Creating sustainable championship football in India

Since its inaugural edition in the 1996-97 season, the National Football League in India has been struggling for survival. Plagued with uncertain sponsorship, a poor stadium attendance record and woeful media coverage, it is remarkable that the league has managed to stay afloat for so long. The AIFF's approach to running the league has been much like putting it on an artificial respirator, obtaining last minute sponsorship deals to keep the league breathing, with no concern for long term viability. Much has been said about the inefficient manner in which the league is run, with poor scheduling and a shameful lack of adherence to contracts. The problem however runs much deeper than simply poor management. Football like all commercial sport is a business. It is hence essential to understand the business dynamics that drive commercial sport before investing valuable resources behind the game. Such an analysis reveals where league football in India has got it all wrong, resulting in a lot of good money being thrown behind bad money. This shall be based to a large extent on parallels drawn from the most successful model of commercial football, championship football in Europe.

Like all business, football is driven by the concept of a value chain. At one end of this value chain we have player and coaching talent, the most basic raw material needed to create the football product. The other end of the value chain consists of the final entertainment product provided to stakeholders such as fans and sponsors. In between these, elements such as training facilities, the stadium atmosphere and media coverage contribute to the final product. Due to its diversified nature, European football is extremely well endowed throughout this value. It is able to source quality players and coaches from across the world. Further, a number of clubs own their own stadiums and boast of star players who have a huge worldwide fan following. Finally, quality media coverage by top sports channels ensures a high quality of the final football product. As a result, European football is in great demand, with a tremendous fan following and lucrative sponsorship deals from top global corporations. The key to the success of European football lies in the way clubs have occupied distinct roles throughout this value chain. In Europe, all clubs, based on the quality of football players available to them, the financial resources available to them and the strength of their brand (largely based on fan following), operate in one of three sustainable business models.

In the first model, clubs act as a breeding ground for new talent. These clubs normally play in the lower divisions or fight first division relegation battles in their respective countries. Given the supply side diversity of the European game, clubs in South America, Asia and Africa also fit into this role. They have a local fan following but are not popular on the national or international stage. As a result, the primary revenue source for these clubs is through the sale of players. While they rarely compete for prize money at top tournaments or for big sponsorship deals, their business model is commercially sustainable. These clubs make their money purely as raw material providers in the value chain.

In the second model, clubs are primarily driven by competition performance. They tend to occupy the middle regions of their national leagues and make the odd appearance at European competitions. The main revenue source for these clubs is through national competition match fees, prize money and sponsorship from small national corporations. Further, they act as first stop clubs for players scouted by smaller clubs. However, by grooming these players and selling the stars to top clubs, they achieve a balance in transfer payments. These clubs act as the typical intermediaries, striking a balance between the raw material and end product side of the value chain. Brescia in Italy for example has managed to survive in top flight competition using this business model.

Finally, the third model consists of clubs with revenue streams that are significantly skewed towards the final football product. Clubs like Manchester United and Real Madrid have a number of star players and very strong fan following. They make tremendous money on sponsorship deals, ticket and merchandise sales and tournament prize money. Similarly, they spend a lot on acquiring star players and are hence at the losing end of the player transfer equation. They operate at the highest end of the football value chain where the margins are the highest and hence tend to be the richest clubs.

The advantage for Europe is that the breadth and depth of the European football market and its integration with other markets like South America means that there is a strong pool of clubs following each of these business models. This forms the foundation for the viability and sustainability of European football. In India on the other hand, the pool of clubs is limited, with most clubs scrambling to achieve a comparable version of the third business model. With a system of transfer fees not in place and very poor infrastructure at the grass roots level, in is impossible for any club to survive with the first business model, resulting in a severe shortage of quality domestic players. While clubs do hire foreign talent, even this is of very substandard quality and is not affordable in the long run. Quality players are at the core of the entertainment experience provided by football. The AIFF needs to take a very careful look at the approach it is following. In the face of such severe competition from cricket, the demand pull approach of the AIFF of desperately seeking sponsorships and providing the occasion bursts of publicity as during the inaugural edition of the NFL cannot provide sustained success. The entire value chain of delivering the football product must be strengthened simultaneously while trying to create demand. This will require a much greater focus on grass roots leagues, regional tournaments, creating provisions for transfer fees and improving training facilities and infrastructure. Only then can we hope to see a domestic football league in India that can not only provide quality entertainment but also act as a launch pad for success at the international level.