India will no longer be the only country in the world operating two top-tier football leagues. In a meeting held at the Asian Football Confederation headquarters in Kuala Lumpur, on 14 October 2019, a plan to reform club football was proposed and agreed upon. The Indian Super League will now be awarded top-tier status. The All India Football Federation’s national football league, the I-League, will be the second tier, with the provision of a five-year process proposed to 'merge' the two leagues.
Additionally, the 2019-20 ISL champions will now be granted a place in the AFC Champions League playoffs, while the I-League champions will go to the playoffs of the AFC Cup, as a "special compensation". By the end of the 2020-21 season, two I-league clubs will be able to join the ISL and from the 2022-23 season onwards, the winner of the I-League will be promoted to the ISL, on the condition that the AIFF's "merit and national club licensing criteria" is met. Finally, a fully functioning promotion and relegation system between the ISL and I-League will be properly established in time for the 2023-24 season. There will be no relegation until this season. Despite the benefits of the restructuring, experts have, however, already identified several potential issues. In the future, the promoted I-League clubs will not have to pay a franchise fee to join the ISL. But this will also mean that those teams will not be entitled to a share of the ISL's central revenue, a concern considering the costs of participation. For example, Bengaluru FC's operating expenses doubled when the club moved from I-League to the ISL and, In the long run, this decision could prove prohibitive to the survival of I-league clubs in the ISL. If they survive until then, that is. The viewing experience so far has been poor.
It’s expected that the two clubs who could move to the ISL by the end of the 2020-21 season are Mohun Bagan and East Bengal, with the size of their respective fanbases potentially making them strong candidates. But if the two biggest clubs left the I-League leave, what would then happen to the competition? Sponsorship revenue, which is already declining, would likely dwindle further and the remaining clubs would be weaker as a community. The perception of the league would also clearly be damaged.
This does not mean the ISL is invulnerable, though, despite it being the fourth most-watched league in the world, after the Premier League, La Liga, and Bundesliga. Before ISL was officially declared as the top tier of Indian football, a 2018 KPMG Football Benchmark report said that a key issue which needed addressing was the competition’s business model, which the report called "a unique case in point in modern football". Because the broadcaster Star India is a co-owner of the league, the ISL is unable to sell its broadcasting rights to other media companies. As a result, its franchises are unable to generate any income from television which, in the report’s eyes, “is undoubtedly one of the biggest hurdles on their road to sustainability”.
The importance of broadcast revenue in club football is well established. English Premier League Clubs receive 46% to 88% of their total income from TV and broadcast rights, depending on the team in question, and that equates to the largest income source for most. It's especially important for the smaller clubs with lower commercial, merchandising and match-day incomes. With no TV and broadcast rights, ISL clubs earn from their share of the central sponsorship revenue, individual sponsorships, match-day ticketing, merchandise and player transfers. ISL's partnership with Hero is the most noteworthy for the central sponsorship revenue.
The automobile giant signed a deal worth $ 8 million for three years in 2014, which increased significantly to $25 million for three seasons starting in 2017. But ISL's initial 20% estimate on how much of the central sponsorship revenue would have to be utilised for organisation was under-estimated, meaning a lower pool was distributed to the teams. According to an HT report from 2015: "... Nothing from the central sponsorship pool, said to be worth around Rs 70 crore, came to the franchises. The league is supposed to take 20% (for) operational expenses but the rest wasn’t ploughed back to the teams as promised. A spokesperson for the ISL said that happened because a huge amount was spent in getting the venues ready."
More recent numbers aren't too encouraging either. According to Mint's analysis, in 2017-18,only one franchise reported a pre-tax profit: the JSW-owned Bengaluru FC. Nine of the ten ISL franchisees registered losses. Kolkata's ATK reported a net loss of Rs 53.5 crore. Revealingly, North East United's annual report showed that the club actually paid more as a participation fee to the ISL than they received from the central pool. The spending by football fans in India is also a barrier to matchday and merchandising revenues. Despite season ticket prices as low as Rs 1400, Mumbai City FC could only attract an average of 4,742 people to their matches at the Mumbai Football Arena, despite its capacity of 18,000. As per figures correct in January 2020, the competition’s average is also just 15,127, with five of its ten teams drawing an average of less than 10,000 fans to their home games.
The merger of two leagues could become a positive development and international investors have started to see potential profitability in Indian football. The City Football Group's recent acquisition of the majority stake in Mumbai City FC is an example. Although now dissolved, Atletico Madrid’s three-year partnership with Atletico de Kolkata was another, so too Pune City’s relationship with Fiorentina and Delhi Dynamos’ association with Feyenood.
Most recently, FC Basel of Switzerland purchased a 26% stake in the I-League’s Chennai City, although it remains to be seen how this might be affected by the competition’s receding status. Indian football has potential, though, and that continues to be recognised from abroad. But the challenges remain and sustainability continues to be a problem without an answer.
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