No Child’s Play

Sports Management in India

From building morale and inculcating values of sportsmanship to being used as a tool to build diplomatic relations, sports have been central to human progress. To say that India is fascinated by sports or that cricket is a religion would be a gross understatement. However, despite the enthusiasm and the multitude of talent, the state of Indian sports today leaves a lot to be desired.

The Need

There is no dearth of talent in India. What India lacks is the system to unearth these talents and provide them with a platform to flourish. With an increasing number of global sporting events (IPL, Commonwealth Games, Indian Grand Prix, World Chess Championship) coming to India, the need for structured sports management and its marketing is being felt more than ever before. A National Skill Development Council (NSDC) Skills-Gap study in the sports sector found that by the year 2022, India would need the following –

table

Challenges

This represents significant challenges and opportunities in the sports sector in India.

To begin with, we live in a society that encourages academic excellence, relegating sports to a lower priority. Despite its potential, sports is largely seen as a recreational activity rather than a profession. The ecosystem that surrounds sports remains largely neglected, with the focus being only on the players. Moreover, women sports continue to be ignored in India.

India’s preoccupation with cricket represents another challenge, as it has deterred the development of other sports. World champions in sports such as snooker, squash and chess go unrecognized. Indigenous games such as kabbadi and kho-kho have taken a backseat. Few opportunities are available for training, competitions and outreach for these games.

As far as resources are concerned, there are glaring gaps in almost every field of sports management in India. There is a conspicuous absence of the most basic infrastructure. According to the Comprehensive Sports Policy drafted by the Ministry of Sports and Youth Affairs in 2007: of the 770 million people below the age of 35 in India, only 50 million have access to organized games and sports facilities. The sports sector is largely under the purview of the public sector. Although private sector’s contribution has been growing, it is still small and largely unorganized. A combination of slow bureaucratic approach, organizational delays and poor maintenance has led to sub-optimal results with regards to new initiatives. Other concerns include the limited availability of qualified teachers and coaches, few opportunities for sports research, and the low level of coordination between various government bodies which are responsible for promoting sports.

Opportunities

The ever-increasing opportunities in sports sector present a platform for aspiring sportsmen and individuals associated with sports and allied services. The sports sector is becoming an increasingly important strategic business unit for many corporate houses in India. There are several untapped avenues that can be used to promote interest in sports, and generate employment in the process.

1. Global mega events in India

Examples: Indian Premier League, World Cups, Asian Games, Commonwealth Games, Indian Grand Prix

Major responsibilities at these events are often outsourced due to the lack of competent local talent. Although they happen in India, a major part of the organizing team comes from abroad. In spite of the outsourcing, local employment generation does take place. Commonwealth Games 2010 resulted in an overall economic impact of US $4,940 million on India’s GDP during a period of four years and expectedly created employment opportunities close to 24.7 lakh. The Indian Grand Prix saw an inflow of US $100 million into the Indian economy through the travel and hospitality industries. The Indian Premier League is directly and indirectly responsible for the employment of more than 15,000 people.

2. Domestic Competitions

Examples: I-League, National A, Ranji Trophy, Franchisee tournaments

Professional domestic competitions provide a platform for talent to be recognized. They help build infrastructure at the grassroots level, and enable non-sportspersons to gain exposure in the professional organization of sporting events.

3. Facilitating global sporting events

Examples: EPL, Tennis Grand Slams, NBA, Tour de France

A substantial segment of the Indian audience is interested in several sporting events that happen across the globe. Local clubs and sports centers could utilize these events to increase awareness among the masses. It would also help them in developing a consumer base and a fan following that is essential for their survival. Support for broadcast and commentary of these events would help these sports in India.

Changing Scenario

Sports is slowly evolving both on and off the field and is now gathering momentum, inching towards becoming an integral part of the common man’s life. The funding for sports in India has increased from INR 270 million in the Sixth Five Year Plan (1980 – 1985) to more than INR 46 billion in the Eleventh Five Year Plan (2007 – 2012).

sports_blog

The government has launched several schemes under the Tenth and Eleventh Five Year Plans that focus on uplifting the sports infrastructure, training and coaching facilities at the basic grass-root level as well as developing world class facilities.

Various institutes offering education in professional sports management have come up in the last decade. Sports is now an important strategic business unit in corporate, with many of them actively participating in the promotion of sports. India is now a regular host to some of the major global sporting events including the Chennai Open (ATP World Tour), Indian Open Super Series (Badminton), Indian Grand Prix (Formula 1) and various sports leagues (cricket, football, hockey, badminton, motor sports, golf).

Conclusion

A systematic and structured development of an environment conducive to the flourishing of sports is imperative for the long-term well-being of the country. There is immense potential for employment by developing professional sports management. There is also immense potential for revenues, both for the government and the private sector. Beyond contributing to India’s GDP, developing sports will also positively influence society by creating healthy, fit and productive citizens.

Sumit is a PGP1 student at IIM Ahmedabad and a member of Consult Club. He graduated from IIT Madras in 2013 with a Dual Degree (BTech + MTech) in Mechanical Engineering. He is interested in technology, business development and sports management. 

Advertisements

The Economic Impact of Mega Sporting Events

Bloomberg reported in 2008 that an estimated US$20 billion was spent on that year’s Olympic Games in Beijing. In fact, IMF estimates that about US$ 36 billion was spent on Olympic-related infrastructure in Beijing in the run up to the games. The spending by China on the Olympics was greater than the national GDPs of 83 countries in the world (IMF estimate). The last few decades have seen several billions of dollars being spent by nations across the world in hosting large international sporting events – the so-called ‘mega events’. One wonders if huge expenditures over world-level events like the Olympics, the World Championships and regional-level events like the Asian Games are justified. One of the most compelling arguments supporting cities bidding heavily for these events is the expected economic windfall brought by hostingthem.
World-level events, led by the Olympics, have become increasingly expensive over the years. Host cities see this not only as an opportunity to build new sports infrastructure but also improve urban infrastructure including housing facilities, communication networks and public transport. Such huge expenditures had led to 21 of the first 25 editions being hosted largely in Western Europe, North America and Australia. With growing concerns of potential terror attacks, security costs have also ballooned over the last decade. It is estimated that the security expenditures associated with the 2002 Salt Lake City Winter Games and the 2004 Athens Summer Olympics were over US$ 300 million and US$ 1 billion respectively. Security expenses largely come from the country’s Federal budget and arenot included in the games’ budgets. Further, there are annual maintenance costs of large stadia and associated sports infrastructure. Private sector companies might be hit by long term costs. Hotels might have seen a construction boom but the surplus capacity might create downward pressure on room rents in subsequent years. It is reported that within 5 years of the 1994 Lillehammer (Norway) Winter Games, 40% of the hotels in the region had gone bankrupt. Despite these shortcomings, estimating the cost associated with hosting a mega sporting event is far easier and reliable than estimating the revenues and economic benefits that a city derives from it.
The Sydney Olympic Games (2000) was expected to have a US$ 6.3 billion positive impact in addition to the creation of 100,000 new jobs. The Athens Olympics (2004) is estimated to have boosted economic activity by 1.3% of GDP every year between 1997 and 2005 and reduced unemployment by 1.9% per year. Prediction studies typically derive economic benefit studies from –direct impact (number of days spent by a visitor x number of visitors x average amount spent by a visitor) and indirect impact (effect of infrastructure spending). A key argument against the direct impact figure are that since leisure travellers’ budgets are inflexible, their spending on tickets simply leaves lesser money to spend on other substitute activities in the local economy. This suggests that the direct impact figure is likely to be overestimated. The effect of ‘crowding out’ local population spending is to be incorporated in addition to negative externalities such as congestion. Further, the issue of ‘time-switching’ is ignored: A visitor planning to visit Athens few months later might just have rescheduled his visit to coincide with the games. However, the latter effect is likely to be subdued for mega events like the Olympics.
The Indirect Impact is estimated by applying ‘multipliers’ to direct expenditures towards the event. These economic multipliers are derived from complex mathematical functions that model the relationships between different businesses in the region. However, when a world-level mega sporting event is happening in a region, some of these relationships do not hold. Another problem while estimating the Indirect Impact is the inability to separate the money flowing to international chains, in which case a foreign shareholder might derive greater benefit than the local population. Further, such leakages are aggravated by the entry of external firms that provide goods and services only during the games.  The benefits derived from the huge infrastructure investments presents yet another complication. Several secondary benefits accrue from heavy infrastructure spending surrounding a mega event. Improved connectivity, increased development of available real estate and even project management capability can derived. The property market in the region is buoyant following an event of this scale. Labour market impact and the socio-economic inclusion of a larger set of people is harder to quantify.
There are numerous intangible benefits that a city or nation derives from hosting a mega sporting event. Firstly, the city gets a ‘status-lift’ making its mark at the world level and rising into the echelons of ‘world cities’. Some studies show ‘a restoration of self-confidence’, ‘civic pride’ and ‘dynamism’ among the citizens following a mega event. The 2008 Beijing Olympics made an attempt of showcasing itselfas a democratic, civilized and harmonious country. In some countries, such events are used as a legitimate excuse to get legislative approval for infrastructure and other projects that might otherwise not be possible.
Despite the less-than-accurate estimates of cost and revenues associated with a mega sporting event, hosting the Olympics has remained an elixir of sorts used by governments across the world. Large caveats that come along with the prediction models have not tempered the gigantic bids cities make to host such world-level and inter-continental events. Do the economic, fiscal, political, social and cultural benefits outweigh the public expenditure of gargantuan proportions? Only time will tell. 

CWG 2010 and Urban Development

An umpteen number of articles, headlines and columns have been written about the organizational inefficiencies and corruption controversies that boldly mark the past and present of Commonwealth Games-India 2010. The opinion that the enormous expenditure related to the organization of Commonwealth Games is anti-poor and unwarranted is totally valid. However, there is no denying the fact that the Commonwealth Games are the world’s third largest multi sporting event and few doubt the global impact and opportunity for development that they offer. Now that India is closing in fast towards the completion of this tremendous challenge it undertook a few years ago, it is imperative that we look at the economic benefits that the games offer.

The CWG is going to be the first major sporting event to be held in the capital city since The Asian Games in 1982. A lot has changed; India is aiming to become an economic superpower and the games are seen as a perfect opportunity to break out on the world stage. The major challenge is to ensure that the potential of CWG as a catalyst for change is harnessed. Be it Barcelona hosting the 1992 Olympic Games or CWG 2002 in Manchester, history has numerous instances where whole cities have been revived due to the change brought about by the games after long periods of low growth and degradation. On a similar note Delhi wishes to stimulate economic growth and improve city infrastructure through CWG 2010.

The development work relating to CWG 2010 Delhi can be broadly classified as:

New stadiums and renovation of existing stadiums

The construction and up gradation of sports facilities is central to CWG 2010. A games village planned at an estimated expenditure of INR 955 crores is aimed at boosting public sports infrastructure. The govt. plans to handover this village to the Delhi University for usage as hostels in future. This in turn would be great news to education infrastructure in the city. Another INR 1250 crores is to be spent on the extensive renovation of existing sport facilities which would be instrumental in putting these otherwise under-utilized facilities to use.

Hospitality Sector

Hospitality is another area that will benefit greatly from the influx of about 8000 athletes and thousands of other foreign tourists. The exponential increase in demand for hospitality services will spell money for the players in this sector. The demand for hotel rooms is estimated to be 30,000 during the games. DDA has planned to auction about 20 sites for new world class hotels. This would raise hundreds of crores for the DDA and would boost Delhi’s capacity to handle inflow of people just a like a world class city should do.

Transport Sector

It is Delhi govt.’s foremost aim to develop an effective mass transport system and solve the massive congestion problems that the city has been facing over the past years. The emphasis has only increased with the games being organized in the city. We have already seen the development of the grand Terminal 3 of the Delhi airport, which got a great impetus in teh speed of development from the CWG. It is now the 3rd biggest airport terminal in the world, with a capacity to handle more than 34 million people a year domestically and internationally. A lot of other enormous plans are in the pipeline; flyovers, bypasses, broader roads, a larger metro system, a high capacity bus system etc. In fact, the transport sector has already been assigned 23.68% of the Tenth plan outlay which amounts to about INR 23,600 crores. Road and transport infrastructure define a city and all this activity in background of the CWG will keep the capital city alive and competitive on the global scale.

Business Promotion

Business promotion for the Indian industry is a key agenda for the CWG Organising Committee. It has even partnered with Confederation of Indian Industry (CII) and the Federation of Indian Chambers of Commerce and Industry (FICCI), to help it achieve this aim. In fact, talks are in progress with Australia, Scotland, South Africa and UK regarding the building of business collaborations in the Pharmaceutical and IT sector. Other sectors like medical tourism, food processing, energy and education also hold lot of promise. It’s estimated that about six to eight memoranda of understanding will be signed with these countries.

All this also spells good news for consulting firms as they get an opportunity to rope in several projects in event management. Some examples are the consulting firms of Mike Bushell (Sports Marketing and Management) and Craig McLatchey (Event Knowledge Services) that are involved in the event. A lot of Indian consultancies will also benefit as several opportunities are in the offing; for example, Air India sometime back was looking for a brand consultant to manage its image makeover during the CWG.

All in all, the Commonwealth Games, in spite of all the corruption and drama, have already contributed a lot to the development of the Indian industry and infrastructure. Now it just remains to be seen, whether they hold some positive news on the Indian sports front as well.