KOLKATA: The Peshawar franchise in the upcoming Pakistan Super League (PSL) has the potential to be both a profit centre as well as a platform for corporate branding, says its owner.
“A franchise cricket team in Pakistan carries enormous potential both in terms of ROI (Return on Investment) and ROO (Return on Objective),” says Javed Afridi, CEO-HNR Company (Haier Manufacturing Unit).
And in his view, both objectives are going to be met in his $16-million acquisition of Team Peshawar, despite the city being in one of the most disturbed areas of Pakistan.
“Like any business, yes, the investment upfront is going to be significant, but for us, a [PSL] team makes sense commercially in the middle-to-long term as well,” Afridi told this correspondent.
The central revenue will be equally distributed amongst the five teams, he says while declining to share the details.
“But the model makes lucrative business sense for us.”
In the course of an extensive interaction over email with this reporter, Afridi also touched upon a gamut of issues including plans for his native Peshawar using Haier’s PSL foray as the springboard.
“Peshawar and KPK are close to my heart, and I want to develop the infrastructure around the game in my homeland,” he says.
“For a region that has been traumatised for more than a decade due to global socio-political upheavals, this team is a tribute to the spirit of survival, the commitment to stay happy in the face of adversity, and the enthusiasm to highlight one’s true identity.”
‘Game-changer’ for Pakistan
What makes him upbeat, Javed Afridi says, is Pakistan’s “burgeoning middle class” that makes it “the second biggest market in cricket” with a 200-million population.
“Cricket is by far the most followed sport, and has a passionate fan base across Pakistan. You have the fans, you have the product, the PSL team has a strategy in place and we are very excited about this.”
Afridi’s confidence also stems from the league’s association with Repucom, a Singapore-based sports research and asset analysis company that he sees as “one of the leading sports property valuation firms in the world”.
“We are confident that the franchise-based model is going to be a successful one in Pakistan,” he says.
“We see the PSL as a game-changer for Pakistan’s sports and entertainment industry.”
Afridi admits he is looking at engaging players and his team for various brand endorsements to raise funds, but does not give details except for saying that the “Haier” tag will not feature in his team name.
“We aim to build a strong, professional unit to run day-to-day operations and commercials of the team,” he says.
As is the case with all franchises in the Indian Premier League (IPL), Afridi says his advisers too are “deliberating on” creating a Special Purpose Vehicle – a company for the PSL franchise.
Having a company facilitates offloading stake later to raise funds. For instance, the original promoters of IPL franchisee Rajasthan Royals, the UK-based Emerging Media, sold its stake to actress Shilpa Shetty and her entrepreneur husband.
But Afridi says it is too early to talk of a similar scenario. “We are currently fully focussed on creation of the team and making Peshawar the best brand in the PSL.”
‘Not a Me-Too League’
Afridi was reluctant to make comparisons with IPL, which opened the floodgates for franchise-based cricket leagues globally eight years ago.
“Yes, PSL is happening after the IPL, but that does not mean that it is a me-too league. The franchise concept is not novel to India, it has been happening around the world for decades,” he says.
“The economy, development of countries, and strength of various industries determine when properties like this develop in certain parts of the world. For India that was in 2008, for us it is now. It doesn’t mean any league that has come after NFL or MLB is a me-too league.”
In fact, he thinks PSL scores over IPL while setting the base price of teams.
“The IPL, I feel, was not considerate of the franchisee costs and its sustainability in its initial years. The franchisee was asked to put in a lot of money in the beginning years,” he says.
“The PSL has been more sensitive in this regard, and the share of central revenue is also designed to make sure the franchise is able to sustain itself in the short to medium term.”
Afridi’s sentiments are echoed by Joy Bhattacharjya, who was Director of Operations at the Shahrukh Khan-owned Kolkata Knight Riders till the last season.
“Not everybody has $1 billion,” he says, referring to the cash-rich IPL franchisees, who in 2007 spent $724 million on the eight franchises, almost double the combined base price of $400 million.
“The fundamental question is, do they have the economics in place? If they do, then it’s okay,” says Bhattacharjya, currently Project Director of FIFA Under-17 World Cup, which India will host in 2017.
“Some succeed, some don’t, PSL has the potential [to succeed]. I wouldn’t worry about that.”
The writer is a Kolkata-based journalist covering the corporate sector and the business of sports.