The JSW model: Is the group’s steady success in Indian sport a blueprint for other corporates?

Think corporate entities and sport in India and one of the first names that comes to mind is the Tatas. They have been supporting sport in the country for a long, long time. They have done it without profit in mind but that is also why their involvement has had its ebbs and flows based on the levels of sporting interest in the boardroom. The same is true of JCT Mills or the Mahindras.

To invest in sport out of the magnanimity and to look at it as an opportunity to make more money are two very different things. While the former may change very quickly, the latter is often reliant on the kind of money the team makes — make enough and you become valuable to the company from even a marketing perspective.

Also read: Corporate India is hardly investing in sports as a CSR activity when it’s actually a no-brainer

Making money through a sports team in India has never been easy. In fact, most involvement in sport would always incur a loss. So that would once again bring us to the reasons why a corporation would want to put money into a sinking cause. It goes against every business rule one can think of.

But this is exactly where the JSW group may be starting a quiet revolution. The group now owns three professional teams — Bengaluru FC in the India Super League, Haryana Steelers in the Kabaddi Premier League and the Delhi Capitals in the Indian Premier League. They also run the Inspire Institute of Sport — India’s first privately-funded High-Performance Training Centre — at Vijaynagar.

They want to support sport but at the core of their philosophy is the idea of self-sufficiency: to set up the teams in such a way that they become independently capable of survival regardless of how the JSW group is doing as a whole.

“I truly believed that on the commercial side, sports has an incredible future, especially live sports,” said Parth Jindal, Director, JSW Sports and CEO, Bengaluru FC, in an interview to Scroll.in.

“The way the world is going, there is nothing apart from live sports and live news for which you will tune in at 7 pm on a Friday night or a Saturday night to watch. Everything else is Netflix.”

Jindal added:

“The sporting industry in India is very very nascent. There is a very interesting stat that in the US the sporting industry constitutes 1.6% of their GDP. In India today, it is 0.4% of our GDP. So the journey to 0.4 to 1.6 has to happen in India and I am very confident that it will happen. And India’s economy will go from 2.5 trillion to I think 10 trillion by 2030. That means India’s sporting industry can grow 8-10 times over the next 10 years. That’s why I felt we have a very powerful proposition. We are the only group to have properties across football, cricket and kabaddi. Cricket is by far the biggest sport in India, kabaddi is fastest growing sport in rural India and is one of the fastest growing sports among kids under 18 years and then you have football which is a global sport, which will only grow over the years. That’s very exciting.”  

The signs are all already there — a recent report by Crisil said that the total money spent on promotion of sports has doubled in the last four fiscals – from Rs 89 crore in FY15 to Rs 191 crore in FY18. That is a huge increase and as sport in India becomes more professional, this number will only continue to grow.

Bengaluru FC, the beginning

A call from AIFF president Praful Patel set things in motion but JSW got into it more as a CSR activity than as a business opportunity. Arsenal fan Parth Jindal knew little about Indian football at that point but they did the due diligence. They observed the best practices around the world and then built the blueprint for the club.

“It just clicked with BFC and that gave us the confidence that if we give Indian athletes same kind of facilties, the same kind of knowledge and we bring in the best talent from abroad, whether its the coach, whether its the strength and conditioning, whether its the physios then our athletes are no less talented than any athletes in any other country,” said Jindal.

The trophies have followed. I-League titles in 2013-14 and 2015-16, the ISL title in 2018-19, the AFC Cup runners-up spot in 2015-16. And they have firmly established themselves as the most professional club in Indian football. And given how some of the teams still run in the I-League, that was a huge step-up.

Perhaps, more importantly, it gave JSW a taste of the Indian sporting scenario and what it could do for them. Not just from a commercial point of view but also from a marketing point of view.

“And then two years after BFC, Anand Mahindra called and said why don’t you all take a Kabaddi team also… So we got into Kabaddi. That’s how organically it all developed.”

The cricket bump

One of the common refrains over the years from other sports in India is that cricket eats into their bit of the pie as well. But JSW found a way to make cricket work for them; work for other sports.

“In 2016, when the steel industry was going through a tough time, there was a fear that BFC might have to be cut. It didn’t happen but it could have. But today, things are very different,” Jindal said.

“If you look at the numbers, IPL is making a lot of money. Each IPL team is making between Rs 110 to Rs 150 crore every year. So as a business it is a very lucrative business. Kabaddi is marginally losing money today. Each franchise is looking between 1-4 crore per season. The TV deal of kabaddi gets renewed next year. So then again we are expecting a spike in broadcast money,” said Jindal.

Jindal added:

“So I think Kabaddi will become profitable from next year as well. Football, ISL, will take bit of a time. I think ISL will at least take about five to seven years before it breaks even for the franchise. Overall as a business, we are looking at it as any other start up. Every start up loses money initially and at some point it breaks even. But the positive part for us is that the profits of cricket are much higher than the loses in kabaddi and football. So, as a commercial entity, we are making money.”  

Roughly put because of Delhi Capitals’ income, BFC is safe. And it gives BFC a 5-6 year window to break even. And it doesn’t end there.

“When we entered cricket, our idea was we will also use cricketers to push Olympic sports,” said Jindal. “So you will see, just before the Olympics, they are having a very interesting campaign where Rishabh Pant, Shikhar Dhawan and others will push the Olympic sports.”

The Olympic dream

India finished the Rio Olympics in 67th position on the medals table with one silver and a bronze to show for their efforts. A lot was expected of the athletes but on the biggest stage they faltered badly.

It once again gave rise to the question: how can India excel at the Olympics? It was a question that Jindal asked himself too but the answer wasn’t exactly forthcoming.

“It all really began with a conversation over lunch I had with Mahesh [Bhupathi]. He said India lacks grassroots. Indian athletes don’t have the correct coaches. Indian athletes don’t have the know-how in sports science and we don’t have the right infrastructure. And there is only so much the government can do and the private sector should come in,” said Jindal.

“So when I asked him how the corporate sector can help, he said [you] ‘should build a high-performance centre and you need to go to the grassroots. You can’t pick up the CWG gold medallist and an Asian Games gold medallist and say you now become an Olympics gold medallist’. He said the technique and learning that happens, happens at a younger age. If you only focus on the elite athletes, yes some of them will go on to win a medal at the Olympics but at the end of the day it is only when you concentrate on the 8-10 year old athletes and provide them with the right guidance and support, that India will start churning out more and more top athletes. ‘If you guys can build India’s first high-performance facility that is privately owned, privately run it could start a moment in Indian sports’.”

And that is what JSW did. They picked up group of 30 young, budding athletes who were good at junior level and started supporting them. And had good results in CWG, Asian Games and it culminated in Sakshi Malik winning a bronze for India at Rio.

Still, it wasn’t all smooth sailing. There is a very strong belief system among Indian coaches and athletes – train abroad. The amount of money that India spends in sending our athletes for foreign training stints is abnormal but with the centre acquiring a reputation now, things are changing. The US wrestling team came to Inspire Institute of Sport for an exchange programme then, the JSW athletes went there.

Even for the Institute, JSW leveraged their corporate connections.

“I went and pitched this concept to corporate India, so today 35 different corporate entities actually support IIS. I went to some people asking whether you can give us some donation as CSR, so they said we can’t give you donation for sports but we can give you in kind donation. So Kajaria gave us all the tiles, Philips gave us the lights… So it was amazing. Right now that’s the way we are running it.”

In return, when they want to use the athletes for a campaign, they can. Borosil already used them for their no plastic campaign. They used Nikhat Zareen, Bajrang Punia, Sakshi Malik. Another group will sponsor our track and field program so they can use Neeraj for commercials. It’s an innovative way for them as they are doing CSR but if an athlete makes it, it suddenly becomes marketing.

The Business angle

Still, what is JSW’s vision? Where do they see themselves 10-20 years from now? Will they still be in sport?

“I think sports is a media and entertainment game. Here you don’t need to create content. Today, the game in media is content. Everyone is chasing content. We said this is one way of entering that industry without creating content. The match will happen, that’s the content,” said Jindal.

“This journey that we are on today, started off as a brand building initiative and a CSR initiative but has very quickly moved into a long term business or a wealth creation sort of an initiative. Because I think, if anyone wants to take a long term view on Indian sports today what will you invest in. If you say, I want to invest in Indian sport, for an investor, what will you put your money into? In the future, JSW Sports might be there as a property which is listed on BSE. If you take a call that Indian sports is only going to grow and I want to invest in Indian sport, you can go and buy stock in JSW Sport, then that might be that answer.”

In addition to all the teams they own, they have the sports management aspect and they are looking to add a fifth vertical, which is sports tourism. Still, these are early days but increased corporate involvement only means good things for Indian sport. It may not be for everyone but if even a few succeed, it will help India in a big way.

For now, if they want to understand how it’s done, the JSW model is one worth looking at.