He added that the next media rights cycle will be very different from what we have seen thus far due to the rapid changes in the media consumption habits of consumers. The founder of Emerging Media thinks that, like American sports leagues, the BCCI should segment and package the IPL media rights to maximise value.
Edited excerpts:
Are Rajasthan Royals promoters looking to dilute stakes to a PE equity giant?
Not really! We just get a lot of inbound interest. We are focused on on-field and strong financial performance; the rest will take care of itself. We have not given any mandate to dilute stakes in the franchise. We have no plans to dilute Emerging Media’s control of the franchise.
What level of interest has there been in the Rajasthan Royals among investors?
One of the things that have changed perhaps most dramatically in the last three or four years has been how attractive sport has become as an investment class for funds around the world, and we see that in America, Europe, and we’re starting to see that in the IPL. Obviously, the first fund that came into the IPL was Redbird Capital through their investment in Rajasthan Royals, and then we saw CVC acquire the Ahmedabad franchise. I don’t think there is a major investment fund in the world that isn’t looking at sports. India is a hugely popular investment destination. You have the Indian macro story, and you have the sports macro story, and then the IPL is a fantastic fusion of the two.Has investor interest in IPL grown after the latest media rights deal that was worth over Rs 48,000 crore?
BCCI has done a fantastic job with the previous media rights deals, but what you cannot afford is complacency because there are massive shifts in how we consume content that is going to affect the next media rights deal. In the last media rights deal, everyone focused on the headline number, but what I thought was more interesting was the split between TV and digital, and how that split between TV and digital evolves over time will be interesting. The other thing that you see in the US leagues is how thoughtful they have become about the segmentation of rights. Segmentation, although it’s a bit of business jargon, is going to become an increasingly important word as you think about rights maximisation whether it’s how the NFL has sold different nights of the week to different broadcasters or whether it’s how they’ve sold different access rights to different digital broadcasters. The future success of IPL media rights will depend on how they are packaged and segmented.
Do you think BCCI should use a similar approach for the next IPL media rights sale and is segmenting rights possible in the Indian market given that the media rights split has made it extremely difficult for existing players to monetise?
Sometimes, when we judge the success or otherwise of investments in rights, we take too short a horizon and don’t understand the full lifetime economics for both buyers. For Jio, for example, do you judge success purely based on ad income earned or how it fits into their broader broadband strategy? Sports media rights should be valued taking into account both ad revenue and the lifetime value of a new customer for the rights holder. I’ve been fortunate to be involved in the IPL before its inception and not only has the landscape changed in terms of television versus digital or between Indian broadcasters and global broadcasters, but what you’re going to see in the next few years is the landscape changing even further from Indian and global broadcasters to global companies.
For companies like Apple, Amazon, Facebook, and Google, India is such a strategic priority that they can’t ignore what the IPL rights can do, not just in terms of ad spend versus the cost of the rights but also in terms of overall brand perception and the overall lifetime value of customers. The one thing that I’m certain of is that while we sit here today with a list of potential bidders, there’ll be a company that’s not even on that list today, and that company in three years’ time could be bidding for the rights because of the pace of change.
When the IPL started, YouTube was a relatively new phenomenon. You never dreamed of Amazon buying the media rights in 2008, and you never thought about Apple getting into sports. Sometimes we constrain our thinking to the here and now, yet at the same time, we know the world is moving so quickly.
For BCCI, that means thinking about how it packages and segments those rights; it means thinking about how it presents those rights; it means thinking about what other innovations we can make so the way the game is played will enhance those rights. You can only control the inputs, but I’m confident that the outputs will be quite attractive in a few years.
What do you think the BCCI should do to strengthen the IPL even more?
It’s our collective responsibility to expand the IPL’s reach. I think creating the women’s league was a very positive step. We were the first franchise to get involved in women’s cricket nine years ago. Women’s cricket has huge potential, and we were unfortunate not to be a successful bidder this time, but we are keen on owning a team in the Women’s Premier League, which obviously must make business sense.
It’s crucial to consider the game’s duration, especially for families with young children. The lengthening of the games and the need to travel home if they end after midnight make it more challenging for families with young children to attend games. My biggest focus would be making the fan experience better, and the structure of the game should be time-friendly. That will allow the game to expand.
Given that the IPL only lasts for 2.5 months out of the year, how are you attempting to connect with the fans all year long?
That is indeed one of the biggest challenges for franchises, which is: how do you create year-round fan engagement when you have a tournament that’s two and a half months in duration? What we try to do is really invest in digital content assets. We have extended our reach into two other leagues (SA20 and Caribbean Premier League) to create opportunities for the coaching staff and playing staff to experience life under the Royals banner outside of the IPL, but the truth is, there’s a limitation on how much we can engage fans in the non-IPL parts of the season. We have to respect that we are part of a broader ecosystem, and right now, the world is focused on the Cricket World Cup. We don’t have a right to own the cricket calendar. We must do what we can within the constraints of the existing window.
How was IPL 2023 for the Rajasthan Royals on key metrics like revenue and fan engagement?
I think financially, it was a success. It was a very frustrating IPL for our team because we underperformed relative to our capabilities. We effectively had two seasons. We had a first half where we had five wins and two losses, and we had a second half where we had two wins and five losses. So, it was frustrating on the field. Off-field, it was fantastic to be back in Jaipur. We have had many historical challenges playing in Jaipur, whether that be battles that the Rajasthan Cricket Association (RCA) is having with the BCCI or whether that’s been related to stadium readiness. Nothing, however, compares to the Rajasthan Royals playing in Jaipur. Having said that, we don’t benefit from the same infrastructure that the other teams have. We don’t have a Wankhede stadium or Eden Gardens kind of stadium in Rajasthan. But it was balanced by our experiment in taking the Rajasthan Royals to Guwahati, which has one of the best stadiums in India. That was hugely successful, and we will hopefully do that again. Hosting matches in Guwahati will help us open new territories for IPL.
How strong is your P&L right now given that the new media rights cycle has started?
Without a doubt, the franchises’ financial standing is better than it has ever been, but we shouldn’t forget that it took us ten years to turn a profit. In the first ten years, we always kept a very tight ship running. Today, everyone is focused on profitability, but they overlook the ten years of investment that preceded it. If you look at what the first eight franchises did to help the IPL grow, they invested close to a billion dollars in total, which is sometimes forgotten.
What plan do you have to expand the Rajasthan Royals brand?
We are one of the earliest franchises to make an investment in the academies. We want to expand that academic network across India. We are making low-cost education available through the Royals School of Business. I think 15 years ago, not many parents would have thought about whether a career in sports was a good option. We want to make an impact on professionalising the sports industry and making sports an attractive profession to build. One of the challenges we have off-field is recruitment. The pool of sports professionals is quite small, and we want to expand that pool.
You mentioned India as a significant international investment destination. You have founded Blenheim Chalcot, a company that has been developing digital technology platforms for 25 years. What strategies is Blenheim Chalcot pursuing in India?
We are investing in India at a more significant rate than we have at any other time in the last 25 years. We now have 700 people in the country. We’re continuing to grow that. We’re launching health tech applications and fintech applications over the next two to three years.
In the next two to three years, what kind of investments have you planned for India?
We plan to invest tens of millions of dollars in India over the next few years. Over the years, Blenheim Chalcot would have invested north of $50 million into India. Blenheim Chalcot is a venture builder, and we are not a venture investor. We build businesses from scratch, and right now we’re building businesses in health tech and fintech. An example would be a business called HemeHealth, which is trying to help individuals take control of their medical records in partnership with employers and insurers to help build a healthier India.
In financial services, we’re always looking at marketplaces. Obviously, with the government’s decision to automate payments, there’s an extraordinary payment infrastructure in the country that allows the building of new financial services players on top of that. We’re probably the largest fintech venture builder in the UK, if not Europe, so it’d be nice to bring some of that expertise to India at some point.
For us, generative technology is currently a major focus both in India and internationally. In Mumbai, we are developing a world-class centre for generative technology. Generic technology is one of the most significant technological advancements we have encountered in the past 25 years, if not the most significant. India’s technology sector has the best young talent in the entire world.
