Sponsors never seem to have a bad day, unlike some of the sports superstars they promote. Rafael Nadal could have been forgiven for overlooking his or the tournament’s sponsors at the end of last month’s Australian Open final. He had lost again to Novak Djokovic.
He was also exhausted, as would anyone after a near six-hour duel. But even on that day Nadal did not forget to thank the sponsors. Neither did India’s Leander Paes who lost the mixed doubles final.
Say, they did forget. No worries. Those signages in the background are not discreet. The logos displayed on the apparel and gear are not modest either. Together, they act as constant reminders of the dominant force that sponsors have come to be in the world of sports.
That explains the big bucks pumped into sporting events or to prop up stars across the globe. The same holds true for India, doesn’t it? In cricket, some companies and brands are as ubiquitous as the ball, bat and stumps — because they have blended into the very paraphernalia of players.
Yet curiously, corporate sponsorship of sports in India constitutes only 1% of a global market estimated to be worth $40 billion, according to sports & entertainment marketing company Octagon. Worse, the market has suffered some sobering news this past week.
The Sahara group, a persified business conglomerate, has broken an 11-year association with cricket administrator BCCI.
Any other time, the development would have set off a frenzy for a replacement. But the Indian team’s extended poor run has made the job of spotting a sponsor difficult. For now, BCCI has only Sahara on the horizon. BCCI chief N Srinivasan is due to meet Sahara boss Subrata Roy in Chennai today to discuss the group’s return.
Ready for Kick off
Despite the lowly statistic, despite the recent turn of events, sports sponsorship in India is finally having its moment. Global sponsorship consultancy IEG says in 2012, India will lead Asia Pacific’s charge as the fastest growing sports sponsorship market in terms of spending. IEG believes the Indian marketplace is already vibrant.
The statement is not wide off the mark. India figured in three of the top 50 sponsorship deals in 2011 (see Big Change…). One deal had little to do with laying a 22-yard pitch — there are other signs too to show cricket’s stranglehold on sponsors is loosening. In football-crazy Kolkata, Rs 34.93 crore was recently splashed on foreign stars such as Hernan Crespo and Fabio Cannavaro for the inaugural Premier League Soccer. Global sports company ING is not promoting cricket, but football and basketball in India.
Indian companies too are trotting the same path, backing sports as perse as Formula 1 racing and badminton in recent years. Bharti Airtel became the title sponsor of the Formula 1 Grand Prix in Noida and the Delhi Half Marathon in 2011, about two years after the telecom operator signed a deal with English Premier League football club Manchester United.
Hero MotoCorp (formerly Hero Honda Motors) promoted the Delhi Commonwealth Games in 2010. The company was also the title sponsor of the men’s hockey world cup that year. Recently, Hero signed on golfers Anirban Lahiri, Shiv Kapur and Gaganjeet Bhullar, says a company spokesman. The Tatas sponsor badminton and marathon events.
Sahara itself promotes 95 events and cricket does not figure in any. A spokesman says the group also backs sportspersons in fields ranging from boxing to archery. Days after its exit from cricket, Sahara renewed a deal to sponsor hockey in India this week.
Game For More
Shushmul Maheshwari, CEO of research agency RNCOS, says sponsorships are no more cricket-centric. “Sponsorship now plays an important role in a company’s marketing mix and accounts for a significant chunk of the marketing budget.”
To cite an example, Sahara’s current sponsorship budget is Rs 550 crore for three-and-a-half years. Even a newbie handset maker such as Micromax has allotted up to 12% of its annual marketing budget for sponsorships, according to its marketing head Pratik Seal. Micromax, though, remains devoted to cricket, sponsoring tournaments such as the Asia Cup and the India, Sri Lanka & New Zealand tri-series in 2010.
Fortunately, the bigger companies are shedding their reticence for other sports. Airtel’s F1 deal was worth $66 million. Hero spends nearly $3 million a year on the Indian Open golf tournament while cellphone operator Aircel’s yearly sponsorship budget for the Chennai Open is around $0.7 million, according to Octagon.
Octagon director Prashant Singh says sponsorship of football, motor sports and golf have gained considerable ground in India. “It is because they have a quantity of followers or a quality of followers that brands are interested.” Each of these sports, he says, makes it viable for organisers and rights-holders to tap into and monetise.
Singh says it is important to remember that the F1 craze, for example, was not born overnight. “India could not have hosted a popular and successful F1 race a decade ago — we did not have enough audiences and, consequently, enough investments from brands chasing the audiences.”
Companies indeed want the biggest bang for their bucks. No executive would want to take his eyes off the bottom line though sports programmes are seen as prestigious sales tools. If more companies are game for football, it is with good reason. The Nielsen Company estimated that 81% of Indians would watch the live telecast of the football world cup in 2010.
Harish Krishnamachar, country head of sports management firm World Sport Group India, says he now sees companies seeking a connect with consumers in terms of popularity and identifying with a specific sport. There are some that take a long-term perspective too, he says.
Experts say Indian companies are borrowing a page from the rulebook of foreign counterparts here. Sponsoring a marquee event costs a bomb — the UEFA Champions League, the club championship of European football, costs e150 million to sponsor for three years while it takes as much as $70 million to promote a F1 team for a season. But the advantages are palpable. Sponsoring the Champions League gives Dutch brewer Heineken exposure to a huge audience that guzzles beer.
Jan Tilman Schwab, the world’s leading football film historian and author of Lexicon of Football Films in German, says simply spoken, sponsorship must translate into financial gains. “Otherwise, it wouldn’t be done in capitalism.”
Gains or not, companies in India find it worth their while to sponsor sports for different reasons. Arvind Saxena, sales and marketing director of Hyundai Motor, says his company’s sponsorship initiatives are directed to establish an emotional connect with cricket-loving Indian customers.
This strategy finds resonance with some experts. RNCOS’ Maheshwari says sponsorship is considered the most emotional of all communication media. No other medium boasts the emotional attachment that consumers have with sporting events, he says. Sahara is a household name in India thanks to cricket, he says.
Some companies leverage sponsorship to reach an audience. Bharat Bambawale, director, global brand, Bharti Airtel, says, “What could be a better way of engaging with a target group than sports?”
For others, sports are a launchpad for brand visibility. Gold financier Muthoot Finance, long known as a Kerala group, introduced north India to five-minute gold loans after it became principal sponsor of Indian Premier League team Delhi Daredevils.
Muthoot chief marketing officer Avinav Choubey says
has given Muthoot a pan-India reach. “We are now a national brand with about 3,700 branches.”
Sponsorship also buffets advertising costs. Advertising during marquee sporting events is pricey. Choubey says a 10-second advertisement slot on TV during the IPL costs Rs 5.5 lakh. “This year, I hear it is Rs 6.6 lakh.”
Source: Sports Marketing Frontiers
By virtue of sponsoring the Daredevils, the Muthoot logo is displayed on T-shirts for nearly three hours, the duration of a T20 match. Muthoot also has exclusive stadium rights besides permission to feature players in commercials.
Advertising agency JWT’s CEO Colvyn Harris believes sponsorship trumps advertising. Sponsoring a player, team or event gives a company greater brand visibility, he says, adding that news channels pick up the footage of players, which is shown through the years.
Still, the sports sponsorship market in India at $400 million is not a patch on the total advertising revenue of $2.41 billion recorded last year. That could radically change when companies realise the full potential of sports, say experts. Already, companies are using sports to build business, especially in golf events where they woo fans who turn out to be potential clients.
Elsewhere, Tata Consultancy Services has turned to events such as the Scuderia Ferrari Formula 1 auto racing team and the ING New York City Marathon. Most of the IT major’s revenue is derived from abroad and Tata uses these events to engage clients.
Likewise, the real business opportunity of the Jaypee Group, which built the F1 race track, will come from developing properties than racing, says Maheshwari.
Source: Sports Marketing Frontiers
But not everyone is upbeat about the market. Shailendra Singh, joint MD of sports and media management firm Percept Ltd, says corporate sponsorship in India is still immature in terms of economic benefits. “It is obnoxiously RoI (return on investments) driven and few corporates have a long-term vision.”
Indian businessmen don’t understand that sports can change India’s brand, people and business, says Singh, who has spent 20-odd years managing sports. “Therefore, we remain a single-sport nation. Indians are not used to marathons, but sprints.”
Singh says sports authorities must give corporates confidence for long-term money to flow into the market. Octagon backs this argument, saying if India has to corner 5% of the global market, sports federations must be cleaned up and administered professionally.
Some companies and sports managers are also cool to the potential of sports. Retail powerhouse Future Group was an avid cricket sponsor a few years ago, but avoids sports like the plague these days. A senior official says there is absolutely no chance of the group returning to sports. “It is too much money.”
That is true if one considers that all that sponsorship buys is the right to use the name of an event, a team or an organisation. Activation — an industry parlance for promotions, television commercials and so forth —might amplify a sponsor’s budget several times over.
Given the inherent unpredictability of competitive sports, a long stretch of poor performances like the one the Indian cricket team is experiencing now, can hurt a brand. There are also occasions when a player gets into trouble — Tiger Woods is a shining example — or simply fails to show up for a promotion. Sponsorship also gets lost in competition as it happened with Pepsico. The beverages major dropped cricketer Virender Sehwag when arch rival Coca-Cola bought sponsorship rights for Delhi Daredevils.
Latika Khaneja, director of Collage Sports Management, is averse to sports for another reason. She says the IPL has diluted the value of the market with its astronomical fees; so endorsements don’t matter for some players. “It has become difficult to manage relations and give minimum guarantees.” Khaneja, who manages Sehwag, Ravindra Jadeja and Ishant Sharma, is winding down the business.
But many promising signs are blossoming away from the cricket pitch.
Octagon’s Singh says the Indian appetite for sports is only increasing, thanks to the multiplicity of TV channels. “Two decades ago, we just had Prime Sports and Doordarshan. Today, we see cricket, international football, motor sports, basketball, golf, tennis, badminton and boxing covered extensively, allowing consumers to first, sample, and then, get involved with the sport of their choice.”
The recent World Kabbadi Championship is an example, he says. “It was held in Punjab, but kabaddi fans from across the country could watch it on TV.” Singh says slowly but surely, India is transforming India into a multi-sport country rather than just a cricket-crazy country.
The majority of the companies ET on Sunday approached did not give the money they have set aside for sports, but confirmed they are committed to sponsorship for a long time to come.
JWT’s Harris says the future bodes well for sports sponsorship in India. Take the F1 as an example, he says. “The first edition was a success, so the second will have more brands and the third one will firmly take root.”
But on whether sponsors connect with end consumers, Schwab, the historian, has this to say: “When Telekom became main sponsor of my club Bayern Munich, I changed my (telecom) provider to Freenet. But I still drive an Opel, which was the previous main sponsor. To tell you a secret: neither decision had anything to do with Bayern’s sponsor.”
Alright, sponsors also have bad days.
( Originally published on Feb 12, 2012 )