Home > Features >

Team India sponsors should take cue from Emirates’ deal with Arsenal and embrace “pay for performance” model

Team India sponsors should take cue from Emirates' deal with Arsenal and embrace

It’s a win-win situation if sponsors of Team India have a meritocracy clause in their sponsorship deal that rewards the team for performance and penalises them for non-performances © AFP

By Amrut Joshi

The association between Emirates and Arsenal is very well-known in the global sports market. Emirates has been sponsors of Arsenal since signing a record-breaking 15-year sponsorship deal in October 2004. The deal was, at the time of its signing, the largest sponsorship agreement ever seen in British football, and was touted as a partnership between Emirates and “one of Britain’s most successful clubs and one of the world’s biggest sporting brands”.

As iconic a club Arsenal has been, its bare trophy cabinet over the last decade has prompted Emirates to structure a “pay for performance” model into its sponsorship agreement with Arsenal. 

Boutros Boutros, Senior Vice-President of Emirates, was quoted in UK’s Mail Online, “There are certain clauses, from 2015, that we pay them a percentage less if they don’t perform… The Champions League is part of the new contract. It’s just to keep them on their toesIt’s fair to us and fair to them.”

While it can be argued that “pay for performance” clauses are particularly risky in the context of sport, where fortunes fluctuate based on a number of factors such as luck, team form, individual player form, form of opponents, refereeing decisions, it can equally be argued that these factors balance out in the medium to long term. Ultimately, the performance of a team can be clearly measured. As long as the performance metrics are clearly known and documented at the time of commencing a sponsorship deal, I would argue that such clauses are not only fair but can also serve as an effective external check on a sporting body’s corporate governance practices.

Let’s take the case of the Board of Control for Cricket in India (BCCI). When was the last time anyone heard Nike or Sahara or any other BCCI sponsor say, “There are certain clauses, that we pay them a percentage less if they don’t perform.” 

If one were to objectively benchmark the performance of the Indian Cricket Team over the last 18 months, would there be any business rationale for Sahara and Nike to stay invested at the levels that they had committed to when they signed their sponsorship agreements? Would it not be fair for them to slash a percentage of the sponsorship dollars based on the Indian Team’s performance?
 
How about inserting clauses in the sponsorship agreements which peg the release of the annual sponsorship fees to the ICC Team Rankings achieved by Team India in a particular 12 month cycle? For example, let’s say that Sahara has committed to pay $600 million over 10 years, through 10 equated annual installments of $60 million. Of the $60 million per year, $20 million each is attributed towards each form of the game i.e. Test match cricket, ODIs and T20 Internationals. Let’s assume that the ICC Team Rankings is agreed to be deployed as a benchmark. How about deploying a pay for performance structure such as the one outlined below?


ICC Test/ODI/T20 International Ranking Achieved Percentage of Sponsorship Released to BCCI
1 100%
2 90%
3 80%
4 70%
5 60%
6 50%
7 40%
8 20%
9 Nil

Since sponsorship and television broadcast form the biggest chunk of the BCCI’s revenues, one would imagine that a “pay for performance” structure would galvanise the entire BCCI machinery into ensuring that the strength of the Indian Team in all formats is maintained at as high a standard as possible. Would the BCCI then continue to justify India’s dismal Test record in recent times by attributing it to “bad luck”, “green pitches”, “loss of key players due to retirements”, “a transition phase”? One would think not.

To borrow Boutros Boutros’s quote, it would “keep them on their toes“.

(Amrut Joshi is the Founder Partner at Gamechanger Sports Ventures, www.gamechangerindia.com, a professional sports consulting firm)

West Indies in South Africa, 2014-15

Dec 17, 2014 (14:00 IST)   at Centurion

India tour of Australia, 2014-15

Dec 17, 2014 (05:29 IST)   at Woolloongabba, Brisbane

Pakistan vs New Zealand in UAE, 2014

Dec 19, 2014 (16:30 IST)   at Abu Dhabi

West Indies in South Africa, 2014-15

Dec 26, 2014 (14:00 IST)   at Port Elizabeth

Sri Lanka tour of New Zealand, 2014-15

Dec 26, 2014 (03:30 IST)   at Christchurch

More

Pakistan vs New Zealand in UAE, 2014

Dec 17, 2014  at Abu Dhabi

New Zealand won by 7 runs

England tour of Sri Lanka, 2014

Dec 16, 2014  at Colombo

Sri Lanka won by 87 runs

Pakistan vs New Zealand in UAE, 2014

Dec 14, 2014  at Sharjah

Pakistan won by 147 runs

England tour of Sri Lanka, 2014

Dec 13, 2014  at Pallekele

Sri Lanka won by 90 runs

Pakistan vs New Zealand in UAE, 2014

Dec 12, 2014  at Sharjah

New Zealand won by 4 wkts

Photos

India vs Australia, 2nd Test at Brisbane

Videos

Josh Hazlewood looks back at his 5-wicket haul

India vs Australia 2nd Test at Brisbane, Day 2: India’s familiar collapse, Umesh Yadav’s heroics and other highlights

South Africa vs West Indies,1st Test, Day 2 at Centurion: South Africa declare at 552 for 5

Australia 221/4 at stumps against India on Day 2 of 2nd Test at Brisbane

Murali Vijay, Ajinkya Rahane guide India to 311/4 against Australia on Day 1 of 1st Test at Brisbane

Australia India Interviews Ishant Sharma Moments in history Ravichandran Ashwin South Africa

Sachin Tendulkar admires swimmer Masudur Rahman Baidya

Stiaan van Zyl becomes first South African batsman to score Test century on debut at home

South Africa vs West Indies 1st Test, at Centurion: Rain forces early end to Day 2

Sachin Tendulkar satisfied with India’s progress in other sports

India vs Australia 2014-15, 2nd Test at Brisbane: India failed to capitalise on good start, says Sunil Gavaskar

India vs Australia 2nd Test at Brisbane: Steven Smith holds key for Australia

Josh Hazlewood’s relentless accuracy and subtle movement against India in 2nd Test at Brisbane augurs well for Australia

South Africa vs West Indies 2014, 1st Test at Centurion: Hashim Amla’s double-century and other statistics

India vs Australia 2nd Test at Brisbane, Day 2: India’s familiar collapse, Umesh Yadav’s heroics and other highlights

Keki Tarapore – India’s manager on the successful West Indies tour of 1971

Fan of the Day

Suraj Gowda

Suraj Gowda

653 Posts | 10 Fans

India vs Australia: Murali Vijay's 144, Video highlights

प्रसिद्ध कथक नृत्यांगना सितारा देवी नहीं रही

More broadband connections to boost GDP growth in Asia Pacific: GSMA

India is becoming our largest overseas market, Xiaomi CEO Lei Jun says

Bigg Boss 8: Ali Quli Mirza, Renee Dhyani, Upen Patel, Praneet Bhatt, Sonali Raut – who should be evicted this week?

Revealed: The reason why Kishore Kumar’s biopic starring Ranbir Kapoor won’t feature Katrina Kaif!

अभिनेत्री प्रियंका चोपड़ा ने स्वच्छ भारत अभियान में हिस्सा लिया

Also on cricketcountry.com

Play Fantasy Cricket & Win

Cash Daily! Click here