Reliance Industries Limited‘s 15-year Media Rights Agreement (MRA) agreement with the All India Football Federation (AIFF) concludes this season, and the impact has already begun to cause issues.
Previously, Reliance’s Football Sports Development Limited (FSDL) paid AIFF a yearly fee of INR 50 crores for rights to Indian football’s premier league. However, the arrangement came with additional expenditures for FSDL, such as marketing, broadcasting, and infrastructure, resulting in losses of hundreds of crores over the years. Since 2014, the company has reported a loss of INR 5000 crore.
Despite the significant financial load on FSDL, AIFF authorities have demonstrated a lack of forethought in managing contract renewal negotiations. With just a few months till the present deal expires, the AIFF has only recently begun conversations for renewal. The postponement has significantly limited their alternatives, as they have missed out on the opportunity to seek deals with other firms that would have strengthened their bargaining position and maybe secured better terms.
As a result, FSDL has presented AIFF with its own contract parameters, leaving little opportunity for negotiation. Under the new structure, FSDL intends to form a new organisation made up of three parties: FSDL, the ISL clubs, and the AIFF, with earnings divided among them. AIFF will only get 14% of the overall profits. This shift is a big blow to the AIFF, which has gotten accustomed to earning INR 50 crores annually without making any attempts to develop or market the league.
With the new profit-sharing model, the AIFF recognises that they will need to work hard to earn actual profits, and they are under strong pressure to adjust to this new reality, which threatens their easy cash stream.
If FIFA‘s rules allowed them to organise a league without federation oversight, the FSDL would have most likely done so. However, due to FIFA’s demand for a national federation’s involvement in organising football leagues, FSDL was compelled to collaborate with AIFF. AIFF’s inefficiencies and lack of aggressive leadership have created friction, as evidenced by the delays in renewing the MRA agreement. This tight scenario is the result of FSDL’s financial burden from ISL losses, as well as their unhappiness with AIFF’s lack of development in the sport.
AIFF’s ALTERNATE LEAGUE PLAN
As per reports, the AIFF is also pondering the formation of a new football league following a suggestion for a no-cash arrangement amid negotiations to prolong its 15-year cooperation with marketing affiliates. The league could have 16 teams, comprising 10 ISL clubs and 6 I-League sides. Each team would pay an INR 4 crore franchise or participation fee, resulting in an INR 64 crore pool. The AIFF will receive INR 30 crore, with INR 20 crore for production and broadcasting and INR 14 crore for operational operations. The AIFF would own 20% of the league, with the clubs sharing the remaining 80%.