Sports And The Ease of Doing Business

There is no arguing that sports and sporting events should be made more inclusive

A recent statement by Rajyavardhan Singh Rathore, Union minister of state for youth affairs and sports, has rattled many private television broadcasters operating in India. Delivering the keynote address at the Confederation of Indian Industry’s (CII’s) Big Picture Summit, he said that media has an important role in taking sports to each and every home in India.

The minister’s intentions are honourable and desirable. But when combined with recent reports in this newspaper and elsewhere that the sports ministry is working with the ministry of information and broadcasting to declare cricket’s Indian Premier League (IPL) a tournament of “national importance”, it has multiple implications. This column usually eschews discussions on policy issues which are works-in-progress, but the multiple consequences of such a policy move are compelling enough to merit a moment of pause.

At the moment, the minister is only thinking aloud. But if the decision does come through, it will require a private sector network that won exclusive media rights to this tournament in an open auction conducted by the Board for Control of Cricket in India (BCCI) to share its live feed of the event with national broadcaster Doordarshan under the Sports Broadcasting Signals (Mandatory Sharing with Prasar Bharati) Act, 2007.

Section 3(1) of the Act states: “No content rights owner or holder and no television or radio broadcasting service provider shall carry a live television broadcast on any cable or Direct-to-Home network or radio commentary broadcast in India of sporting events of national importance, unless it simultaneously shares the live broadcasting signal, without its advertisements, with Prasar Bharati to enable them to re-transmit the same on its terrestrial networks and Direct-to-Home networks in such manner and on such terms and conditions as may be specified.” Section 3(2)(1) of the Act also requires the “contents rights owner” (private broadcaster) to share 25% of advertising revenue with Prasar Bharati.

Apart from the relevance and applicability of the Act to IPL, whether the IPL can be termed an event of national importance or whether the statements were meant to influence the Gujarat state election, two critical issues stand out.

One, any possible ex-post intervention by the two ministries will go against the grain of Prime Minister Narendra Modi’s strenuous efforts to improve the ease of doing business in India. The private broadcaster won the rights to broadcast IPL matches via television, digital media, Indian and overseas media for five years on payment of Rs16,347.5 crore. This winning bid was probably calculated on the basis of certain metrics and revenue projections. But, if the two ministries follow through on their plans, it is likely to send all calculations awry. The issue once again raises the spectre of retrospective action, something that makes it vulnerable to international arbitration and investor anathema.

There is no arguing that sports and sporting events should be made more inclusive. Unlike many other developed countries where access to sports—including tennis or golf—is getting increasingly democratized, sports access in India remains largely sequestered behind elite walls. Even popular sports like football and hockey remain out of reach for a vast section of India’s population. Therefore, the ministry’s attempts to foster a deeper sporting culture and expand sports infrastructure is quite commendable.

However, as a policy imperative, this should have been included as part of the auction’s terms and conditions and not articulated as an afterthought. Bidders would have then structured offers differently, factoring in the changed dynamics and sharing of advertising revenue. Inclusion of the national network would definitely bring more eyes to the event, which would justify the sharing of advertising revenue. The contra argument is that with additional access points now available, it would reduce traffic to the original broadcaster, thereby having an impact on the overall revenue.

That brings us to the second point.

According the IPL the proposed special status raises multiple questions: What trigger points are necessary to declare a tournament of national importance? Can any minister, ministry or government department declare anything nationally important?

What adds to the confusion is whether the ministry of sports and youth affairs has any category listed as “nationally important”. The ministry currently has four categories created to determine eligibility for Central assistance: high priority, priority, general and other. The ministry documents: “In the ‘High Priority’ category, the sports played in the Olympic Games and in which India has won medals in last conducted Asian Games as well as Commonwealth Games or in which India has good chance of winning medals in Olympics have been included.” There are nine high priority sports and cricket is not one of them—athletics, archery, badminton, boxing, hockey, shooting, tennis, weightlifting and wrestling.

The Constitution’s seventh schedule puts sports in List II, or areas where states have jurisdiction. The ministry has been trying to include it in the Concurrent List; till that happens, it is questionable whether any declarations can be made. To be fair, the ministers have not yet got around to acting on their thoughts. But thinking aloud or even vocalizing arbitrary government intervention can send mixed signals to potential investors.

The above article was originally published in Mint newspaper and can also be read here