Sports & Money

Sports & Money
Pradip Krishna Chatterjee, 1977 Mechanical Engineering

In February 2022, BCCI President Sourav Ganguly announced plans to start a women’s version of the Indian Premier League, which would take place in March 2023. On 25 January 2023 the BCCI officially named it the Women’s Premier League, and invited bids for the league’s title sponsorship rights until 2027. The Adani Group made the biggest splash in the bidding war to own a franchise, with the highest bid of Rs 1,289 crore for Ahmedabad, followed by Mumbai, Bangalore, Delhi and Lucknow. Men’s IPL team owners Mumbai Indians, Royal Challengers Bangalore and Delhi Capitals, along with Capri Global Holdings, bagged the other four franchises,

So even before a ball is bowled, the BCCI, one year prior to its scheduled league, could assure Rs 4,669.99 crore in their bag which it will earn over a period of 10 years. The BCCI had earlier sold the media rights to Viacom 18 for Rs 951 crore, which translates to Rs 7.09 crore per match for the 2023-27 period. Thus, WPL could assure Rs 5,650.99 crore to the BCCI.

The BCCI intends to distribute 80% of the profits from the competition among the franchise owners during the first five years. For the next five seasons, 60% of the profits will be shared, and from seasons 11 to 15, 50% of the profits will be distributed. Additionally, 80% of the revenue from the central licensing rights for the competition will be shared with the franchises. Franchises will also generate revenue through merchandise, ticket sales and advertising.

A recent dispute came up on the tax issue that is imposed on BCCI for making huge profits through IPL. BCCI claims its function as NGO. Again, it’s how do you manipulate your money. Common people understand that the beneficiaries through any NGO are generally all under privileged people, whereas beneficiaries through IPL are Tendulkar, Kohli, TV and media agencies, airlines, hotels, event managers, and so.

In 1990, the managing director of London Weekend Television (LWT), Greg Dyke, invited the representatives of the “big five” football clubs in England (Manchester United, Liverpool, Tottenham Hotspur, Everton and Arsenal). The meeting was to pave the way for a breakaway from The Football League. The Founder Members Agreement, signed on 17 July 1991 by the game’s top-flight clubs, established the basic principles for setting up the FA Premier League. Then BSkyB won broadcasting rights with a bid of £304 million over five years, with the BBC awarded the highlights package broadcast on Match of the Day. The First Division clubs resigned en masse from the English Football League in 1992, and on 27 May that year the FA Premier League was formed as a limited company, to break away from the English Football League.

So, there is an audience, there is money and there is business. In the beginning of 21st century, Florentino Pérez Rodríguez (Spanish businessman, civil engineer, former politician), the president of Real Madrid Club) brought in Luís Figo from arch-rivals Barcelona. In 2001, Zinedine Zidane was signed from Juventus for a then-world record transfer fee of €77.5 million, followed by Ronaldo in 2002, David Beckham in 2003, Michael Owen in 2004, and Robinho for a short time in 2005. players were soon popularly referred to as Galácticos. Each new Galáctico had the squad built around them, and In his first years in office, Real Madrid won two Spanish championships and its record ninth UEFA Champions League. On the other hand, in June 2003 Roman Arkadyevich Abramovich became the owner of the companies that control Chelsea in West London. Since his takeover, followed by tagging some the best players across the world, club could win 18 major trophies – the UEFA Champions League twice, the UEFA Europa League twice, the UEFA Supercup twice, the Premier League five times, the FA Cup five times (with 2010 providing the club’s first ever league and FA Cup double), and the League Cup three times, making Chelsea the most successful English trophy winning team during Abramovich’s ownership, equal with Manchester United (who have also won 16 major trophies in the same time span).

Pepsi, nothing official about it.
Let’s visit the 1996 Wills Cricket World Cup, India was one of the hosts.
Off the field, a fierce marketing battle was being waged by two cola giants, Coca Cola and Pepsi, as both had an eye for dominance in the newly liberalized India with the reforms of 1991. In the end, Coca-Cola bagged the official sponsorship rights to the Wills World Cup. However, that didn’t stop Pepsi from stealing the eyeballs from Coca-Cola by their campaign having an outrageous tagline: “Nothing official about it”. So, Pepsi’s retaliated with ambush marketing. Pepsi’s “Nothing official about it” campaign, was one of its kind instances of ambush marketing in the country.

While Coca Cola is serving their drinks during match break in the field, Pepsi’s “Nothing official about it” showed cricketers and even officials rejecting the official drink in favour of the unofficial one and even featured the umpire Dicky Bird going loco. In reality, few players wore coloured clothes and faced up to the pace of fast bowlers like Courtney Walsh and Alan Donald. Its cheeky theme “Nothing official about it” turned the apparent disadvantage of losing the battle for the sponsorship to Coca Cola into a massive win for Pepsi and became a kind of anthem for the age.

So, when the board is making a contract with Coca Cola, some of their players were advised by Pepsi not to consume that Coca-Cola drink in front of the camera. So, so powerful is the sponsor’s money.

EPL & EPL Club Sponsors:

For several years, the two primary Premier League sponsors have been Carling Brewery and Barclays. Currently, EA Sports is the main partner of the Premier League, with Budweiser serving as the official beer, Castrol as the official engine oil, Hublot as the official timekeeper, Nike as the official ball, and Oracle as the official cloud partner.

Emirates is Arsenal’s main sponsor, with the most recent contract of $250 million signed in 2018, and it is set to expire in 2024.
Chelsea signed a $1 billion deal in 2016 with Nike until 2032. It is also reported that WhaleFin agreed on a sleeve deal worth $24 million per year in 2022.
Standard Chartered started as Liverpool FC’s main team sponsor in July 2010, when the bank became only the fifth company ever to adorn the Reds’ first-team strip. The current $60 million per year deal expires in 2027.
Manchester City, Etihad has sponsored the Premier League team since 2009, two years following which the UAE-based airline announced a 10-year partnership to include naming rights for the club’s stadium. Their current deal with the airline is worth $81 million per year.
TeamViewer agreed to a $57 million per year contract as the main sponsor for Manchester united until 2026. The club also has an Adidas kit deal worth $90 million per year until 2025.
AIA Group Limited agreed on a $385 million main sponsorship deal with Tottenham Hotspur from 2019 until 2027. The club also is on a deal with Nike for the kits, worth $36 million per year, until 2033.
In addition to above, few dozens of other companies like Adidas, Hublot, Oracle, Cadbury, American Express, Castrol, AB Inbev Beer, British Oil, Avery Dennison, Panini, and so are sponsoring different kits for different clubs.

Coming to mainland Asia,
In 2009, the Brazilian Portuguese coach Luiz Felipe Scolari signed an 18-month contract with the Uzbekistani champions FC Bunyodkor. The contract made Scolari the highest paid football manager in the world, earning €13 million a year. World’s one of the best manager of his time, Felipe Scolari earlier had led his Brazil national team to a FIFA World Cup win in 2002, led the Portugal national team to the final of UEFA Euro 2004, and to a fourth-place finish in the 2006 World Cup

Marcello Romeo Lippi the Italian manager, who led Italy to victory in the 2006 FIFA World Cup, signs a deal in 2012 worth around €30 million, with the Chinese team Guangzhou Evergrande for a two-and-a-half-year contract. Then in 2016, he took over the charge of Chinese national team, as Manager.
In 2015, when Marcello Romeo Lippi left the Chinese team Guangzhou Evergrande, Scolari was appointed the team’s manager. Within four months in charge, Scolari led the club to victory in the 2015 Chinese Super League and AFC Champions League, and then extended his contract till 2016 after his potential successor Marcello Lippi was appointed as the manager of China national team. Scolari led Guangzhou win three consecutive league titles from 2015 to 2017.

So, it’s clear that even Asian teams are willing to sign up with the world’s best names, on exorbitant terms.

That’s how billions / trillions of big money flows in sports, which is nothing but originally an inflow from millions of sports lovers. Today, the Premier League is the most-watched sports league in the world, broadcasting in 212 territories to 643 million homes and a potential TV audience of 4.7 billion people. For the 2018–19 season, the average Premier League match attendance was at 38,181, only second to the German Bundesliga’s 43,500. Sometimes we forget that when we’re in the comfort of our home enjoying the game. Trust us, there’s a lot going on behind the scenes.

A short research revealed tons of inputs.
Where Does the Money in Sports Come From?
Let’s narrow our focus to the spectator segment of the global sports market for a moment. At the end of the day, money controls the decisions that are made no matter the level (team owner, top player, regular players, and so on).

Just think about the mind-boggling fact that as of 2019, there were 106 global sports franchises worth more than $1 billion each, everyone making a profit of millions annually. But where, you might wonder, does all this money in sports come from? There are three main sources, including fan-based revenue/TV deals, merchandising/licensing deals, and advertising/corporate sponsorships. Let’s talk about each one individually.

Source #1: Fan-Based Revenue and TV Deals
Fan-based revenue is exactly what it sounds like: income that is generated by the fans who watch and listen to the games (in-person, on TV, or on the radio), including ticket sales (this can include season tickets and premium seat licenses too), concessions, TV views, and radio listens. Media companies like Amazon, ESPN/ABC, NBC, CBS, and FOX pay hefty amounts to sports teams for the righa wet to stream their matches (which are highly viewed; in fact, National Football League (NFL) football games in particular are the most-viewed sports matches in the U.S.)

In the NFL, the average football stadium seats 70,000 people and tickets usually sell for around $150 (INR 11000/- approx.) each. Teams sometimes choose to host non-football-related events like concerts in their stadiums to earn more money, or they renovate their stadiums to add more seating and/or concessions. Concessions (like food and drinks) don’t bring in a ton of income for the teams compared to other revenue streams, but their margins are very high.

Source #2: Merchandising and Licensing Deals
Professional teams also make money in sports by selling companies the right to sell items with their logos, team colors, and player information on them. This gives sports fanatics (and just regular fans!) the ability to buy team gear and apparel to show their support of their favorite team(s). An example of this is the 10-year licensing deal that Nike and the NFL signed with sports retailer Fanatics back in 2018. While we don’t know exactly how much Fanatics paid for this right, it was likely a nice amount given that Fanatics now has the exclusive ability to manufacture and distribute Nike-branded NFL adult merchandise.

Source #3: Advertising and Corporate Sponsorships
Corporate advertisers recognize how lucrative and influential the sports industry is and are always looking to capitalize on that. Consequently, advertising in sports and corporate sponsorships can be a big revenue generator. Sometimes advertisers partner with one of the sports leagues; other times they team up with a famous athlete who acts as a spokesperson for their brand. Corporate sponsors will also pay professional sports teams to put its logo on their merchandise and uniforms or to rename its stadium with their company’s name.

Where Does the Money Go? How Does it Get Divided?
Professional sports organizations need to earn a lot of revenue in order to cover all the costs of running their teams. Take the NFL, for example. The most successful American sports league to date, it is technically a trade association that is comprised of and financed by 32 member teams. One of them, the Green Bay Packers, spent $410 million (worth 30.75 billion in INR) on operational expenditures in 2021. This was used to pay the players their wages, maintain their stadium, cover team and administrative costs, and pay for marketing.

When the money comes in, no matter the sport, it gets split amongst the players and owners of the team. But each sport strikes different deals. So, for instance, as of 2021, the NFL agreed to give its players around 48% of the generated revenue where as in the National Basketball Association (NBA) and Major League Baseball (MLB) typically keep that percentage a bit higher at around 49-51%. In the National Hockey League (NHL) it’s a 50/50 split.

Whatever the case, professional sports teams must pay attention to their expenses and set budget plans like any other organization does (you know, they have to employ financial management). If you personally need any help budgeting or managing your money, check out this article about budgeting and/or this one about money management.

Sports, and International Political Power Alliance
Qatar was the host for 2022 FIFA World Cup, with an eye to promote and display their money power. And they did. After the final match, Leonel Messi of Argentina and Kylian Mbappé of France shared the stage with Tamim bin Hamad Al Thani, the Emir of Qatar, who owns Paris Saint-Germain club through closed shareholders Qatar Sports Investments (QSI), purchased in 2011. Today, both Messi and Mbappe plays for the same club, Paris Saint-Germain.
And now, the news in the papers is that PSG have reportedly accepted a 300 million euros bid for Mbappe from Saudi Arabian club Al-Hilal. If Mbappe agrees to move to the Saudi Pro League, he could earn a staggering 700 million euros salary for a year and then move to Real Madrid next summer.
So, that’s the sports world today.

USA, Canada and Mexico would be jointly hosting the 2026 FIFA World cup, they beat Morocco in the bidding votes. Interestingly most of the Arab countries voted for America, but not for their neighbour. Analysts say that the cold war between Morocco and mainly Saudi Arabia made the upset, even displaying Palestine flags in Qatar stadium during the FIFA cup was a concern for Saudi-Israel political relations.