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Lalit Modi: A peek into the mind of a brilliant marketing marvel

Lalit Modi: A peek into the mind of a brilliant marketing marvel
Underestimating Lalit Kumar Modi — flanked here by Shilpa Shetty (left) and Priety Zinta during the 2010 Indian Premier League auctions — would be at your own peril, says the author, IS Bindra © Getty Images

By Inderjit Singh Bindra

This week I received a call from a journalist who wanted to discuss the danger to cricket with Lalit Modi’s return to Indian cricket, if at all. He further questioned the Board of Control for Cricket in India’s (BCCI) overreaction to Modi’s possible victory in the Rajasthan Cricket Association elections last month.

Now in any democratic polity, a viable opposition is paramount for its effective functioning. Over the years whenever the BCCI has lacked an effective opposition, the functioning has deteriorated. This is detrimental for the game and the institution. At this point of time there is no opposition to N Srinivasan, with the result that he is making decisions that are not in the interest of the game.

What possible danger can Modi pose to cricket? He will be a good opposition to have. And anyways to write off Modi would be an act of ignorance at one’s own peril. As far as I know him he is a fighter and would fight till the bitter or sweet end.

It feels just yesterday that I first met Modi. And, surprisingly enough, his career in Sports Administration began on the opposite side of the table, when he was trying to build a business out of distributing sports pay channels in India. I think then he was perhaps the only individual that had realised early on that the business of sport was unlike any other having the ability to ‘cut across all creeds and all castes’, which is why he decided to bring televised cricket through ESPN and then Ten Sports to India.

He knew even then that live sport was one of the few things that Indian television viewers would soon mature and agree to pay. Lalit knew even then the value of the broadcasting rights. About a decade ago, in one of his first meetings with me, he prophetically told me nobody was marketing cricket in India the right way.

Next I knew with ESPN he had gone about buying the broadcast rights of the English and Wales Cricket Board (ECB), the BCCI, Cricket Australia, Cricket New Zealand, West Indies and Sri Lanka. And interestingly enough I remember Mr. Jagmohan Dalmiya, telling him: “You are foolish. You are paying us so much money.”  ESPN then had signed a contract for US$12 million. Indian cricket had never seen such money in those days. This was a man who could do many good things for Indian cricket and so I took him under my wings to help improve cricket in India. And the best way to improve the system is to join it. A decision was taken and Lalit’s tryst with Indian cricket began in earnest then.

Soon after, I distinctly remember a headline run by the Indian Express on February 22, 2005 titled, “RCA Modi-fied: Rungtas run out on 38” heralding what would be Lalit’s eventful entry into Rajasthan cricket and through that into the BCCI.

The implications of the result that day, were to find an echo later that year when the BCCI election took place and Lalit more than lived up to all his promises made to the Board.

As early as March 2005, I remember Modi making the following statements publicly in an interview with the Outlook magazine:

  • The value of Indian cricket is at least $2 billion in the next four-five years.”
  • “Indian cricket can be as big as the NBA (the basketball league) in the US.”
  • “An Indian Test player can earn as much as Michael Jordan used to: $40 million a year.”

Intriguingly enough, the magazine at that time had chosen to term these prophetic statements as “Strange new sounds emanating from the edifice that is the Board of Control for Cricket in India”.

But I was convinced by Modi, even then about the brand potential that was Indian cricket.

Next, I remember November 29, 2005 as if it were yesterday. It also happened to be Modi’s birthday, when a new chapter was written in the annals of Indian cricket. Under the visionary leadership of Mr. Sharad Pawar a new team took office. Improving infrastructure, marketing the game correctly to monetise it, settling the all-important TV rights issues, new player contracts, finding a suitable team sponsor, and bringing transparency and professionalism into the functioning of the BCCI was the simple agenda laid out then by Mr. Pawar. And Modi, as one of the youngest-ever BCCI Vice Presidents, took up the challenges whole heartedly.

It was Modi’s dream to make “Indian cricket the most powerful brand in world sport” and one that he took up in earnest post November 2005.

Having identified the potential revenue streams, Modi emphasised to the BCCI the importance of the need for implementing an open bidding process for any property. Next he went about virtually single handedly collating and analysing all past data on BCCI prices and arrived at a hypothesis that all the old data was irrelevant, because cricket in India was getting undersold.

First of the blocks in December 2005 and a litmus test for all Modi’s assumptions were the team sponsorship rights tender. The Sahara Group had earlier paid the BCCI a mere Rs. 78.10 crore for Team India’s sponsorship for three years. If I remember accurately close to 12 corporates purchased the bid documents, while six — Indian Oil, Hero Honda, Reliance Infocom, Air Sahara, Idea Cellular & Airtel — qualified. Amongst these, Hero Honda had not participated in the final bidding. Finally, through a fair and transparent bidding process Air Sahara had won the Team Sponsorship rights for a whopping Rs. 313.80 crore almost quadrupling the revenues the BCCI had received the last time around. In fact, even all the other five bidders that had qualified had bid over Rs 250 crore each, validating Lalit’s hypothesis. And incidentally, this was only for the logos on the player’s chest and leading arms. There were more revenues to come from the sponsorship of logos on the player non-leading arm and apparel/kit sponsor. Times of India had summed it up best when they said on December 20, 2005 shout out “Cricket business just got 300% bigger”.

But Modi was confident even then that his role of unbundling the value for the BCCI and Indian cricket had only just begun. Next on his agenda was the official kit sponsorship deal, and the eight-figure sponsorship deal that we bagged for Team India and the BCCI certainly did raise a few eyebrows. Reebok, if I remember correctly, had offered us US$26 million, only to be topped by a US$28 million bid from its soon-to-be-sibling Adidas. Adidas, in turn, was bested in dramatic fashion by a US $44 million cheque from Nike. And I remember announcing that the Rs. 196.66 crore winning bid had made Team India the “world’s most valued brand in team sponsorship.”

Nike was Indian cricket’s official kit sponsor for five years and also agreed to sponsor the player’s non-leading arm with their ‘swoosh’ logo from January 1, 2006 till December 31, 2010. Nike also became the official licensee for all apparel merchandise of the BCCI. All Lalit had done with Nike was simply work on the brands eagerness to break into an emerging market like India.

But the coup de grace for Modi, and perhaps the BCCI, was the all-important television broadcast rights.

He brought all his learning’s to bear during the all-important Television Broadcast Rights of the BCCI. He knew the television companies’ balance sheets inside out and it was incredible to watch him simply call everybody in and played one against the other. Importantly, it was Modi’s experience that had helped him arrive at a base price of US $ 430 million — which once again made many of my detractors publicly ridicule his business acumen!

Net Result: Nimbus Communication bagged the coveted Global Media Rights of the BCCI for a gargantuan US$ 612.18 million from March 2006 to March 2010 in February 2006.  I distinctly remember a Times of India report dated February 18, 2006 titled “BCCI scores Rs. 3354 crore and still batting” – wherein the journalist had very succinctly put in a comment that even if the BCCI had broken up its bag of goodies and given it to different bidders the aggregate would have been less than what Nimbus had bid. Other headlines then in newspapers like the DNA had stated “BCCI makes a killing on cricket rights” and even the International Cricket Council (ICC) had remarked “full credit to the BCCI for being able to monetize the eyeballs well”.

Some media analysts even then had said that the bids were too high and everyone worth their salt had begun to break down the numbers to understand the return on investment (ROI) for Nimbus.

It was then that the BCCI was perceived globally as an influential powerhouse, capable as anybody else, in shaping what international cricket will look like, and feel like, in the years to come. And all those accolades in my mind were for one person and one person alone — namely Modi.

 

Incidentally, in the four years prior to the arrival of Mr. Pawar’s new regime and Modi, the BCCI’s income was estimated at U$67m and within a matter of a year the BCCI had passed revenues of over US$ 1 billion.

Modi did not stop there; he then turned his attention to improving the level of cricket and its infrastructure in his home state of Rajasthan. The Rajasthan Cricket Association under his leadership opened the doors to a spanking new Cricket Academy, which was truly state-of-the-art and even today is looked at by many a cricket administrator as a Global Centre of Excellence in Cricket. Next Jaipur’s Sawai Mansingh Stadium was completely refurbished and modernised for the new Indian cricket fan. In fact, I have no doubt in my mind that it was these changes instituted by Modi  in terms of giving the Rajasthan cricketers the very best-in-class global facilities, that helped the state of Rajasthan win their maiden Ranji Trophy crown in 2011.

The IPL journey

Interestingly, all through this, while Modi had festered a personal dream of an Indian sports league that would be the envy of the sporting world. He dreamt that our national sporting passion — cricket — would captivate fans all over the globe. And as his efforts with the Marketing Committee were noticed by all and sundry, Modi mustered up the courage to present his plans of an Inter-City Professional Cricket League to the BCCI, once again.

It was just about this time that a shorter, more entertaining version of cricket was gaining worldwide appeal. Twenty20 cricket was fast emerging as the “perfect blend of sports and entertainment”, it also featured loud music, dancers, cheerleaders, and wired-up players providing commentary on the game even as it was being played.

Cricket purists had scoffed at the gimmicks and felt that Twenty20 was a travesty. The format, nonetheless, proved to have great appeal in England. As experts decried the technical inelegance of its play, spectators enjoyed being able to watch a complete game in three or four hours.

I remember, Modi coming to me one day and reading out something Ayaz Memon, the then Sports Editor of DNA had written about Twenty20:  “Sponsors will drool, the game has found favor across age groups, and more significantly, across genders. It could even emerge as a potent challenge to Bollywood because it lasts just about three hours.”

Modi felt Ayaz had got it right.

Modi then set about actually studying myriad business models of sporting leagues in the United States and Europe and set aside their strengths and weaknesses. It was post this preliminary investigation that he attempted to put together what best-suited cricket in the global context. The final product was then designed with all the safeguards put forth for all our stakeholders and players. And the Indian Premier League (IPL) was born — at least in Lalit Modi’s head.

With his homework done, Modi then approached the BCCI, outlining the vision and plan and for the IPL. And I also remember Mr. Sharad Pawar, after a few consultations and queries, handed over to Modi a clearance of nearly Rs. 200 crore and a free hand to turn his dream into a reality. The money was approved by BCCI for Modi to use as seed-capital to help recruit cricket players to the IPL, but even then the murmurs of some nay-saying colleagues were quite audible. He never used the said amount, but instead astonished everyone by bringing in billions of dollars before spending anything.

A lot many said that the league was doomed to fail, but Modi was determined to prove them wrong. The real work to get the league off the ground had only just started for Modi. The IPL, after all, was meant to be something totally new, and to build it He had to constantly deal with much risk and uncertainty.

Within a few days of getting the BCCI’s approval Modi held a formal media briefing in New Delhi, to let the world know that the IPL was just seven months away from its first match. I asked him then, why the announcement at a time when he did not have a single player signed up, let alone an Indian corporate ready to stake their money on a sporting franchise. He said, “Bindraji, perception, perception and perception will be key to our success.”

Importantly, the world though stood up and took notice.

 

Modi then meticulously set about signing the top 100 international players in the world. He knew that for the IPL to succeed he just had to sign up the very best in International cricket. I remember Modi classified the top 100 players in the world into four categories, based on their annual earnings and skill levels and decided to offer minimum salaries of US$ 100,000, US$ 200,000, US$ 300,000 and US$ 400,000 to players in the different categories. In all, he was willing to offer $20 million for the top 100 players in the world. Armed with that he started speaking to many players, and would you believe Lalit signed up all the Top 100 players with all of one – YES ONE IPL employee!

 

Next, Modi turned his attention to bagging the all-important Broadcaster, who would actually help fund the IPL through the Media Rights. I distinctly remember that his initial discussions with several TV broadcasters in India and abroad had not been very promising. Broadcasters had reasoned that LIVE TV coverage of the IPL was feasible only if the matches could deliver an average of five rating points per game. Thus it all boiled down to when the IPL matches were played, and the audiences they delivered. None of the existing Sports Channels believed this could work.

 

He believed only Prime time television had the potential of delivering these kinds of audiences in India. There again most Indian households had a single TV, and there was a risk that a prime time IPL broadcast not garnering the potential audiences unless it was compelling enough to attract a broad audience. Secondly cricket matches starting at 8.00 PM at night was scorned at by many, and unheard off. Unperturbed by all these questions, Modi went ahead with the Global Media Rights Invitation to tender and after a fair and transparent bid process was pleasantly surprised at the amount of the winning bid.

 

The rights had been bought by the World Sports Group, who were the only bidders and in turn sold to leading sports broadcaster Sony Max through to 2017. No other Broadcaster bid for IPL. It was WSG a Lagadere company only that bid. With a broadcasters bid of a whopping USD $ 1.026 billion, the IPL had well and truly become a billion dollar baby without a single ball being bowled. Incidentally ESPN did bid but offered no Money. Sony withdrew their bid.

 

With the broadcaster on-board things were now ripe for the IPL to go look for its right franchisees and a Title Sponsor for the league.

 

Modi personally went around from office to office of prospects, making PowerPoint presentations to Indian corporates and businessmen with a request to come aboard as a franchisee. That is when Modi once again thought of mixing two of India’s favorite pass time Cricket and Bollywood. I thought that mixing the glamour of films with the fast-paced action of Twenty20 was a possible masterstroke.

 

He personally spoke to Shahrukh Khan, an old friend, about buying a franchise. Shahrukh was interested, but confessed to knowing next to nothing about cricket or franchising. Then, on a visit to Thailand over the New Year break, I received a call from Modi saying that he had met Preity Zinta, vacationing in Phuket with Ness Wadia and they too could be interested in buying an IPL franchise.

 

By then Modi’s approaches to big business conglomerates like Reliance Industries and the UB Group  were also beginning to pay dividends as both Mr. Ambani and Mr. Mallya had immediately agreed to come aboard. We had some traction, but still a long way to go.

 

From then on, Modi personally made it his agenda to meet and explain the investment rational of the IPL to prospective franchisees. Sometimes literally flying around the country in an effort to get buy-ins. Those were some tough days indeed and without the IPL’s eight franchisees it would have been a non-starter. I think that the Media Broadcast Rights won by Sony Max & the World Sport Group a week earlier, with the broadcasters bid of US $ 1.026 billion did miracles in terms of getting prospects to believe in the IPL.

 

A fair and transparent bid process on January 18, 2008 saw the likes of Shah Rukh, Preity, RIL (Mukesh Ambani), GMR Holdings, UB Group, Indian Cements Ltd, Deccan Chronicle and Emerging Media emerge winners for the exclusive Franchise rights for the eight city league.

 

Winning Bidder City Franchise Won Winning Bid Value
     
India Win Sports Pvt Ltd (Mukesh Ambani) Mumbai USD 111.9 Million
GMR Holdings Delhi USD 84 million
Shah Rukh Khan/Juhi Chawla/Jay Mehta Kolkata USD 75.09 million
Indian Cements Ltd Chennai USD 91 million
UB Group Bangalore USD 111.6 million
Preity Zinta / Ness Wadia/Karan Paul/Mohit Burman Mohali USD 76 million
Deccan Chronicle Hyderabad USD 107.01 million
Emerging Media Jaipur USD 67 million

 

Hunt for a title sponsor and other sponsors

 

He then got down to scouting around for a Title Sponsor and other Co-Sponsors to build the Central Pool Revenues for the BCCI and our eight other franchisees.

 

Once again Modi hit the road armed with a sales pitch to bring on board the all-important Title Sponsor for the league. In mid-February, we opened the bids for the Title sponsorship of the IPL and DLF won the same with the highest bid of Rs. 40 crore per annum for a total sum of 200 crores. The deal gave DLF Ltd., exclusive Title Sponsorship rights for a period of five years.

 

Next up on Modi’s agenda was the all-important IPL player’s auction. The rest, as they say, is history. From there on end, Modi was simply unstoppable looking into each detail, micro-managing everything. And when Brendon McCullum got the tournament off to an electrifying start with his 158 at Bengaluru, all I could remember that night was a beaming Modi — like a parent smiles at the birth of his or her baby.

 

All said and done, all I would say of Lalit Modi is that he is a sharp and a hands-on administrator. A very good communicator; very clear about what he wants to do or achieve, charismatic and capable of carrying people along. Always bubbling with energy, his own set of ideas and opinions. Simply put, he is a go-getter. Whether you agree with him or not, he had a charisma and the marketing acumen to set the world alight with his achievements. And you would only ever write Modi’s epitaph at your own peril. A case-in-point is his re-election to the Rajasthan Cricket Association which could well see Modi take guard for a potential second innings and one can only wonder what this marketing maverick will do from here on. I am only too hopeful for what the future holds for Lalit Kumar Modi.

 

(Inderjit Singh Bindra is a former Indian Administrative Service officer who has been associated with cricket administration in India since 1975. He has been Punjab Cricket Association president for nearly three decades. He was also the Special Secretary to Giani Zail Singh when he was President of India in the 1980s. He played a key role in staging the Reliance World Cup in 1987 and opening up the Indian cricket television market. India’s stock in world cricket rose dramatically with the increase in commercial muscle, thanks largely to Mr Bindra’s efforts.  He was president of the Board of Control for Cricket in India from 1993-94 to 1995-96. India’s first ultra-modern cricket stadium at Mohali, among the best in the world, is Bindra’s brainchild. He was also the advisor in forming the Indian Premier League and ICC’s Principal Advisor)

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