homebusiness NewsMad About Markets: Here’s all you need to know about the booming sports business in India

Mad About Markets: Here’s all you need to know about the booming sports business in India

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By Mangalam Maloo   | Ritu Singh  Sept 29, 2021 9:06:47 PM IST (Updated)

The growth of the Indian sports industry has also created big growth opportunities for other businesses. The cumulative sales of sportswear in India have grown to over Rs 9000 crore. This industry also grew in the year of the pandemic, when the sports industry itself fell by about 35 percent. A third of the sales came from the digital channel.

The second part of the IPL is underway and it comes after the rollicking Test series in England. Team India performed phenomenally in both the Tokyo Olympics as well as the Paralympics which succeeded it. In short, Indian sports rocks. India’s sports industry too has seen a huge growth over the last decade at almost 15 percent.

In fact, the Indian sports industry is one of the fastest-growing in the world, although on a smaller base; and this is considerably higher than the 5 percent growth that the world is seeing for the sports industry in the last five years.
The Indian sports market was worth Rs 6,400 crore in 2016 and jumped to Rs 9,100 crore, which is a billion and a half dollars, and saw a 42 percent CAGR over the next three years. Of course the pandemic hit all sectors in 2020, and the sports industry saw a drop of 35 percent.
However, the industry is set to bounce back, all the way up to Rs 8,800 crore. Some optimistic estimates expect the sports market to reach above pre-pandemic levels.
A large chunk of this, almost 60 percent, is just media spends. Besides the on-ground ads, that contribute almost 11 percent, the sponsorships and endorsements make up this Rs 5,900-crore market size.
The bulk of the growth will come from on-ground ads. Media spend as always constitutes a significant chunk of the market and is expected to grow by almost 15 percent. About 12-14 percent growth is expected from endorsements.
Of course, it is a skewed market when you talk about sports in India. It is an understatement to say that cricket dominates the sports industry here. Of the Rs 5,900 crore, around Rs 5,150 crore comes from cricket. Other sports like football and the rest account for the remaining Rs 800 crore.
India’s love affair with cricket
Vikram Sathaye, a cricket presenter, said, “I think there are two reasons. The first is anything that is aspirational over a period of time becomes popular. Cricket was aspirational because the British ruled us for 200 long years, and played the game. The generals played it, the bureaucracy played it, the heads of the princely states played it, the Parsis played it, so it became aspirational for the common man. To become cool you had to play cricket and if you played well, the British also respected you. So it became popular at that level.”
“Interestingly, it was a class sport even in Britain, and the mass sport was football. The reverse has happened in India now. Football has become aspirational because the urban guys now say hey, I don't watch this cricket. I am a fan of Chelsea, ManU, and Arsenal and the cool dude. So football has become aspirational and that is why now you have a lot of footballers in this country,” he said.
The second most important reason is economics -- the 1971 and 1983 victories and then the advent of the economic God, Sachin Tendulkar. Sachin’s journey and the Indian economic journey went into the stratosphere. When economics and aspiration come together, it is a winning combination. When every mother in this country starts thinking that now by playing cricket, her son or daughter could be a hero, the two reasons come together and explain why cricket is popular in India.
IPL, the golden goose
What has really commercialised the business of cricket is the Indian Premier League (IPL). In 2008, when the financial crisis had devastated the business world, the BCCI the cricketing body in India, came up with the IPL game plan to turn cricket into profitable money-minting machine.
The IPL itself accounts for nearly half of the entire sports market in normal times and almost the entire revenue as of last year. As of 2020, the IPL industry was valued at Rs 45,800 crore, that's nearly a twofold jump of its value about five years ago.
To talk about the business of sports in India, CNBC-TV18 spoke with Vinit Karnik, Head - Entertainment Sports and Live Event, GroupM and Abishek Ganguly, MD, Puma.
Talking about how the sports industry evolved, including cricket and other sports, Karnik said the growth of sports as an industry has been phenomenal over the years. The whole growth story actually began in 2008 with the IPL.
So from 2008 till about 2019, the Indian sports industry overall was growing at a healthy 12-13 percent, in some cases 14 percent. This is the overall percentage from a sports industry perspective. Regarding the non-cricket sports, because of the low base, these sports were actually growing at a very healthy 15-17 percent in some cases over the last five to seven years.
Ripple effect
The growth of the Indian sports industry has created big opportunities for other businesses. Cumulative sales of sportswear in India that have grown to over Rs 9,000 crore (almost $1.2 billion) -- that's the combined retail sales of the biggest players like Puma, Adidas, Nike. This industry also grew in the year of the pandemic, when the sports industry itself fell by about 35 percent. A third of the sales came from the e-commerce platform.
The official merchandise market -- team jerseys, caps, bobbleheads – is also booming with around Rs 100 crore in terms of retail sales. There is also a lot of latent demand. This industry is growing at over 50 percent. And now with a new jersey partner, fan merchandise options, and digital sales, this industry is likely to grow much faster.
To know about the opportunity here, CNBC-TV18 spoke with Harsh Lal, Co-Founder, The Souled Store, the official merchandiser for a handful of IPL teams
Lal said, “The sports merchandise industry globally was valued at about $30 billion in 2020. In comparison, the Indian sports merchandise industry was only $500 billion, that's less than 2 percent of the global total.”
Now while we expect to grow at about 10 percent year on year, we need to be cautiously optimistic, he said, adding that the biggest gap here is that our foreign counterparts enjoy a cult following that they've built over generations. Whereas most of the Indian sports leagues that we see today are barely 5-10 year old.
So if we truly want to succeed and hit our potential, there has to be a much longer-term commitment in terms of money and effort to grow this. If brands and sports franchises look at this from a shorter-term point of view to simply cash in on the hype, I don't think we can hit the potential that we have and build true value for our fans, he specified.
Talking about growth in the athletic wear category and in the industry in 2020 and 2021 so far, Puma’s Ganguly said, “We have seen tremendous growth in business. The recovery started in the last quarter of 2020. When we grew about 10 percent over the last year, which was pre-pandemic in 2019. This year, there has been tremendous growth. We are at this stage, doubling our business over 2020. So we are seeing enormous growth. I think it's also the category which is growing and not just us, but the overall sportswear category is growing at a great pace at this stage.”
For the entire show, watch the video
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