“From a corporate perspective, Pakistan Super League has all the ingredients to become the biggest brand in Pakistan, bigger than any other sports and entertainment brand currently on display,” Chief Operating Officer (COO) of Islamabad United, Shoaib Naveed told Profit days before the start of PSL 2.
Little did he know, players from his own franchise would put the league’s very future at stake just when the second season kicked off.
The match-fixing scandal, which rocked the lucrative league on its second day became international news after the Pakistan Cricket Board (PCB) suspended United’s Sharjeel Khan, the star of PSL’s first season, along with teammate Khalid Latif for the duo’s alleged involvement in fixing. Few days later, former opener Nasir Jamshed was arrested along with a bookie from London in connection with the same case.
As we write this report, Mohammad Irfan, also a United player, remains under investigation while Nasir Jamshed – not part of any PSL team – was identified as the link between the two suspended United players and the bookie. Both Nasir and Yousaf (bookie) were subsequently arrested in London and released on bail to appear in a UK court in April. It is still however too early to comment on how the whole scandal will affect the growing popularity of PSL, which experts say can become one of Pakistan’s largest brands in years to come.
Amidst all the brouhaha, at least one thing is certain that the stakes are high and PSL means business to every stakeholder. The PCB’s swift response to the incident sends a clear message: there is zero tolerance for anything that can hold PSL back or stand in its way to success.
An emerging and strong contender for country’s top brands
To understand what is at stake and what is driving all this optimism in the first place and criticism that follows, Profit takes a detailed look at the brand PSL, whose very launch — let alone success — was in doubt until it picked up momentum in the second half, courtesy some spectacular cricket, which pulled huge audience to the grounds and back home on TV.
The defending champions, Islamabad United is a case in point when it comes to commercial success of a PSL franchise. Ali Naqvi and Amna Naqvi of Leonine Global Sports bought United for $15 million, the second lowest bid price for a PSL franchise, but the team went on to claim the title in the inaugural edition — and this was not the only thing it won.
In other words, this marriage of business with the country’s most sought-after sport opened up new opportunities for franchise owners, which range from building a valuable property to international fame and offers from big businesses lining up for sponsorship rights — that seems to be the case with Naqvis, at least.
Backed by powerful brands, the likes of Qmobile, Pakistan Telecommunication Company, JS Bank, and Igloo to name but a few, United now boosts a Facebook fan following of 2.8 million, highest for any PSL franchise — the list doesn’t not include a host of secondary and tertiary sponsors.
Given that it was bought for a lower price, United benefited the most in terms of appreciation in its brand value. According to PCB, each franchise saw its value more than double on the back of PSL’s growing popularity. According to a report by Dawn, the PSL chief Najam Sethi said they have received offers for a sixth franchise and the amount quoted was double the average price ($18.6 million) of the first five franchises who bought the rights for 10 years.
A market survey by Profit, which includes background interviews of officials from franchises, PCB and advertising agencies, suggest that the value of United and Quetta Gladiators (the finalists of PSL1 ) has increased three-folds.
“Excluding the title sponsor (HBL) and broadcasters, PSL has managed to sell sponsorship rights to other players at rates at least three times higher than that of last year,” PSL Tournament Director Naila Bhatti told Profit. Since all franchises have a share in PCB’s revenues, this increase directly translates to higher earnings for franchises.
The first edition of PSL received massive TV ratings last year and its viewership has increased by 27% to 374 (for first four match days of PSL2) compared with 294 (for the corresponding period of PSL1), according to Media Logic, a TV ratings provider, which collected data from Ten Sports, PTV Sports and Geo Super, the three channels that bought the broadcasting rights. The combined viewing of these three channels during peak slots (22:00-22:30 hours) is 9 plus, which is higher than popular gaming shows like Jeeto Pakistan and top prime time dramas on Hum TV.
The league’s growing popularity has resulted in higher rates for advertisement, that is more bargaining power for franchisees. For example, Peshawar Zalmi charged Rs2 crores from PepsiCo to place its logo on their official kit last year — the same promotion is worth Rs5 crores this year, according to officials aware of the developments.
It is perhaps these numbers, which have given so much confidence to United, the winner of PSL1, which even turned down brands who placed low bids for sponsorship rights. This also explains why United is in good spirits and its management bullish this season.
Unlike United and Gladiators, which spent the lowest amount but gained the most in terms of popularity, the other teams seem to be jittery.
“Will be taking @thePSLt20 to new heights globally, the only way forward is UP IA #BringingBackSmiles,” Zeshan Afzal tweeted on October 10, 2016 following his appointment as Chief Executive Officer of Peshawar Zalmi, one of the hot favorites in PSL’s inaugural season, which failed to reach the final.
With a proven track record in the financial sector, Afzal was the only CEO among all five franchises who could run his venture like a corporate firm. However, before he could bring those smiles back, Afzal left the franchise — that, too, only a couple of weeks before the start of PSL 2.
“I resigned myself,” Afzal told Profit on WhatsApp without giving further details. On the other hand, Javed Afridi, CEO Haier Pakistan, owner of Zalmi and a subsidiary of Chinese consumer electronics giant, Haier Group Corporation, had a different explanation to this: it was project-based [assignment] and Afzal’s contract was not renewed, Afridi said in response to our queries on WhatsApp.
We could not determine the actual reason behind Afzal’s departure from Zalmi because of the mismatch between the two explanations. However, what is certain is every news matters when brand reputation is at stake. Afterall, Afridi bought Zalmi for Rs 160 crores or $16 million. In fact, he has already invested at least Rs32 crore ($3.2 million) in terms of first installment of the franchise fee ($1.6 million) other expenses ($1.6 million), such as team ceiling (players fee), charges of match officials and logistics to name a few.
The first season didn’t give franchise owners much time for planning, but this year is different. Winning strategy and people who form those strategies, it turns out, is all that matters because margin for error is low and stakes are high. Even before these five teams took each other on for the second time, the owners knew that a professional management alone won’t bring results and leaders on ground will also matter. If we can be more specific, Javed Afridi’s Peshawar Zalmi replaced Shahid Afridi, the face of Pakistan’s T20 cricket and former captain with Darren Sammy, the talented West Indian who successfully led his team to two world titles (2012 and 2016) in the shortest format — the 33-year-old is the only T20 captain to have won two world cups for his country.
“I have complete confidence in Sammy as a leader and Afridi as an inspiration for the team,” Javed Afridi told Profit adding the change of leadership had no connection with Shahid Afridi’s performance.
However, Zalmi is not the only team that entered the ground with a different captain this time around.
Azhar Ali, despite a poor record as captain, was allowed to lead Pakistan’s one-day international team for quite a while, but Lahore Qalandars, that had the second worst winning record in the first season under Ali’s leadership, didn’t give him a second chance. The Qatar-based lubricants giant Qalco, which bought the franchise for $25 million, needs results on ground and for that they picked Brendon McCullum — one of the world’s most aggressive cricketers who led his team to the finals of World Cup 2015 (50-over format), the only game they lost.
Qalco’s Managing Director and owner of Qalandars Fawad Rana once said on a TV channel that his franchise embodies the characteristics of Qalandars (saints), but when it comes to performance, results matter more than characteristics — the change in Qalandars’ leadership indicates just that.
In fact, none of the franchises who failed to reach finals in PSL inaugural season seems to be taking any chance, at least with their leadership. Karachi Kings, the most expensive franchise bought for a whopping $26 million by ARY Group, too, replaced Shoaib Malik with Kumar Sangakkara to lead the team in PSL 2 — Sangakkara was man of the match in Sri Lanka’s only world T20 title that came in 2014.
These changes certainly indicate that every franchise owner wants the best of the game to lead their teams on ground with one objective: winning the title. And, that certainly makes sense because PSL has become one of the hottest properties for these investors after the phenomenal success it had in the first season.
PSL’s website says all franchisees have benefited from a significant rise in the value of their assets and are now able to cash in on the popularity of the first season by getting major brand name sponsors and media houses on board.
In fact, it is already happening. For example, Islamabad United and Quetta Gladiators, the finalists of PSL1 have got new sponsors, such as JS Bank, Jubilee Insurance, Master Oil to name but a few.
While they will jack up their revenues, the new sponsors are only icing on the cake: both United and Gladiators, which received the lowest bids ($15 million and $11 million respectively) in the first season have benefitted the most in terms of increase in value. In fact, Nadeem Omar of Omar Associates, the owner of Gladiators even received an offer of Rs40 crores ($4 million) for his franchise, which he revealed to a small group of journalists during a PSL match last season — current market estimates put gladiators value between Rs75 crores to Rs100 crores.
The unexpected value gains and sponsors’ increasing attention to the finalists, perhaps, best explain why the other three franchisees have picked up the best names of world cricket to get the same recognition, the underdogs of PSL 1 have achieved.
Following the success of PSL1, the league has become one of the most sought-after marketing platforms for bigwigs of corporate Pakistan, the likes of Habib Bank Limited (largest bank), Jazz (largest telecom operator), Jubilee Insurance (private sector’s largest insurance firm) and Bahria Town Group (one of the largest real estate developers).
The league is now full of big names from corporate Pakistan, but HBL was quick to buy the title sponsorship at a time when the league’s launch was under doubt — perhaps, its ability to foresee commercial gains paid off well.
According to a market research by Profit, HBL invested Rs 30 crores ($3 million) for a three-year contract to become title sponsor of PSL. For a company that earns more than Rs34 billion in profits, this amount is peanuts for the brand recognition it will get from this sponsorship, say market analysts — HBL has simply surprised the entire banking sector by taking the title sponsorship, they say.
“If you look at the brand promotion HBL will gain from three-year contract with PSL, the amount they spent is peanuts,” said one analyst who requested not to be identified.
PSL currently boosts a Facebook fan following of almost 3 million, secondly only to Indian Premier League (IPL), the undisputed king of all T20 leagues played around the world. Besides millions of fans who watched it on TV, the inaugural season was watched online by 90,000 people on the league’s Youtube channel. In short, every brand wants to ride the PSL bandwagon.
“PSL is a huge commercial opportunity,” says Numan Nabi Ahmed, Chief Executive of The Brand Partnership, which acted as technical consultant for Arif Habib Group in their bid for Karachi Kings that eventually went to ARY Group.
The league, Ahmed says offers a double opportunity to brands for it has both qualitative and quantitative aspect. “This is a very exciting proposition for the franchisees and brands associated with it,” he said. Explaining the qualitative aspect, Ahmed said it provides franchisees with increased access to people who matter along with recognition locally and globally.
“It helps create a strong consumer bonding for brands associated to a franchise. For example not many people recognised the otherwise successful businessmen who owned franchises but after owning one, they have become celebrities of sorts,” he said referring to Nadeem Omar of Omar Associates, which owns Gladiators.
Sharing another example of global recognition, Ahmed said many Pakistanis learned about Shahid Khan, the Pakistani-American billionaire only after he bought a franchise in English Premier League, which has a huge fan following in the world including Pakistan.
Talking about the quantitative aspect, he said these franchises invested in a business that was bound to go up, and this is a global trend where property value of franchises in popular leagues goes up with time. Hence, brand equity is built and the investment grows, he says.
The franchise owning businesses may benefit the most from PSL, but numerous other local and international brands operating in Pakistan, too, seem to be riding the PSL bandwagon to promote their own identities.
“Quetta Gladiators was a young team just like Jubilee Insurance, the fact that relates the two entities,” says Javed Ahmed, Managing Director Jubilee Life Insurance, the country’s largest insurance company in the private sector and one of the sponsors of Quetta Gladiators in season two.
“Gladiators are a young side, which is aggressive, displays teamwork, exhibits fighting spirit and yearns for victory. These are the attributes we want to promote in our company with this collaboration with Quetta Gladiators,” Ahmed said.
What future holds for PSL
With growing popularity of PSL, the league and brands associated with it, specially the franchise are hopeful it will become one of the biggest commercial entity going forward.
“PSL is the biggest sporting event in the history of Pakistan. Subsequently, it has become the biggest platform for companies to place themselves or their products to familiarize themselves with masses,” Naveed, the COO of United said. “In years to come, PSL has the potential to provide recognition to bigger brands like Leonine Global Investments.”
He goes on to say PSL is nowhere near reaching its full and if handled properly, it can become as big if not bigger than any reputable brands in the telecom and media space, two of the thriving industries in Pakistan.
“But before PSL1 started, it had a negative value since it was postponed around four times. People were unsure whether the league would happen or not. So, it was a big thing that businessmen came forward and bought the franchises,” Naveed said adding they deserve to reap capital gains and much more.
The PSL sold five franchises for $93 million for a period of 10 years to be paid every year in 10 equal installments. Moreover, it earned another $20 million from selling broadcast rights and title sponsorship for a three-year period and booked $2.6 million in profit from the first edition. This is certainly a good start for PCB, which lost $200 million in TV and ticketing revenue since international cricket was moved out of Pakistan in 2009, the year Sri Lankan cricket team came under attack enroute to Gaddafi Stadium Lahore.
Are franchises booking profits?
The PCB has increased its rates to fully capitalized on the growing popularity of the league and even distributed over 80% its profit among franchises. However, it will take a while before franchises start breaking even.
According to stakeholders, Profit spoke to all franchises reported a net loss at the end of first season — which is in line with a typical start by any new brand in the corporate world.
Naila Bhatti, the PSL Director, says the first season was risky and PCB appreciated the main sponsors for taking that risk. “They took the right decision and it has paid them well for keeping faith in the league,” she added.
“Our main sponsors were title sponsor HBL and broadcasters and we struck a three-year deal with them. So, a big jump in PSL profits is expected after 2018 PSL edition when we will auction the rights again for the fourth edition,” Bhatti said. It will also be the best time for valuation of PSL franchises because a sixth franchise will be added to the league.
Se further said that the viewership is increasing and the PSL management is satisfied with all the people involved with the league.
“There is a big hype in the social media about PSL’s second edition and definitely it will be bigger than the last edition from several perspectives including the financial and viewership aspect,” she said.
Ahmed of The Brand Partnership shares similar views. He says PSL will continue to become bigger next year and onwards “if we don’t have the beginning of events in the pattern of a league to it in football, hockey or squash, which may start growing gradually”.
As Ahmed speaks, another league on PSL pattern is already in process and likely to be followed by other ventures. The inaugural season of Pakistan’s first Kabaddi league by the name of Super Kabaddi League (SKL) will start this march. The founder and CEO of Strawberry Sports Management, the company organising the league, Haider Ali Daud Khan has been inspired by the success of PSL and believes his league could be the next big thing. He also plans to launch leagues for Wrestling and Volleyball in the future.
Ahmed believes all franchises should be in profit this season, an estimate whose basis lies in the feasibility he conducted for Kings as part of the bidding process last season, other stakeholders Profit spoke to say they are likely to break even in or after third season — it merits mentioning here that six out of eight IPL teams are still operating under heavy losses even after eight seasons.
“For the first three years, it’s all about investing and making the brand bigger and better each year,” Javed Afridi of Zalmi told Profit. “Having said that, we would like Zalmi to sustain itself in the years ahead, we are in for the long haul that’s why we have made a 10-year franchise agreement with PCB,” he said.
Afridi, however, added he doesn’t have business objective as such. “We see the franchise as source of contribution from our end for the betterment of the game and cricketers in the country, especially the KPK region.”
And United’s Naveed seems to agree. “It is too early to tell how impactful the league will be financially for all stakeholders, and it will take three to four years for it to mature and make that call,” he says.
Regardless of timeline for booking first profits, franchises success will also depend on the success of PSL itself. But that won’t happen with sponsors alone, that is at least what Naveed thinks.
“It’s not sponsors as much that nourish sports leagues, it’s actually broadcasters. On long term basis, if PSL has to survive then our sports broadcasting industry needs to evolve,” the COO said lamenting that sports broadcasting industry has not evolved in Pakistan over the time as it has evolved in other countries like America. He added if the broadcasting industry doesn’t evolve, it may prove dangerous for PSL over the years. However, that’s not the only obstacle to the event’s success.
Numan Nabi Ahmed of The Brand Partnership says most people looking after PSL’s commercial aspect are not exposed to effectively exploit and monetize it.
“There was a complete lull since February, 2016 (the time of inaugural edition) till December, 2016 when PSL 2 was back in the news. Both the franchisees and PCB did not pay attention to this aspect, Ahmed says. “If they continued to do marketing and engage people, they could have recovered much of their investment and kept building the brand equity.”
Giving an example, Ahmed says if a brand was willing to sponsor a franchise but could not meet demand during the season, the off season was the time to rope him in on a lower value. “They didn’t even gain 50% of the opportunity that was there.”
Now that they know it, they can make more from it provided they have a game plan and strategy created for the purpose of monetizing from such platforms, Ahmed says.
A solid strategy to monetize the brand’s popularity has its own importance, but gaining that popularity, that is winning the title, in the first place may take just more than that.
“The most important ingredient for the recipe to win a tournament title is how you prepare yourself for the challenge,” says Naveed, the COO of United. Off the field planning and evaluation of playing conditions and opponents are as important as team’s eventual performance on the field, he says. At the end of the day, he adds it all depends on the strategy that has been devised and the preparation the players do accordingly.
Strategy, it seems, is the most important aspect this season because no brand can afford to lose the commercial opportunities that come with recognition. The changes in the leadership of Zalmi, Qalandars and Kings seem to endorse at least one thing: franchise owners want their captains to turn things around for them.
However, there will be no low hanging fruits because the finalists of season one don’t seem to be taking it lightly either.
The parent company of United, the underdogs of last season and defending champions of PSL 2, have turned the franchise into a commercial entity, setting up a governing body and a professional management. And they seem to be well prepared with their strategy both on and off the field.
“Last year was a bit different story, but this year every team has been planning and preparing well for the tournament. There will be much more competitive matches to be seen this year,” says Naveed of United.
“Every team has learned from the first season, recognized where they lacked and I am expecting each of them will be coming in the league with full armament and ammunitions. So, there will be little margin for mistakes and there will be tough battles on the cards,” the COO said.
PSL and demons of fixing that continue to haunt Pakistan Cricket
Pressure is mounting on PSL officials as former cricketers and even politicians have turned vitriolic against the PSL officials following recent developments.
Former chairman National Assembly Standing Committee on Sports Iqbal Muhammad Ali Khan has criticized PSL and said that the match-fixing issue has brought the country’s name into disrepute.
Qamar Ahmed, considered an authority in cricket journalism, believes that apparently lack of transparency in the PSL and its franchises’ businesses through it could not be beneficial for the entity from a long-term perspective. I think PSL need to be more transparent along with all of its franchises so that PSL develops and grow,” he said.
However, when there is so much money involved, chances of corruption and fixing are higher — Indian Premier League is a case in point, which was also amid severe criticism after fixing scandals came into the limelight.
Following the scandals, PEPSI withdrew its sponsorship deal with IPL. Similarly, one of India’s largest conglomerates JSW Group revealed that it had dropped its plan to purchase an IPL outfit after match-fixing controversies made the headlines.
Moreover, Chennai Super Kings and Rajasthan Royals were banned for two years following illegal betting and investigation into match-fixing. Gurunath Meiyappan, a former team official of Super Kings, and Raj Kundra, a former Royals co-owner, were banned for life from any involvement in cricket matches.
Shanthakumaran Sreesanth, who took Misbah-ul-Haq’s catch in the inaugural World T20 Championship final, to take India to the victory stand, was arrested along with two other cricketers and several bookies in 2013. He served a year in jail before being bailed out. In 2012, five cricketers of low profile were found to be involved in the corrupt practice.
Much older than PSL, IPL has been marred with several scandals as well but it still survived. In fact, shortly after Pepsi’ withdrawal, Chinese mobile phone company Vivo bought the title sponsorship.
Former Pakistan captain and PSL brand ambassador Rameez Raja believes that the PSL brand wouldn’t be affected by this scandal. Yet it depends how PSL think tank unfolds its crisis management strategy.
PCB’s response to the latest fixing scandal was prompt and may have restored fans’ trust in the league. However, it will need more than the right strategy post fixing crisis to help PSL grow.
But than there is another challenge, which is bigger and holds more significance for Pakistan cricket in the long term, and that is bringing the league back to where it belongs.
Most experts agree that the league’s full potential can be unleashed once it is brought home. In fact, the biggest challenge the PSL has been facing is organizing this tournament abroad, says Bhatti.
“It has been a big challenge for us to organize the tournament abroad since all our offices and support staff resides in Pakistan. So, definitely it has been the biggest challenge for us,” she said.
The PCB is trying to bring, at least, the final of the second season back home, and they are hopeful about it. Market experts, too, believe the league’s full potential can be unleashed only after it is brought home.
“PSL has to land in Pakistan to explore its actual potential as league from popularity to commercial viability,” says Naveed of United.
Similarly, Ahmed of The Brand Partnership says the value of franchises can increase by up to 40% if the league comes to Pakistan.
However, the hosting of final in Lahore once again hits snags after a deadly bomb blast rocked the provincial capital on Monday, February 13, sending alarm bells all the way to UAE.
The friendly rivalry between cities that PSL is meant to cash in on, can only be fully unleashed when matches take place in these cities and fans turn to venue in large numbers to support their favorite local stars and cheer for international stars from all over the world – the main attraction for fans.
However, if Lahore blast was not enough, the consecutive blasts that followed including one at a Sufi shrine in Sehwan, 200 kilometers north of Karachi, might have killed the slightest of hope.
As we prepare this report Prime Minister Nawaz Sharif concludes a high-level meeting with heads of military, intelligence bureau, interior ministry, and finance ministry and backs hosting of PSL final in Lahore.
However, it might need more than assurances to bring the league home. In a recent TV interview, Sethi admitted it would be difficult to bring foreign players to Pakistan after Lahore blast.