India wakes up to the business of sport

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The scandal engulfing the multi-billion dollar Indian Premier League (IPL) raises a cautionary flag in a country where big business and sport are currently enjoying a new and lucrative flirtation.

When it comes to sport, India has always been something of a sleeping giant, lacking the sort of hunger that has seen neighbouring China transform itself an Olympic powerhouse.

Until recently, it was essentially viewed as a one-sport nation, devoting all its passion and resources to the pursuit of excellence on the cricket field.

In three short years, the IPL took that devotion and turned it into a marketing phenomenon, building a showbiz-fuelled cricket tournament that now carries a brand value estimated at 4.1 billion dollars.

For many the success of the IPL was a symbol of the new India - an emerging economic powerhouse, pumped up with self-confidence and aspiring to assert itself in the global arena.

India's wealthy corporate giants started looking at sport in a fresh light, seeing opportunities to grab new national and even global advertising platforms by investing in high-profile events.

Earlier this year, India got the go-ahead to join one of the most prestigious sporting clubs of all and host a Formula One Grand Prix in 2011 at a brand new track to be built near New Delhi.

In late 2007, flamboyant Indian entrepreneur Vijay Mallya - chairman of United Breweries group and Kingfisher Airlines - bought a 50-percent stake in the Spyker F1 team for around 120 million dollars and promptly rebranded the team as Force India.

One of India's leading vehicle makers, Mahindra and Mahindra recently launched a basketball league in three cities in a tie-up with the US-based National Basketball Association (NBA).

At the same time, India's largest private sector firm, Reliance Industries, struck a deal with IMG Worldwide, a big player in sports marketing and management, to create and operate sports and entertainment assets.

Reliance chairman Mukesh Ambani said the new joint venture would help "transform the sporting fabric" of India.

But the honeymoon period for the marriage of big business and sport has been punctured by the allegations of corruption, money laundering and tax evasion that have overwhelmed the IPL and caused major sponsors to review their links with the tournament.

"The IPL was meant to showcase India and the coming of age of Indian sports," the journalist and economist Paranjoy Guha Thakurta told AFP.

"You cannot run a tournament like IPL as a closed club. But I do not think the IPL scandal will dissuade investors. Sports is not a bad investment to make in India."

Last year, Indian consumer electronics and home appliances conglomerate Videocon Industries bought the franchise rights for India for the World Series of boxing, which starts in September.

The tournament, which is modelled along similar lines to the IPL, features 12 franchise teams spread across three regions - Asia, Europe and the Americas - competing for team and individual titles.

Nandan Kamath, Director of Gosports India, a leading sports management and marketing firm, said corporate India had finally woken up to the exposure that sports can offer.

"More than many other investments, sport provides an interactive opportunity for investors. Community, affinity and interactivity are of great value to brands and sport is capable of delivering on each of these counts," Kamath told AFP.

"The challenge for Indian sport is to channel these investments well and to encourage these investors and brands to keep coming back," he added.

Poor infrastructure and a multi-layered bureaucracy are among the biggest hurdles facing potential investors, according to a study by TransStadia-Ernst Young.

"Investment is growing in sports and reflects a growing positive environment for sports business in India," says Udith Sheth of Transstadia, a start-up company which is setting up a multi-purpose sports complex in the western city of Ahmedabad.

"But the government has to come up with pro-sporting industry policies to attract higher investment," Sheth said.

Despite the problems with the IPL, Kamath insisted that the tournament deserved credit for opening corporate eyes to the opportunities sports provide.

"The IPL showed that if a professional platform is built and fans and viewers are engaged, there will be willingness from sponsors and partners to participate and invest," he said.

"The easier investment is in cricket but that certainly comes with a hefty price tag," he said. "Smaller investments in other sports can be effectively leveraged through integrated marketing efforts and engagement strategies.

Further boosting investor sentiment is the Commonwealth Games to be hosted in New Delhi from October 3-14 this year.

The government is pumping in 2.5 billion dollars for Games infrastructure development and organisation.