00:00This is a story about cricket, a word understood in every language throughout the 28 states of India.
00:05Cricket was introduced to India by the British, but it became a national obsession here,
00:10an obsession that in recent years has exploded in interest, including from foreign investors,
00:14as we saw recently when Blackstone participated in a group that invested $1.75 billion to buy the Royal Challenger's
00:21Bengaluru.
00:24Across India's sprawling cities, you're never far away from a cricket ground.
00:32Close your eyes and dream of what is possible and then multiply it by any number that you want
00:39and you'll get an obsession for cricket in India. It's always been big, but it's just got bigger and bigger.
00:46So big that even U.S. investors are taking notice.
00:49This can be good B-roll, but yeah, because you guys...
00:53This is the logo, right?
00:53Yes.
00:54When John Gray's Blackstone stepped up to help buy the Bengaluru team earlier this year,
00:59his firm became part of the second most valuable sports league in the world on a per-game media rights
01:05basis, behind only the NFL.
01:08In India specifically, cricket is the passion.
01:13I'm still struggling with the rules.
01:15I'm making slow progress on it, but now as an owner, part owner of a team, we've got to understand
01:20this.
01:21Fortunately, my colleagues in India do.
01:24But there are only 10 teams in a country with 1.5 billion people.
01:28That is a lot of eyeballs.
01:30And then this team in Bangalore has won the last two championships, won the second after we made the investment,
01:37has a terrific team, terrific management, and is in the fastest-growing city in the country.
01:42So it all lined up for us.
01:44The Royal Challengers are part of the Indian Premier League,
01:48which created a form of cricket very different from the version first brought to India by the English in the
01:5318th century.
01:55His Majesty the King at Lourdes, where he greets the English team and the All-India XI.
02:00Amar Singh has scored his 50.
02:03Incidentally, the top score for his side during this match.
02:06Originally a slow, dawdling game that would last days,
02:10it's now been turbocharged into a shorter, faster game that lasts just three hours,
02:15called 20-20, referring to the number of overs or sets of six throws of the ball.
02:21Each team gets 20 overs in its innings at bat.
02:25Harsha Boghle is a cricket commentator in India.
02:29The younger generation in India couldn't be bothered five days of cricket.
02:33And so India took the 20-over game, and like you play with the dog in the bone,
02:38they just took the handkerchief and ran away with it.
02:40So 20 overs cricket, perfect.
02:42And everyone can watch.
02:43The grandmother can watch, your sister can watch, your uncle can watch, the little kid can watch.
02:48The explosion in popularity traces back to 1983,
02:53when India defeated the heavily favored West Indies to win the Cricket World Cup.
02:59That was a watershed moment in Indian cricket.
03:02And entire nation rejoiced.
03:04And when something like that happens, entire nation rallies,
03:09the kids started playing, parents started encouraging them.
03:12So that was a very important moment for Indian sports and cricket in particular.
03:19Since then, it's only grown.
03:21And it's now moving cricket from a game traditionally played between competing countries
03:26to one now dominated by competing franchises.
03:29And if one franchise team has harnessed that growth better than anyone,
03:34it might be Royal Challengers Bengaluru, the two-time defending champion.
03:39On the game day, the entire planning is with the head coach.
03:43So head coach along with the support staff plans.
03:46A former marketing executive, Rajesh Menon, is their CEO.
03:50And we met him at their home ground in Bengaluru.
03:54He ties the success of his club and of cricket overall in India to the essence of India today.
04:01If you look at everything, it starts from the belief system, the philosophy.
04:05And the philosophy should be aligned to the country's philosophy.
04:09So when I looked at RCB per se as a team and we looked at India,
04:14India was a closed economy.
04:16But when the Indian economy opened up,
04:19people started to migrate from small town to big towns.
04:22Then came the startup boom.
04:24And every Indian knew how to start their own business.
04:26And we all know saying one in a million succeeds.
04:30There was fear of failure.
04:33People were failing.
04:34There was no safety net.
04:36And hence there was fear of failure.
04:37And that's the cultural tension which we saw.
04:40We all knew India has to move forward.
04:42People have to try.
04:44But as a human being, we don't know what's on the other side.
04:46Until and unless you go play bold.
04:49That's the philosophy of RCB.
04:51Go play bold.
04:52We don't know what's on the other side.
04:54Until and unless you go and play bold.
04:55And that philosophy is young India's philosophy.
04:58It's not a philosophy of one region, one culture, or one thing.
05:03So it's a philosophy of young India.
05:05And that resonated with young India.
05:06And it was not a tagline.
05:08It was a belief system.
05:10And what we did with that was we manifested that on every aspect.
05:15And that resonated with this young India.
05:18The Indian Premier League has seen major growth in recent years.
05:22And both Gray and Menon think there's more to come.
05:26I think the growth is what we've seen in the United States in the expansion and value of media rights.
05:32If you think about what the NFL has done or the other leagues, it's still much earlier in the Indian
05:40sports process.
05:42So it is, I think, how you monetize these teams.
05:46Obviously, it's the branding related things.
05:49And then it's just the growth of that underlying economy.
05:52I mean, an economy growing 7%.
05:54There's going to be a lot of wealth creation.
05:57And India's GDP per capita is going to, at this rate, double every 10 years.
06:04But they'll still be passionate.
06:05It's the same thing we see here.
06:07So to me, there's a real scarcity around sports teams.
06:12So very strong demand and a finite number of teams to absorb that demand.
06:16And this team in a particularly good city.
06:18So we feel very lucky to invest here.
06:21Point number one, India's a massive consumer market.
06:251.5 billion population, growing economy.
06:29If you're owning a team like this, it gives you that expanse to get into that market.
06:35Second one is media keeps growing in all aspects.
06:39One is the penetration of media is growing.
06:43Consumption of media is growing.
06:45Number three is the scarce resource.
06:47Any scarce resource has a premium to it.
06:49And if the scarce resource is growing, there's much more premium to it.
06:53And if scarce resource, you know the cash flow.
06:56And it even becomes even more valuable.
06:59The fourth aspect is, it is just 19 years old, this league.
07:03Whereas globally, other leagues are 90, 100 years.
07:06In 19 years, what we have achieved here, the sentiments inside and outside is that, in next 20 to 30
07:14years, this league will be globally one of the biggest leagues, whichever you can see.
07:18And this league is currently two and a half months.
07:21Think of this league becoming four months.
07:23Think of women's league becoming bigger.
07:25So I can see only opportunities.
07:28Fourth and fifth one is expansion.
07:31How can you make this brand around the year?
07:34Because currently, if you look at, 85% is coming from media.
07:37So there are only opportunities I see.
07:39And I feel I'm 100% sure this is the opportunity which the investors also have seen while investing into
07:45an IPL brand.
07:47But Bogle warns that there could be a plateau ahead for cricket in India, at least when it comes to
07:54media rights.
07:55The value of the digital rights through competition kept going up.
07:58It got to a stage where you cannot not have it, which is a win-win for the person selling
08:03the rights.
08:03So there was one entity that bought the television rights for a large amount and one entity that bought the
08:08digital rights for a large amount.
08:10The amount of money that Disney-owned Star paid was not sustainable.
08:16They were going to make huge losses on it, but they just had to have it.
08:18And so we had a buyout that audiences in the U.S. would be very well aware of, a buyout
08:24where the digital-owned entity buys out Star Sports.
08:27So now their bill, their rights bill is huge.
08:31So the fear going into the next television rights is, with one predominant entity owning the media landscape, will the
08:40rights be as big?
08:41Or will the cricket board play it very smartly and say, come what may, you can't do without us?
08:47So I am expecting the rights to be slightly divided.
08:52We had the head of Netflix in India recently, and he said, we're not interested in bidding for the whole
08:57thing.
08:57But yes, only the weekend games.
09:00That would be very interesting for us.
09:03Beyond prospects for growth, cricket in India offers an attractive business model for investors,
09:08particularly given the cost structure compared to all those revenues.
09:11While European and American sports stars have seen their salaries balloon in recent years,
09:17Indian Premier League cricketers are paid just a fraction of that,
09:21with player payroll as a percentage of team revenue among the lowest in major global sports leagues.
09:27If you divide the rights and say what percentage of the rights are given to the players as fees,
09:32it's among the lowest in the world.
09:34But because cricket has traditionally not been a huge paying sport,
09:40what they're getting already is considered so valuable that it'll require a rebel to say,
09:46you know what, you are getting 25 crores, divide that by the current dollar terms.
09:52But you're getting 25 crores to play six weeks, but you know what, you're actually worth 60.
09:57So do you want to rebel and say this is what we want?
10:01It'll come down to that.
10:03As the league surges in popularity, Indian Premier League teams have taken stakes in franchises in South Africa,
10:10the UK, and even the US in a bid to grow their global footprint.
10:15But the biggest opportunity remains at home.
10:18India is the largest country in the world, divided by language, region, and income,
10:23but united by a passion for cricket.
10:26And if India's economy reaches the potential it hopes,
10:29and if incomes rise and consumption increases,
10:32more of that spending will flow toward leisure activities.
10:36Few industries are better placed to capture it than the game India already loves,
10:41bringing together 28 states and 1.5 billion people speaking 120 different languages behind a single goal.
10:50It's an aspiration of young India.
10:52We're not tapping into any other insights there.
10:55It's basically what young India wants.
10:57Indian economy is growing.
11:00The 1.4 billion, 1.5 billion population is young.
11:03Different industries are growing.
11:05And hence, if you look at the philosophy,
11:07if you don't play bold, then we won't move forward.
11:10Nietzsche and takit moto
11:10You'll be observed.
11:11India
11:11India
11:11India
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