India: A Roadmap To Sports Infrastructure

Last Updated: 14 December 2018
Article by Link Legal India Law Services

Over the last decade there has been a spurt in the development of sports infrastructure and facilities in India. With the increase of capital investments and successful hosting of events such as the Commonwealth Games-2010, ICC World Cup-2011, the Indian Premier League, the F1 Indian Grand Prix in 2011, the Under 17 FIFA World Cup-2017, and the Indian Badminton and Soccer League, there are enormous commercially exploitable opportunities present in the Indian sports industry. However, the regulation of the Indian sports industry is highly decentralized and fragmented.

REGULATION OF THE SECTOR

There is no national or state legislation for regulation of sports in India. The Ministry of Youth Affairs & Sports ("MYAS") was set up by the Government of India to create the infrastructure and promote capacity building for broad-basing sports as well as for achieving excellence in various competitive events at national and international levels. The National Sports Policy of 2001 was formulated to undertake the development and promotion of various sports prevalent in India. Sports promotion is primarily the responsibility of the various National Sports Federations ("NSFs") which are autonomous in nature. The MYAS issues notifications and guidelines from time to time to regulate the NSFs.

The Ministry of Finance vide its Gazette Notification dated September 9, 2016 has included sports infrastructure under the harmonized master list of infrastructure subsectors and it includes the provision of sports stadia and infrastructure for academies, and/or for training / research in sports and sports-related activities. This inclusion will afford all the privileges enjoyed by the private players in the infrastructure sector and will attract them to the sports industry.

SPORTS INFRASTRUCTURE IN INDIA

Sports is primarily a State subject under the Constitution of India, and a huge portion of the sports infrastructure is owned and managed by State Governments. Sports Authority of India ("SAI") builds and maintains stadia on behalf of the MYAS (infrastructure owned and managed by the Central Government). 

The Central Government through its 'Khelo India' initiative, has allowed grants for certain infrastructure projects and sports facilities creation at the state/union territories/district/sub-district level. State Governments and other local authorities may seek the benefit of these grants. However, the beneficiary of such a grant has to enter into a Memorandum of understanding ("MoU") with SAI in order to provide the latter access, for a minimum of ten years, to the facilities on a timesharing basis for training of the trainees of SAI and holding competitions. This year the Central Government has allocated INR 575 crores to promote the Khelo India scheme in the Union Budget of 2018. However, the utilization of the sum for development of sports infrastructure will be limited to the strict guidelines under the scheme.

ROLE OF THE PRIVATE SECTOR IN SPORTS INFRASTRUCTURE

The concept of private participation in sports though novel is not alien to the Indian sports arena. The SAI has executed a MoU with different types of stakeholders to develop training centres/high performance centres in India. Private sector involvement in sports infrastructure development is through public-private partnerships ("PPP"), lease and leasebacks, MoUs with various sport bodies, upgradation of existing sports infrastructure via private sector investment, and renovate, modernize and operate ("RMO") structure.

Public Private Partnership

Successful PPPs are a key enabler of sports development. PPPs can be explored for creating infrastructure through build-operate-transfer ("BOT") or RMO models, by contracting construction companies specialising in building multi-purpose centres or allowing professional private sector entities to manage and control the existing State/Central Government sports infrastructure. The objective of taking such a route is to build commercial models and convert the same into revenue centres. Higher asset utilisation and revenue generation could in turn incentivise sports infrastructure creation. PPP for sports development in India is limited owing to a lack of standardised guidelines and incentives for States to integrate PPP into their sports policies – resulting in funding constraints.

While some states like Gujarat and Rajasthan do have a defined role of PPP in their sports policy, a majority of Indian states are yet to include PPPs into their internal policy. One successful implementation of the PPP model in India is the construction of the sports city in Naya Raipur by the Naya Raipur Development Authority, which contains facilities such as lawn tennis, aquatics and an indoor stadium.

Pro-active role of States in promoting PPP as a viable route for sports infrastructure development

As stated, Gujarat and Rajasthan have already delineated the role of PPP in their sports policy while some other States like Madhya Pradesh have commenced with the development of sports cities via the PPP mode. Some States have taken initiative to incorporate the PPP model in their policy portfolio:

  • The Government of Rajasthan in its Integrated Stadium (Sports Infrastructure) Development Programme, 2015 has provided that the role of the private sector will be delineated to creating infrastructure facilities on Government land. These facilities will be owned by the Government and the private sector will operate and manage the facilities. The private sector will be allowed to recover fees for a fixed period. Sports infrastructure facilities like indoor stadiums, hockey, football stadiums, sports academies, etc. will be upgraded, operated and managed by private sector.
  • The Gujarat Sports Policy of 2016 envisions a broader role for the private sector. It outlines how a PPP model can offer an excellent solution for motivating the private sector to offer innovative models for sports development whether it is by way of building infrastructure, talent identification and nurturing, organising competitions, bringing in world class technological solutions, and management practices. The policy proposes a joint venture where the Government will contribute the land and/or provide initial contribution, while the private sector will raise resources, create a suitable plan and implement the projects on BOT basis and will also conduct management. The policy also states that the applicability of Gujarat Infrastructure Development Act, 1999 can be extended to the sports industry as well.
  • The Karnataka Government in its sports policy of 2018 has specifically stated that a scheme shall be framed for accommodating the PPP structure in the sports industry. The framework evolved will focus on promoting, inter alia, PPP for upgrading, building and maintenance of infrastructure. Revenue sharing model or any other self-sustainable model in a transparent manner will be adopted to achieve this objective.  
  • Haryana, in its sports policy of 2015 has also acknowledged that the PPP model can be used to mobilize additional resources for development and maintenance of sporting infrastructure as approved by State Government.
  • NITI Aayog's Action Plan for revitalising sports in India highlights the importance of encouraging PPP in sports. It stipulates ways in which the private sector could be encouraged to invest in the construction/upgradation of sports infrastructure and facilities.
  • Andhra Pradesh is the host for the national games for 2018-19, and in preparation of the same, the State Government has enhanced the budget for development of sports infrastructure. The objective of using the PPP model for sports infrastructure development stems from the flexibility it offers. It allows the Government to focus entirely on recruiting top physical education trainers and coaches to train youth in different sports activities while the private players focus on the revenue aspect. Under the State Government's PPP initiative, private players would be allowed to open the facilities for the citizens on payment of fees and the stadium can be used throughout the year.

KEY ISSUES PLAGUING THE SPORTS INFRASTRUCTURE INDUSTRY

Sports development in India is often hampered by bureaucracy and politics because of the low level of private sector involvement. Many federations are highly dependent on Government funding for carrying out their key objectives, such as organising championships, procuring equipment, and training sportspersons; a model which increases the probability of breeding inefficiencies.  Further, lack of accountability of sports federations, and the restrictive and non-competitive guidelines of the Khelo India programme are other factors hampering the participation of private players in the development of sports infrastructure. There is also a lack of clear guidelines on asset utilisation and monetisation.

MITIGATION MEASURES

In addition to the Khelo India scheme, the Central Government should look forward to adopting the following measures to foster or boost private participation in sports infrastructure:

  • Developing standardised guidelines for asset utilisation and role of PPP in sports facility creation/management to incorporate sports policies across all States.  
  • Asset planning, development of multi-purpose stadia and innovative revenue streams are common methods for determining high future revenue generating potential of infrastructure and return on investment. In addition, stadium developers are looking at technology to create experiences that ensure that the fans keep coming back.
  • To arrange dedicated land bank for the setting up of sports infrastructure.
  • To introduce various commercial aspects, such as selling the naming rights, hospitality packages and branding inside the stadia, to make these facilities financially sustainable.
  • To adopt PPP model in which the Government will provide institutional and financial support for the building of infrastructure and the private sector will manage and maintain its operations.
  • Further, the Central Government should provide standard guidelines for the role of PPPs in sports infrastructure creation for States to adopt and could also design the criteria for allotment of national games on the basis of the extent of the integration of PPPs.
  • Government involvement can ensure that funds for sports infrastructure development can be borrowed at a lower rate of interest.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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