Monday, September 15, 2014

Will Pro Kabaddi Franchisees make money

Every sports worth the name seems to have a pro league in India which has commenced or will commence soon. These games include cricket, football, hockey badminton and lawn tennis.Now the question that need to be asked is do these leagues just have prestige value or can they make money too for the franchise owner.

 The common wisdom has it that "pro-leagues do not really help create money for the franchisees" but it does help create mileage for  businesses and individuals who are looking for brand name for future. What if there is a popular sport where players are available cheap; the game is exciting and the audience can relate to the team and above all there are brand icons associated to add glitz and glamour to the game. So kabaddi seems to be the answer.

Here are some facts about the pro kabaddi league that would help the game become popular:
  1. Audience in India can relate to the game easily as it is a popular game in India.
  2. The prokabaddi is fast paced and can be finished in 40 minutes hence it is short and exciting.
  3. The space required for the game is lesser compared to other popular games such as cricket and football.It is popular among both men and women hence couples watching matches together would bre more common.
  4. Mashaal sports the brain behind pro kabaddi is run by Charu Sharma who understands the sports industry well and Anand Mahindra who is an astute businessman who can monetise these opportunities well.
  5. The support of a strong media partner in the form of star sports adds strength to the whole process.
  6. The owners of the teams are all brand icons in their own right. This adds to the who process.
  7. With a nationalist government at the helm of affairs the government support could also come in if the game attracts the requisite critical mass. 
Following is the business model of kabaddi: :

  1. Revenue: The major sources of revenue for the company includes sales of tickets for home matches, sponsorship, memorabilia, share of advertisement revenue and share of  stadium revenue.
    • In the first season the major source of revenue was sales of tickets. The last leg saw full house. 
    • Revenue from advertisements and sponsorship were on the lower side. this edition. However, going forward with the reach estimated at 218 million it is expected that the revenue from advertisements and sponsorship would increase in the March edition of the event. One fourth of the total viewership could be attributed to age group 15 to 24. Hence, the growth of revenue through advertisements targeted at this age group is expected to increase.
    • As the popularity of pro kabaddi increases the icon players could help generate revenue for the game through sales of memorabilia going forward.
  2.  Cost: The major cost drivers for pro kabaddi league teams include player acquisition cost, license fees, transportation and lodging costs for players.
    • To promote the game the pro kabaddi franchisees have been able to acquire the teams at token price only.
    • As the game is not rewarding financially for the players traditionally, the whole team have been bought at INR 60 lakhs. Hence the cost of acquisition is extremely low.
    • The other major expense is travelling and lodging cost.
Looking at the low cost structure it can be deduced that the investors in pro kabaddi league can breakeven in a short period. It is estimated that the franchisees will break-even in three months compared to fifteen months in case of the bellwether IPL cricket league.