The $20 billion goldmine

Sports & fitness have taken off across the world and are the buzz words among the masses. Sports is a $700 billion global market and it contributes upto 3% of the U.S. economy. China also has ramped up it's focus on Sports in the past 4-5 years. The General Administration of Sport (China) published the 13th Five-year Plan on the sports industry last July, the documents of which explain that the sports industry will exceed 3 trillion yuan ($432 billion) by the year 2020. Alibaba has started Alisports in 2015 and recently Sequoia China has teamed up with CMC to set up a VC fund dedicated to Sports. Many developed as well as developing nations have focused on sports as it is a great enabler of equal opportunity as well as good way of employment generation. Researchers have proved that sports boosts the spirit of a nation which in turn improves it's overall economy as well as the happiness quotient. So, let us see what are the opportunities for the same in India.

Over the past two years of my entrepreneurial journey with Athletto, I had the opportunity to meet many sports entrepreneurs, industry experts in the sports sector, investors as well as political bureaucrats. One thing that they all agreed upon was the tremendous opportunity which this sector has and the projected trajectory of its growth in the coming decades. However, when it came to sizing of the market, most of them had highly varying numbers ranging from a few million dollars to tens of billions of dollars.

On probing into these figures, I found almost no documented reports stating the market size for sports ground and their revenue potential. That is when we took it upon ourselves to find it out.

Before getting into the details, let me first give you an overview of the sports ecosystem in India. Below given image(from KPMG Sports report) gives a decent idea of the ecosystem in India at this point of time.

The size of the global sports market according to KPMG report is between $600-$700 billion. This is almost 1% of the global GDP or greater than the GDP of the 15 countries in the world. Not only does this sector help in improving the health and fitness of a country, it also helps in lifting the spirits of the masses and in uniting a diverse nation like India. Cricket, Sindhu, Dipa have proved this by bringing together 1.2 billion diverse people time and again.

Now, let us see the individual break-up of the market size segment-wise:

India's Goldmine

However, these above two images miss out on an important existing sector of LEISURE SPORTS : Pay by the hour model, coaching & memberships of these sports infrastructure/clubs. Leisure sports sector is an amalgamation of infrastructure development, sports events, sports marketing, sports retail and training. This presents a wide need which needs to be filled, an opportunity to make a sustainable and profitable business through technological intervention and digitization.

In India, we have more than 15 lakh sports facilities. A number we would find it difficult to believe. But YES, that's the fact. The market size for utilization of sports grounds itself is northwards of $20 billion in India.

The Sports infra in India can be categorized into the following:

a)     Privately owned

b)     Gov. owned

c)      Clubs/Gymkhanas

d)     Schools

e)     Colleges

f)      Residential

g)     Corporate

These grounds can be used for an array of sports based activities like pay and play, coaching, memberships, sports events, corporate sports outings, team building activities, sports tournaments, etc.

We at Athletto tried to figure out the patterns of play of the Indians across various age groups in the past 2 years. We tried to understand how much are they playing, in what age group and how frequently. India has around 710 million people in the age group of 7-40 out of which, this segment of leisure sports has a 200 million+ target population. Our focus is the recreational youth and adults. We observed the youth(age group 7-24) play around 18-20 days/month, a minimum of one unique sport. The recreational adults played 6-8 days/month on an average, usually more than one sport mostly for their leisure and fitness purposes.

Given below are some statistics that show us who exactly is playing and using these sports facilities:

The Problem

With the demand for sports facilities and the present supply of sports infra (existing and growing), what is needed, is to bring the two together.

The core problem which needs to be addressed is that of accessibility of these facilities to the masses and their optimum utilization.

What’s the solution?

1)     Making sports infra usable and maintaining them for the purpose of sports(some venues used more for concerts/play/exhibitions rather than sports)

2)     Standardizing the sports venue with basic minimum facilities like toilets/washrooms, changing rooms, etc.

3)     Digitizing them and making it open to the public in a transparent way such that it is beneficial for all the stakeholders

4)     Introducing Pay and Play policy with online cashless booking facility so that it is convenient for the masses to do seamless online transactions. This is also in line with PM Narendra Modi's vision of cashless society and Digital India.

Another most cited problem is the dearth of sports infrastructure itself. And many people echo this same problem because they don’t see sports facilities around them. The main reason for this is because most of these sports facilities are located in the interior(streets & corners) and not on the high streets & main roads unlike gyms, spas, salon, restaurants, etc. One needs to put in huge effort to discover the sports facilities and it is in the discovery phase that most of the people give up. Some don’t even try because they assume there are no facilities around them. Digitization of all the sports infra will help solve this problem.

Countering the above public opinion(of dearth of sports infra), I would like to mention from my personal experience in Bangalore that in the past 1 year, we have witnessed more than 100 new privately owned badminton courts and more than 25 new football turfs open for public on a pay and play basis. This pace of new sporting infrastructure is only going to increase as more people realize that the returns from building and operating a sports venues is high. One can earn returns in the range of 60-90% per annum compared to any other investment opportunity which usually at best give 20-30% returns (detailed post on this coming soon). Stay tuned.