Show me the money – Uday Disley

For all those who have been hooked to your television sets to watch the FIFA World CUP, you probably missed one team playing all along. Take a guess! It is team Mahindra Satyam. They seem to have done a great job, four years into the contract, all culminating in the delivery of a world class output. Picture this, 3.14 Million tickets have been sold in this world cup; the company is tracking $1 billion worth of assets, managing viewership across 214 countries through 317 channels, managing 150,000 volunteers and 250,000 accreditations. Apart from all this, the logistics of movement of players and officials too have been tracked by Mahindra Satyam. In other words they have done what no other Indian company has done before and that too on this scale. Does this mean something for those of us in the investment banking community who follow the sports industry very closely?

If one were to look at investments in sports in India, the complaint has always been about the lack of opportunities. This is where the Mahindras have come into their own and have cashed in where the long tail wagged. We at Viedea firmly believe that the money in sports is clearly in the long value chain that large sporting formats offer. So let’s briefly summarize the main elements of the value chain – sponsorship, marketing, television, digital and technology, logistics, stadiums, teams and athlete rights. The long tail flows from these elements, for example marketing would include advertising, on field and off field promotions, event day promotions and marketing arrangements. There are not many of these large sporting formats (or franchise to use a more familiar term) that are of the size of the FIFA world cup. For arguments sake let us say that there is also the Olympics, European professional football leagues, American professional sports leagues, the F1, ATP tours, the PGA tour and of course our very own IPL, which are of considerable size. The entire value chain leading to these event centric sports is where we believe that the real money is for the sports industry both domestically and internationally.

It would be interesting to note that one of the companies that we interact with analyses sports events for its marketing clients. So you have about 150 odd people sitting in Bangalore analyzing how many times Coca Cola’s logo (example) flashes on television screens through out the FIFA world cup. Back home in Bangalore, DNA Networks which manages the ticketing, ground staff and promotional events for the IPL is another example of a support services company raking in the ‘moolah’ being associated with a successful sports property.

There are many more examples of such support service providers in India, who have the potential to cater to opportunities thrown by the entire sports value chain. The question that we need to ask is whether these companies are doing enough to reach out to large sporting formats abroad. Also, are there investors out there who believe that Indian companies can scale up to match expectations of a world class sports property?

With Mahindra Satyam leading the way, we believe that there will be many more Indian companies (if not Indian sportspersons) winning accolades in the next Olympics.