After succeeding in the first edition of the Indian Premier League (IPL), Emerging Media-owned Rajasthan Royals has big plans to develop the franchise into a global brand. Part of the agenda is to do a variety of lucrative commercial deals and break even before three years.
Emerging Media is looking at raising around $20 million by selling 10 per cent of its stake. The company is in the process of appointing bankers to find a private equity partner, ahead of an initial public offering (IPO).
In an interview with Indiantelevision.com's Ashwin Pinto, Rajasthan Royals vice chairman Ravi Krishnan spells out the franchise's future strategies.
The IPL franchisees are said to have recovered close to 80 per cent of the money they paid to the Board of Control for Cricket in India in the first year. Does the huge success of the first edition of IPL mean that Rajasthan Royals will break even faster than the earlier three-year target?
We are revising our plans positively, though I can't comment exactly on the figures. We spent less on acquiring the franchise and invested judiciously. We did not sign an expensive contract with a Bollywood star; nor did we spend heavily on advertising campaigns. I have never seen Chicago Bulls run an ad campaign; it is PR-led and builds value from the success that it enjoys. You could focus on the peripheral stuff as well, but the IPL at the end of the day is a sporting competition.
Since we played well and won the inaugural IPL tournament, this has opened up more opportunities for us like playing in the Champions T20 League. We will, thus, be in a position to rake in more money.
What are the commercial opportunities that have opened up for you after your success?
We are scouting for strategic partnerships. There are some obvious ones like sponsorships on the shirt, etc. Then there are those that are not so obvious that will showcase the success of our franchise. We will be announcing more details later.
What are the plans in the licensing and merchandising arena?
We are in discussions with different parties for tie ups. We have a very broad licensing and merchandising programme, which would cover a range of goods and services.
Would it be a challenge for franchisees to get sponsors at high value because of the global economic downturn?
Even if some sectors have been affected by the downturn, other clients will come on board. When the tobacco embargo came in and Wills stopped sponsoring cricket, there were predictions of doom. However, other companies stepped in. Advertisers can't ignore the IPL. I do not think that there is cause for any of us to panic.
Why are some franchisees including Rajasthan Royals looking at raising funds by divesting stake. Isn't this coming too soon and at a time when there is a global downturn?
There are different reasons for selling a stake. For us, the aim is to fund the development of the franchise.
Are you looking at private equity investors as it is a bad time to go for an IPO?
We will be diluting a small part of the equity and are looking at the private equity route. We are in the process of appointing bankers.
Up next for the Rajasthan Royals is the Champions T20 League. How do you see this developing as a property?
I think that it will be as significant for cricket as the Champions League is to soccer. In tennis you have the year-end Masters Cup where only the best of the best get to play. The Champions T20 League will occupy a similar mind space. It is being held for the first time and so there is some uncertainty among some parties; but I think it will do really well. It will be the icing on the cake when you talk about global domestic competitions.
One of the things that EPL (English Premier League) clubs have done is to market themselves through foreign tours. What plans do you have in making Rajasthan Royals a major brand?
You have to remember that the EPL and its clubs are 100 years old. IPL has just finished its first year. While it is new, the IPL has aspirations to evolve into a major league in world sport like the EPL.
What role will Rajasthan Royals play in helping Emerging media become a player to be reckoned with on the global stage?
I think that the success of Rajasthan Royals will provide a platform for the company to enter into other areas. However at the moment, we are going into the Champions T20 League, which will be followed by another IPL season next year.
What is your strategy going to be when the trading window opens on 15 December?
We are looking at various permutations and combinations. The fact is that our team had seven nationalities. The public loved seeing Shane Warne, Sohail Tanveer and Graeme Smith on the same team. This lent freshness to the proceedings.
The trading window is an innovation that fans look forward to. Who is going to be in the team? Who will not be there? Who will be traded? There will be a lot of drama around this. This is what happens in the US with college drafts for baseball and basketball. The composition of some teams in the IPL will change which will cause speculation and excitement.
What were the things discussed at the recent meeting in Bangkok to improve the IPL?
We had a conference in Bangkok to debate on the areas where we can improve upon. It was a three-day session that looked at different things - from organisation to ticketing to hospitality.
Hospitality as you mentioned is an area that could be improved upon. What are Rajasthan Royals' plans in this?
We recently launched our membership programme. We benchmarked this against other membership programmes globally. It is a five-tier programme and also includes kids. Creating a community can contribute to the financial success of the franchise as they would buy tickets, merchandise products and also attend special events. We are the first IPL franchise to launch a structured membership programme.
Our membership programme could create life-long fans for the franchise. I have supported a football club in Australia since I was five years old. I am a repeat buyer of their jerseys and other club merchandise. It is about building a community and then finding ways to get them excited. Giving them special offers is one such way.
What is the impact that IPL will have on world cricket and on the business of sports marketing?
Let me take the second point first. In terms of sports marketing, it is providing a viable platform for companies to get involved with cricket. It could be through attaching themselves to the league itself or to a franchise or getting visibility on the broadcasting platform. The fact that there is also a Bollywood element to it has made the IPL an interesting marketing platform.
The IPL has also brought in opportunities for service providers like ticketing companies, ad agencies and firms that specialise in hospitality.
As far as the world of cricket is concerned, the IPL has found its place. English and Sri Lankan players badly want to play in it. The IPL offers players the chance to make the most out of their short career spans. While the Future Tours Programme might make it difficult for all players to take part, the way the BCCI and other boards are dealing with the issue is good.
The IPL has also upped the ante as far as careers in sports go for Indians. Cricketers who were unheard of, can make more money here than from playing the Ranji Trophy.
As a sports marketer, do you feel that there is danger of Test cricket and ODIs getting devalued as T20 grows in importance?
This sport has had its origins in Test cricket and it would be wrong if the people in charge of the future of cricket, were not concerned about this format losing its lustre. The gatekeepers need to ensure that there is enough opportunity for the various formats to survive. The administration has to see to it that no format is overplayed or underplayed.
Would the league franchise model for another sport like hockey or soccer work?
A lot of things have to be pulling together in the right direction for this to succeed - the sports administration, the broadcast platform, the corporate community and the players.