A business perspective of cricket
Hilmy CADER
With the commencement of the Cricket World Cup and given the
socio-economic and business significance of cricket globally, we
reproduce extracts from MTIs 11 C Cricket Strategy Model.
The business of cricket is estimated at US $ four billion globally,
growing at 15 percent per annum and could be easily classified as a FMCG
(Fast Moving Consumer Good).
Not only does it touch the hearts and minds of over two billion
consumers worldwide, it accounts for a significant proportion of the
consumers’ television and web surfing time, not discounting the enormous
amount of casual consumer chat.
It is argued that this form of unscripted entertainment is capturing
share from other forms of leisure and entertainment.
It is now opening up new frontiers, from Afghanistan to Argentina,
from Canada to China and from Namibia to Netherlands.
The innovation curve has just begun, with the likes of IPL, and it is
expected to capture an increased percent of the consumers and the
advertisers wallet.
Many in the industry still see it as a competitive sport. Consumers
see it as a form of entertainment, Cricketers see it a viable career.
Above all it is among the most competitive and dynamic industries,
that rivals many conventional industries.
Given the many facets of the cricket industry (players, spectators,
TV viewers, sponsors, advertisers and boards) it requires a holistic
business strategy framework, that can benefit from proven strategy
formulation models, yet captures the very essence of cricket.
MTIs 11C Cricket Business Model has been developed as a framework
(with relevant tools) to help cricket authorities to analyze, strategize
and realize greater heights for the cricket as a business.
Currency, community and champions
The strategy formulation process starts by analyzing crickets
performance (in a given country or territory) based on the end results
by which the success of the industry must be measured. In the case of
cricket, this includes three equally important success criteria i.e.,
Currency: How much funds has cricket been able to attract from
consumers via ticket sales, television viewing, sponsorships and
endorsements and converging segments like memorabilia, coaching etc.
The argument being that the more satisfied the consumers are, the
more time they will spend consuming cricket and this in turn means a
greater share of their wallet towards cricket.
Champions: How has the country performed in this globally competitive
industry, as measured by the team and individual performances, which
influenced the currency.
There is a direct co-relation between a country’s performance at
sports and the currency factor it attracts.
Community: Unlike some conventional industries, cricket (and most
sports for that matter) has a strong social aspect that is interwoven
into it. Therefore, it needs to play a role in linking citizens and
different cultures and promote healthy values.
Competition and collaboration
At this stage of the strategy formulation process, based on specific
KPIs (Key Performance Indicators), the country’s historical performance
is analyzed and provides the basis of setting the vision and goals for
the next one to three years (which is done at the end of the process,
whereby these three components of the model are re-visited).
MTI Consulting CEO
Hilmy Cader |
The consumer has a finite amount of time, discretionary income (and
passion) that different types of leisure activities compete for. Some of
these could be between sports and some from other forms of
entertainment.
For instance, TV ratings and ticket sales of Bollywood movies dropped
during the IPL.
It could also be between different types of sports, for instance the
decline of cricket in the Carribean attributed to the intensified
marketing of baseball and basketball in the Americas.
Cricket as a product needs to be constantly researched and evaluated
if it is providing value to consumers and if competitive activities and
sports are making inroads.
Based on these findings, like in conventional industries, the product
(in some cases the brand) needs to be fine-tuned. This is an on-going
process.
As in the case of West Indies Cricket, it may take many years to see
the consumer impact on the game, however once this happens it will take
as many more years to reverse the trend. So the key is on-going research
and feeling the pulse of the consumer who consumes this product on a
daily basis.
Given that a significant part of cricket consumed is still between
countries (unlike soccer), the production of cricket requires the
collaboration of two or more countries. Hence this calls for the need to
factor in all the bi-lateral and multilateral negotiations between
boards at this stage of the process.
Like in soccer, with the advent of the likes of IPL, the type of
collaborations will change, and this needs to be monitored and factored
into the strategy formulation process.
There is bound to be competition within different formats of cricket
competing for the consumers cricket dollar.
Core formats and consumption
This effectively is the way in which cricket is consumed and equates
to product development in the conventional sense. It includes everything
from six-a-Side to Tests and all forms of experimentation with the core
product, from referring umpiring decisions to day-night test matches.
The findings from the competitive scan and the expert opinions
(effectively the R and D and Innovation lab) will be the basis on which
existing products are fine-tuned and new products developed.
If this is carried out on a continuous process, it will signal the
challenges well in advance well before it hits the bottom-line of
cricket.
For instance, the alarming low level of in-stadium spectators for
test cricket could have been signaled by such timely research and
analysis.
The module on consumption will focus on how cricket is consumed,
beyond just in-stadium spectators and television viewing. Potentially,
it can cover a diverse range of applications, from web applications to
degrees in cricket management to a cricket version of American Idol,
where raw talent can emerge outside the formal school and clubs.
Put it another way, Slumdog Cricketers (no insult meant) in the words
of Steve Waugh.
Cricketers and chain of supply
The modules on core formats and consumption will help determine the
demand for cricketers based on the demand for cricket - very much like a
typical manpower planning exercise in a business. Like in the movie
industry, the stars (the cricketers) hold the key to
cricket-entertaining audiences, which determines the financial health of
the industry.
The module on cricketers will intensively focus on the total
development and welfare of the cricketers, applying relevant human
resources management principles.
The appearance of your favourite and successful cricket star on stage
is the end of a long supply chain process, that starts with identifying
talent as early as a toddler and grooming them through the process and
ensuring their welfare through to retirement.
The module on chain of supply will cover all the aspects that support
the total development of the cricketers and will include aspects
relating to coaching, education, infrastructure and even a cricket
culture in the society.
Capital
Given that cricket has no equity investors in the conventional sense,
it has to use the power of its brand (this includes that of the country,
the authorities, the players, the venue and the cause) to generate
capital, the threshold for which substantially increased.
At this stage of the strategy formulation process, every opportunity
to en-cash the power of cricket is pursued, in addition to the main
revenue streams of television rights and sponsorships.
A battery of financial analytics will be run at this stage that
measures the power of Brand Cricket and how it is translated to the
bottomline.
Cricket authorities can also wear the hat of an Investment Banker and
ask the question What do we need to invest to win the World Cup
(Champions) and achieve a quantum increase in revenue (Currency) and
what will be the ROI? For instance a Cricket Bond or other financial
instruments that can be traded on capital markets. The emergence of the
Virtual Cricket Stock Exchange of India could well be the fore runner.
Control
Finally, the other ten components of the model needs to be
proactively and interactively managed, not just administered.
The organizations responsible for managing cricket need to align
their structures, competencies and processes based on findings from the
other 10Cs.
Here there is a case for cross-industry learnings, while recognition
of a technical specialist with hardcore cricket experience, MTI
Consulting, as part of their thought leadership initiatives, have
conceptualized, researched and published MTIs 11C cricket Business
Strategy Model, which provides a strategic planning model for cricket as
a business and is ideally suited for cricket authorities around the
world.
The development process used a blend of sports business models and
best practices in business strategy models, benefiting from strategy
work carried out by MTI in over 40 countries. Last year, MTI along with
UKs Intangible Business, carried out a pioneering study to financially
value the eight IPL Franchises.
MTI Consulting is a fast growing boutique management consultancy,
with operations in Bahrain, Bangladesh, Dubai, India, Malaysia,
Pakistan, Sri Lanka and associates internationally.
Since our inception in 1997, MTI has worked on 350 client-specific
projects in 35 countries across five continents, helping clients to
Analyze > Strategize > Realize profitable business initiatives. MTI’s
core focus is on Strategy Consulting and this augmented with specialized
solutions on corporate finance, human resource management, marketing and
research and analytics. |