Eyeing business potential in sports

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Eyeing business potential in sports

Monday, 05 Jul, 2010

One can spot soccer enthusiasts wearing T-shirts adorning names and images of their favourite players on walking tracks in posh areas. Whereas youth can be seen painting giant flags of Brazil and Argentina on their house walls in low income Lyari area in Karachi. There are indications that the middle class also follows the game but their interest is not so much visible. - Photo by AFP.

The Football World Cup, watched on television by an estimated two billion people, has entered final stages before it closes on July 11 when the final match will decide the champion 2010.

Besides firing passions, the World Cup attracts a huge investment and generates great business opportunities in the host country.

The corporate world spends billions of dollars to capitalise on the people’s sports frenzy by marketing their brands and event-related merchandise. Many firms compete with brands associated with the event. They pay astonishing fees to earn title of sponsors and partners of different categories with the Federation of the International Football Association (FIFA)-- the organiser of the World Cup.

In Pakistan, public sentiments converged with the mood of global citizen but the conduct of companies diverged from their peers in other countries.

Star players of the World Cup 2010---Messi, Ronaldo, Kaka, Gerrad, Eto’o, Xavi, Torres, Rooney--- are not aliens to Pakistanis who follow the game closely. They watched matches not just privately but also collectively on specially erected big screens on roads, in barber shops and restaurants.

One can spot soccer enthusiasts wearing T-shirts adorning names and images of their favourite players on walking tracks in posh areas. Whereas youth can be seen painting giant flags of Brazil and Argentina on their house walls in low income Lyari area in Karachi. There are indications that the middle class also follows the game but their interest is not so much visible.

The business, however, was unable to comprehend the power of the soccer game and let a huge business opportunity pass by them. One estimate of the total quantum of commercial activity generated by the World Cup in the country was in the range of mere three million dollars. It includes cost of airing rights, advertisement budget of companies supporting beaming of the game on the TV channel and value of increase in sale and export of soccer balls from the centre of sports goods, Sialkot.

South Africa, the host country of the event in 2010, spent about $800 million on building and renovating the ten stadiums and about the same amount on airport up gradation. It spent about $400 million on improvement of road and rail network. Analysts speculate that the World Cup will inject about $2.5 billion into the South African economy, while generating an estimated about $1.8 billion in direct spending.

The organisers engaged service providers to manage the event. They generated revenue from selling tickets of the event. The major chunk, however, was raised through selling rights of the association regarding the event to corporate giants. This year Addidas, Coca Cola, Emirates, Hyundai, Sony were FIFA partners whereas Budweiser, McDonald’s and MTN were sponsors. They paid in billions to be associated with the event. Many of their rival companies indulged in what comes to be referred to as ‘ambush marketing’.

Corporate Pakistan, detached as it is from the common citizens, is stated to have underestimated the popularity of football in the country and missed the business opportunity.

Several dozens private channels did not even try to buy the right to beam football matches. The Pakistan Television bought rights for some selective matches from regional distributor. Only one specialised sports channel run by a consortium of locals and foreigner is beaming coverage of the World Cup 2010.

As for advertisement, some companies in the telecommunication sector have diverted a portion of their advertisement budget to the World Cup package and are said to be marketing for the first time in the country.

“Telenor Pakistan showcased the excitement of the FIFA World Cup experience to young enthusiasts by bringing latest updates and scores straight to their mobile phones through its youth segment brand djuice” said Affan Haider, head of Corporate Communications Telenor Pakistan.

A random market survey by this writer revealed that there was almost no local merchandise related to the global sports event. There were no key chains, caps, T-shirts, scarves, hand-bands, lockets, etc, to capitalise on interest in game and popular players. Some imported T-shirts from China, Thailand and Indonesia were available at certain spots but they were too expensive for ordinary buyers..

The sale of football, however, has picked up by 30-40 per cent locally as the youth energised by the World Cup games got themselves a football before heading to playgrounds in their locality to experience the game and copy skills of their favourite international players.

Safdar Sondol, former chairman, Pakistan Sports Goods Manufacturers and Exporters Association, confirmed the pick up in the demand of hand-stitched footballs made in his hometown Sialkot. “We expect the demand to hike further in future as the performance of mechanised football has not been good during the current season”, he hoped.

Some hotels, clubs, and bottlers did generate some activity around this mega sports event but generally sports craze did not translate into commercial frenzy in the country struggling to shrug off economic lethargy.

After the gap of a few years, the export of football produced in Sialkot has also picked up by about 30 per cent as most multinational sports brands such as Nike, Addidas, Puma, etc, with their representatives stationed in Sialkot placed fresh orders to cover for the spur in demand for football all over the world.

For many marketing professionals, assessment of viewer-ship monitoring was shocking. “I follow the game closely but had no idea that so many people watch the game”, said a CEO of an advertising company in Karachi.

Aleem Durrani, CEO Media Pulse, felt the trend of marketing FIFA World Cup is picking up.”High numbers of viewer-ship during the current season would set the ground for big budget advertisers to strategise in advance for the next World Cup”, he said when contacted for comments over telephone.

He agreed that the domestic private sector has underestimated the public interest in the sport.

Faraz Ansari, Country Head of Ten Sports, the only channel beaming the sport event could not be reached. Fawad Hussein, CEO Mindshare, another advertising company gave a different version.

“I believe the trend of watching football to be an urban up market phenomenon. This is the first time that FIFA event has been marketed in this country.”

“The game in South Africa generated multibillion business this year. With corporate sector and consumer giants strategising to get most out of the sports gala, even small businesses on all continents capitalised on extraordinary interest in fast pace soccer game. Our companies are too inward looking with marginal understanding of the society to be able to harness the market potential”, said another marketing executive.

“Unlike their counterparts elsewhere, the big business in Pakistan was not inspired enough to be activated. The reason could be the popularity of the game in the lower tiers of the society with limited buying power”, a senior market watcher concluded.

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