The 5th season of the Hero Indian Super League (“ISL”) kicked off just a few weeks ago, generating excitement around the competing squads and also a few question marks regarding future prospects. The main talking point is how this recently-set up league – owned by Indian conglomerate Reliance Industries and media group Star India – and its 10 participating franchises will drive their strategic development. Although it has been established as a key stakeholder in the Indian football landscape, the ISL still has considerable ground to make up on its European peers and the Indian Premier League in cricket, from both sporting and business perspectives. As many challenges lie ahead, the KPMG Football Benchmark team has endeavoured to look into the league’s recent achievements and provides an assessment of its current ecosystem.
There is little doubt that the ISL has gained considerable traction and appeal among Indian fans and sponsors since its inception in 2014. Over recent seasons, the league has managed to increase significantly its portfolio of commercial partners, evidenced by the 2017 renewal of an agreement with Indian motorcycle company Hero as title sponsor for an annual fee of USD 8.3m (up from USD 2.6m for the 3 preceding years). As for gate receipts, attendance levels seemed to have tapered off after the first couple of successful seasons which were characterized by the presence of several foreign star players nearing the end of their careers. This illustrates the difficulties for the ISL, as for any other young league, to build a property that is good enough from a sporting perspective to be able to draw large stadium crowds. Although the growth of its brand is undeniable, the league will need to further increase its marketing efforts to portray the tournament as the most prestigious football property in India.
There are some promising signs already. Since the start of the new season, attendance and overall interest have started to rise again thanks to the implementation of a few operational changes – no more double headers and a standard 7:30pm kick-off time for all games – which is illustrative of the importance that managerial decisions can have on the momentum of the league.
Another positive signal lies in the higher emphasis ISL teams have put on their own academies. In line with the AFC Club Licensing Regulations, now all franchises have youth teams from the U13 age group upwards and are investing in their own youth programmes and related facilities. Although this has not yet yielded results, the development of club academies is pivotal to the league’s long-term success and a course for this needs to be charted. The number of foreign players, limited to seven for the current season, also acts as an incentive for clubs to field more Indian players.
Still, the immediate challenge for the league and franchises remains the need to elevate the playing level of Indian players. As illustrated by the graph below, their market values are still significantly lower than their non-Indian counterparts, a factor which casts uncertainty over the ISL’s short-term ability to improve the attractiveness of many of its fixtures.
Perhaps even more importantly, two other key issues will have to be tackled by ISL authorities: governance and an economic business model. The latter has to do with a unique case in point in modern football where ISL franchises simply do not generate any broadcasting revenue. As a co-owner of the league, Star India owns all broadcasting rights of the competition and the ISL is thus unable to sell its TV rights to any other media company. As a result, ISL franchises do not benefit from any TV-related money, unlike the vast majority of the professional leagues worldwide. This is undoubtedly one of the biggest hurdles on their road to sustainability.
Finally, the ISL still competes with another professional football league at home, the I-League, which is based on an open promotion-relegation system. This set-up has evolved into a quite ambiguous situation for Indian football as both leagues run in parallel (from approximately October to March) and thus act as rivals on the domestic stage. While the I-League benefits from a much stronger fan base in local cities and communities, it appears to be outgunned financially by ISL franchises, which are owned and backed by deep-pocketed investors. As the status quo is clearly not viable in the long-run, the AFC has increased pressure on Indian stakeholders to design a new structure for the organisation of professional football. Rumours have it that the two leagues will merge into an expanded ISL, integrating the best teams from I-League (as it has played a successful role in developing Indian talents, many of them recently joining ISL franchises). The benefits of a competition format revamp, in which both sides could benefit from the other’s strengths, would be manifold, but it is still unclear when and how this will happen.
From every angle, the ISL appears to be at a turning point in its young history. While player development and the design of a sustainable business model must be at the heart of the league’s development path, much will actually depend on how well governance issues are managed. The positive implications of a potential merger, if well-designed, will appear over time as football keeps on growing in the second most populous country of the world. The potential is huge, it just needs to be assessed and harnessed in the best possible way.