CII-KPMG
report released at CII’s Sports Conference – ‘SCORECARD 2014 - Business of
Sports’
New
Delhi, February 25, 2014: Today KPMG
under the aegis of CII released a report titled “Business of Sports - Shaping a
Successful Innings for the Indian Sports Industry”. The report identifies key
issues in the sports ecosystem and explores measures to develop a
private-investment led sporting scenario in the country – one that helps imbibe
a sporting culture and achieve the country’s vision of excellence in sports.
The
reports states that resource scarcity in India makes it difficult for the
Government to attain the above objectives and calls for collaborative efforts
of both the Government and private sector towards strengthening the sports
ecosystem. Long term sustainability of commercial ventures in the Indian sports
sector would require sustained audience interest driven by India’s winning
performances at international sporting events.
Sports not only boost the youth and instil pride among
citizens, but also facilitate social and economic development of a nation. Sports sector is seen to have a significant socio-economic
impact worldwide contributing to 1-5% of national GDP. This can be achieved by building a
sporting culture in the country.
However,
in India sports is not recognised as an industry yet, limiting corporate
investments except in cricket and a few other leagues. Being home to various
upcoming leagues and the youngest population in the world, India’s sports
sector offers tremendous growth potential.
Ajit
M Sharan, Secretary, Ministry of Youth
Affairs & Sports released the CII - KPMG report at the Scorecard 2014,
CII’s National conference on Sports.
Earlier
Atul Singh, Chairman, CII National Committee on Sports and Group
President (Asia), The Coca Cola Company, highlighted Industry’s role of “going
beyond Sponsorships and CSR activity and the need for a policy shift to
recognize Sports as an industry”. He said, “this would help actualize the
India@75 vision for broad-basing sports in India, and promote excellence in
Sports, by promoting infrastructure development, providing technical support
for athletes, as well as grooming talented sportspersons”.
“Corporate
funding in sports may be the answer to ignite sports development in India. The
gestation period for realizing return on such investments may be long, but
global experience shows us that it could be potentially rewarding’, added Jaideep Ghosh,
Partner, KPMG in India
Global
sports industry is estimated to be worth around US$ 600 billion and growing at
a rate higher than national gross domestic product rates around the world.
While direct sports revenues are dominated by gate collections, sponsorships,
media rights, the sports
sector may comprise several segments such as sports tourism, sporting equipment
manufacturing and retail, sports apparel, recreational sports, high school and
college athletics, as well as associated businesses such as sports marketing,
sports medicine, venues & infrastructure, hospitality and merchandising.
Key
issues and recommendations
Some key issues have been identified across various segments of
the ecosystem and a set of recommendations have been suggested to drive their
resolution. .
Segment of the ecosystem
|
Issue
|
Recommendation
|
Overall
|
Lack of sports culture in India
|
• Nationwide campaign to raise awareness on sports
• Implementation of a uniform sports policy across all states
• Active regional/local media supporting the cause of developing
sports in India
|
Limited funding avenues in sports
|
• Provision of industry status to sports Sports governance
|
Sports Governance
|
Lack of transparency
|
• Strict implementation of the Sports Bill 2013
|
Limited community-level engagement in sports despite the
Panchayat Yuva Krida
Aur Khel Abhiyan (PYKKA)
|
• Incorporation of a community-level Engagement Team under the
aegis of Ministry of Youth Affairs and Sports(MYAS) which may also help NSFs
organise competitions
|
Limited commercial focus of governing bodies
|
• Institution of a Corporate Relations Team under the aegis of MYAS
that could help Sports Authority of India (SAI) and the community-level
Engagement team to deliver on their plans
|
Talent scouting and training of players and trainers
|
Lack of coordination among the concerned bodies affecting
professional uptake of sports
|
• Identifying and promoting collaboration among all concerned
stakeholders to encourage more innovative business collaborations
|
Lack of coaches and technical know-how on sports in India
|
• Collaboration between SAI and National Sports Federations
(NSFs) to train coaches
|
Scarcity of playing spaces and high capital expenditure required
to establish private training academies
|
• Allowing access of public infrastructure to private training
academies in lieu of reasonable fees
|
• Consideration of alternative modes of financing such as
revenues from naming rights by private academy owners
|
Imposition of customs duty on training equipment imported by
private academies vs. duty exemption on the same import by the Government
|
• Relief/exemption from duty for private academies if the
equipment is imported for academy players who have consistently performed
well at the inter-state or national level or above
|
Inadequate support to former sportspersons launching private
academies
|
• Continued increase of public-private fund such as the National
Sports Development Fund (NSDF) could provide financial support to upcoming
academies
|
Talent scouting and training of players and trainers
|
Lack of awareness on opportunities for sports coaches
|
• Central and state Governments and NSFs may promote awareness
on opportunities for sport coaches by providing case studies on typical
career paths, opportunities for further development and companies’ recruiting
coaches
|
Lack of specialized courses in nutrition, sports medicine and
psychology
|
• Evaluation of demand by the Government for these courses and
the establishment of lucrative incentives by the Government for their
inclusion in existing private and public Universities
|
Sports infrastructure
Sports
infrastructure ( Contd.)
|
Insufficient legacy planning for various games hosted by India
leading to poor asset monetisation
|
• Legacy planning to be done before the construction of
stadia/assets begins in order to incorporate future requirements post
international events as per the legacy plan into design of assets
|
Limited implementation of existing schemes
|
• Mandatory implementation and periodic review by the Central
Government on the status of implementation of schemes such as PYKKA and
National Playing Fields Association of India(NPFAI), at the state level
|
Limited corporate investment in sports infrastructure
development
|
• Revision of policies and consideration of methods such as
innovative PPP models by the Government to attract corporate investment in
sports.
|
• Creation of repository of case studies of successful instances
of corporate investment in infrastructure Sports equipment Lack of a unified
representation for the sports equipment industry
|
Sports equipment
|
Lack of a unified representation for the sports equipment
industry
|
• Integration of sports apparel exports with the Sports Goods
Export Promotion Council (SGEPC) for holistic promotion of the sports
products sector
|
Non-recognition of some sports training import items as sports
goods
|
• Government policy could be targeted at bucketing some
equipment for sports training under sports goods and levying customs duty accordingly,
for instance wrestling mats and boxing gloves may be treated as just sports
goods and not classified under generic gloves and mats
|
Leagues and tournaments
|
Lack of transparency in the governance of leagues
|
• Implementation of a uniform robust legal framework for
governance across all leagues
|
Poor monetization of leagues
|
• Better packaging of events can make the leagues spectator
friendly
|
Limited engagement of franchises with local communities
|
• Concentrated efforts by franchises to engage with local
community to build fan base and, hence, attract audiences
|
Performance incentives for sportspersons
|
Lack of policy ensuring financial security post-retirement for
some players
|
• Collaboration among NSFs and sports consulting firms to plan
players’ careers post-retirement
|
Limited career options within the sports ecosystem
|
• Provision of industry status to sports
|
|
• Active collaboration among stakeholders to help strengthen the
commercial aspect of leagues and franchises.
|
Direct tax
|
• Lack of clarity on the:
–– Rates at which prize money and unguaranteed participation fee
would be taxed.
–– Taxability of global sponsorship and advertisement revenue
and prize money i.e., whether to tax global sponsorship, advertisement
revenue and prize money in India and to what extent.
–– Taxation mechanism if there is a triangular treaty scenario.
|
|
About CII
The Confederation of Indian Industry (CII) works to create and
sustain an environment conducive to the development of India, partnering
industry, Government, and civil society, through advisory and consultative
processes.
CII is a non-government, not-for-profit, industry-led and
industry-managed organization, playing a proactive role in India's development
process. Founded in 1895, India's premier business association has over 7100
members, from the private as well as public sectors, including SMEs and MNCs, and
an indirect membership of over 90,000 enterprises from around 257 national and
regional sectoral industry bodies.
CII charts change by working closely with Government on policy
issues, interfacing with thought leaders, and enhancing efficiency, competitiveness
and business opportunities for industry through a range of specialized services
and strategic global linkages. It also provides a platform for
consensus-building and networking on key issues.
About KPMG in India
KPMG
in India is the Indian member firm of KPMG International and was established in
September 1993. It strives to provide rapid, performance-based,
industry-focused and technology-enabled services, which reflect a shared
knowledge of global and local industries and its experience of the Indian
business environment. KPMG in India provides services to over 2,700
international and national clients in India and has offices in Ahmadabad,
Bangalore, Chandigarh, Chennai, Delhi, Hyderabad, Kochi, Kolkata, Mumbai and
Pune.
www.kpmg.com/in