advertising, building on collaterals, larger fan base, reduced wage costs. Factor in the popularity of soccer, the fact that this is likely to have huge synergies in the Indian soccer/business of sports domain, and one can even be forgiven for overlooking the obvious. This is a golden opportunity to avail of free advertising, publicity, and brand building. If the only thing Venky has achieved from its investment was a certain amount of intangible brand awareness and media coverage, one can safely say that a ?40 million investment would in and of itself be worth it. A below the line marketing expense, if you will.

A world-class stadium and training facility, guaranteed broadcast revenues, an opportunity to treble its gate revenues, a chance to target the Indian youth with merchandise and collateral activities/products, along with a fan following of potentially a billion plus individuals. And the opportunity to rope in SME sponsors from India, and also to host EPL friendlies in India as away/home games for the Rovers. Also, in the next five years, to develop the most lucrative and popular sport globally on a for-profit basis in India.

This is why more Indian corporates should look to follow the Venky?s example. There are tangible revenue streams and collaterals, with the additional intangible benefits that come with a high-profile acquisition such as this. It is an outstanding value, when one looks at the price tag of and associated debt components for other clubs in both the EPL and other such professional sports leagues. The beautiful game, with an Indian glaze.

?The author is a sports attorney at J Sagar Associates. Views are personal