Teams will make sure it's a transparent auction: U Mumba's Ronnie Screwvala

Owner of the Mumbai Pro Kabbadi league franchise, Ronnie Screwvala, has played a key role with other team owners to push for an open auction of the media rights from this year, ending Star Disney’s five-year run for those rights. In an interview, Screwvala tells Surajeet Das Gupta why he expects a host of global and Indian companies to bid for the rights. Edited excerpts:
 
This is the first time that all the media rights are being auctioned. What is the reason for ending the five-year deal with Star Disney?
 
Sports management company Mashal Sports is owned by Anand Mahindra and Charu Sharma. However, six-seven years ago, Star decided to enter this sport and bought 76 per cent stake in the company. At that time, team owners raised objections on a broadcaster and media company owning sports rights as well. This is unprecedented anywhere in the world. Even a person as aggressive as Rupert Murdoch, who used to own Star in India, has not done it. All of us had shown our concern. However, as the deal was already done, we could not do anything about it though we were not happy with it. Star offered to structure the deal with us in such a way that we could recover our costs. But it was an ad-hoc amount. At that time, we added a clause that the rights would get re-tendered after five years.

 

Many would say Star has built an amazing platform in sports after cricket. What’s your response to that?
 
While Star India has done an excellent job in promoting the sport, the flip side is that the commercial conflict of interest was huge. Vivo was signed up for a Rs 300-crore deal as title sponsor for five years. We felt short-changed as no other sports except cricket was getting that amount of money. So, when a year ago, Star made an offer, the team owners thought it was best to have market forces decide the price. Therefore, we decided to try the auction route. There was not much negotiation because Star was coming from a perspective that it controls the sport. All 12 teams unanimously decided to go for the auction. Eighty per cent of the money from the media and broadcasting rights goes to the franchises and the rest remains with Mashal.

 
How transparent is this auction, considering that some have raised questions whether Star will have a big advantage being the owner of the league?
 
This auction is going to be extremely market related. It is an open e-auction; anyone can continue to bid until the highest bid is reached. Star has no preferential right in the auction except that it can participate. So, it is a completely arm’s length situation. Eighty per cent of the beneficial ownership are the teams. So, the teams will make sure that it is transparent and a market-driven auction. As it is an e-auction, everybody can see who bids on the screen; so it is not like a sealed envelope and you can continue to increase your bid. The auction will start in six weeks and be a one-day auction. One of the Big 4 audit firms will also be appointed to ensure transparency.

 
What is your expectation of the value that can be created from the league?
 
The playing field for the rights was very large for Star, but it looked at only the advertising revenue. Hotstar’s value is primarily because of cricket and kabbadi. It has hardly any other content. However, the value of the league comes from 300 million viewers for kabbadi, which is huge. So, other than cricket, no sports has found this level in India; it simply cannot be hijacked. I must say now that it has agreed to the open auction. Star has been extremely fair and above board.

 
Are you expecting a lot of companies to bid for the rights?
 
Yes. Hypothetically, a Dream 11 could buy the naming rights as well as the playing rights. Amazon and Flipkart can buy the rights. Flipkart, which is looking at building an OTT platform, could be a contender. Sony has a good cluster of sports channels, which is also an important business for it. It could look at it. I expect Jio to take a look because it is a mass sport and so can Star.
 
What are the rights coming up for auction and what is the structure?

 
It is a 20-year league where we will auction the media rights every five years. All rights are up for auction: title sponsor, associate sponsor, global rights, OTT rights, digital rights, broadcast rights, gaming rights and television rights, among others. The only rights that are not being auctioned are the right of teams for stadium collection and T-shirt branding. The tender document has been divided into four divisions. You can bid for one of the parts or the total package. It is exactly structured like the IPL which Star won. In the earlier structure, Star was giving us a minimum guarantee for five years. This was a lollipop.

 
Were the teams viable?
 
Yes. It could have been a five-year investment; however, it became profitable from Year One as the sport took off.