Couch Talk Episode 35 (play)
Guest: Venky Mysore, CEO & MD, Kolkata Knight Riders (KKR)
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Subash Jayaraman– Hello and welcome to Couch Talk. In today’s episode, we have the CEO and Managing Director of the IPL franchise – Kolkata Knight Riders, Mr. Venky Mysore. Welcome to the show, Venky!
Venky Mysore– Thank you so much! It’s great to be here.
SJ– It’s our pleasure. Tell us a bit about your background, before you took up the position with the Kolkata Knight Riders. You come from a financial background, don’t you?
VM– That’s right! I don’t know how far back you want me to go, but will try to keep it short here. I was born and brought up in India, and like most kids, played a lot of cricket, played for Madras University, and had aspirations of going further. But then, US(A) came calling in 1985 and so, I immigrated to the US in 1985 and was there for close to 12, maybe 13 years. Then, I took up international assignments, first went to Indonesia and then went to Hong Kong and then came to India to set up a MetLife business. I was with MetLife for almost 21 years. So, I set up the India business and became the CEO and was running it untill 2006. Then, I left MetLife and moved from Bangalore to Mumbai to become the Country Head of SunLife, of Canada, which was running the joint ventures of SunLife here. So, till 2010 October, at that point I was 25 years into financial services, insurance management, etc. And suddenly lightning struck, and it was a unique opportunity to come and run the Kolkata Knight Riders. So, I took the plunge. And, (my) life has come one full circle. Cricket, that started off, as a kid, and was stopped at some point, is now back into the thick of things.
SJ– How did you manage the transition from financial sector to managing a sports team, i.e., sports management arena? What adjustments did you have to make?
VM– I’m still adjusting, to be honest. To start with, it’s the excitement. When you think in terms of a career switch and also think about what you want to do in life…as one of my senior mentors said when I was contemplating this change, he said -“There are very few opportunities in life that a person gets to pursue their passion and really do something they enjoy doing”. I was fortunate to get that opportunity. Secondly, the opportunity must also come at a time when you can afford to do it, in life. I was fortunate in that as well – from my family, although they thought I was nuts when I talked to them about this change. I think, when you look at it from that standpoint, passion to do something different and do something that you love, that was the driving point in the decision making. And once I come into it, like many thousands and millions of people out there, I am very passionate about cricket and I follow the sport, played the sport, and thought I was not so intimately involved in it, I was following it. So, this has been a great thrill to get involved up-close and personal with cricketers and team and looking at the ways in which we can perform well. There is also a very fundamental business side to things. There is this business model – business franchise model, which is not that different from any other business. At the end of the day, you have to manage your revenue and keep working on ways in which you can grow that. You have to manage your expenses and there are governance issues that you have to address. I’ve done a CEO’s job for several years now, almost 15 years, and in that sense, on the fundamental level it wasn’t different. It is an exciting platform, where there was so much scope to expand and build and bring creativity to the work place daily.
SJ– As a CEO of the franchise, do all the business decisions end with you? Do player decisions end with you as well?
VM– As a CEO, when our owners made a decision to bring in someone of my background and profile, and we were going through the process of discussion, that was one of the questions I had. In fact, I almost probably irritated them over and over again, asking “What are your expectations, and why would you want someone from my profile?”. The consistent answer that came was that they wanted to professionalise the franchise and they wanted to bring in someone of my profile, empower the individual and run the business. To that extent, the cricketing decisions and business decisions are pretty much left to me. It doesn’t mean that I single handed-ly make all the decisions, because they have a superb support staff, the think tank that I rely on quite heavily. But, it’s pretty much safe to say that the buck stops with me.
SJ– Kolkata Knight Riders, KKR, when this started off, they were the most popular franchise, even before a single ball was bowled in IPL. They were the popular franchise, of course, because of Shah Rukh Khan, and the players that you had in your franchise. Since then, things have changed. The leading phase of the franchise, in terms of players is gone, no longer with the team. And we know what happened with the Pakistani players – not allowed to take part, or franchises not wanting to risk on them etc. So, how has that changed the overall profile of the team?
VM– I think you summarised the history of the franchise very well. Needless to say, the moment you mention KKR, the first name that comes out of everyone’s mouth is “SRK”. We are very fortunate to have him as an owner and someone who backs us 100%. I cannot emphasize enough the extent to which they are behind us and let me and my team do our job. That’s something we are very fortunate about. But, it’s a process of change. Despite everything you described, it is a very funny format. The T20 format is a very funny format, and KKR found out the hard way. In the first three years, there is no hiding the fact that KKR was the worst performing team in the league. It had won the fewest matches and was the only team that had never made the playoffs. All other teams had made the playoffs one year or the other. Being popular and having a roster on paper and by reputation was absolutely fantastic, but somehow things hadn’t come together. I think, that was, perhaps the reason for the change. When I came in, there were some interesting opportunities. I was fortunate to come in at a time when we had the opportunity to overhaul the team. That was a starting point. Certainly, things have changed, and some of the things that haven’t changed is that we continue to be the most popular team. SRK continues to be the heart and soul and face of the organization, and someone who supports us from behind the scenes, if you will. But, we did change our on-field strategy and some of our business strategies, which is slowly beginning to show results.
SJ– I have to ask you this – how easy or tough, both cricketing-wise and marketing-wise, was the decision of letting-go of Sourav Ganguly?
VM– It was a very tough decision, needless to say. That was one of the first decisions I was faced with to make. There were two parts to the decision. The first was, whether we were going to retain any player, let alone Ganguly. It was pretty obvious from the basic analysis that I did –retention made sense only if you had good Indian players, it didn’t make good sense if you had only good foreign players because the foreign players supply demand situation and the auction is such that you can get foreign players for reasonable values, whereas the number of Indian players available were, by contrast, not that many. So, the fundamental decision that had to be made was whether we retain anyone or not, and we decided that we wouldn’t retain any. And that was the right decision on hindsight. The second part of the decision was the formation of the team. It’s a fundamental shift in the direction where we said that, basically, we are going to move in a different direction, that we are going to build for the future. All of those things came into play when that kind of decision was made. You have to have conviction in the decisions you make. It’s not always going to be the right decision. But, this is the one where there was a fair amount of analysis that we did, and we said “If you’re building for the future, we are cleaning the slate and moving forward”. Then we needed to move completely in a different direction than the one we had adopted for the first three years. To that extent, it was a difficult decision, but the more we talked about it, the more analysis we did, it was clear that that was the right thing to do. From a marketing/business perspective, people certainly, forewarned us about the possible backlash in Calcutta (Kolkata), about possible impact on business, and all of these different things. In the end, as I said, you need to have the patience and luckily, while we second guessed ourselves before we made the decision, it was the right decision. We are fortunate that the team we put together really did a fantastic job. This was the best year for the KKR. We qualified for the playoffs and with a little luck, we could’ve gone further. But, anyway, we qualified for the Champions League and lost out by a whisker in terms of run-rate. But, that’s life. And when you are running a franchise, that’s the game, and that’s what keeps it exciting. From our business’ perspective, this has been our best year. In fact, we’ve just about announced that we are the first team to become profitable in the IPL. Except for the first game that we played in Calcutta, the rest of the games very pretty much sold out in Eden Gardens, which, to me, is a kind of indication of the kind of support that we started enjoying and I think the people there also really wanted to see a winning team and back a winning team, and see the team start performing well. Off the field, I must emphasize that, we are relly proud of how the team conducted themselves. Really professional. They’ve got a bunch of terrific guys who are outstanding, world class players who are so humble, and conduct themselves in a dignified manner that they have really won a lot of appreciation for that and won a lot of hearts also, I think. We are looking forward to build a lot on that foundation this season.
SJ– Talking about this season, we recently had the IPL auction and the transfer window. So, a bunch of questions from listeners – Thejas, Aditya, Sunny and Monish, lot of them have, in one way or the other, have framed a question – how do you, as a team, go about analysing the performances of players before you make the decision to invest millions of dollars in a particular player. In IPL4, according to Thejas, you were solely focussed and had a blind determination to pick up certain players – say, Gautam Gambhir, who was your captain, or, Yusuf Pathan, or Jacques Kallis. Was there any statistical basis to it? Any analytical models that you were running to find out who your value player and that you have to go and get him? Something like the moneyball?
VM– Absolutely. In fact, I started talking about The Moneyball well before the movie was released, as I came on board, because I had read the book a couple of years ago and it made an impact on me. Little did I know that I will be going into a career where I had the opportunity to potentially apply some of those things. Yeah, we had a completely clear-cut strategy. In fact, there was an article written about us, post-auction last year. There were three points that were said. One, that we were the only team t hat was represented by the management, and not the owners. That was a vote of confidence, where the owners decided that we should go out. We had a strategy, and they wanted us to go out and execute (it). They didn’t want to come in…In fact, Shah Rukh told me, “If I come to the auction, I know I will confuse you. The strategy that you’ve put together is fantastic. I’ve not seen anything like this before”. The second point the article said, was that, we looked very cool and composed and seemed to know exactly what we were doing. I agree to one point of it that we had a good game plan and knew quite what we were doing. In an auction though, you never 100% know. Bu, it wasn’t right to say that we were cool there, our hearts were pounding like crazy.
What we had done was, I had engaged a software company from Chennai to build me a bidding system and we went through all kinds of decision trees. The whole strategy was about making sure that we didn’t start thinking about names of players. The moment you start thinking of players, you get emotionally attached. In all likelihood, the name would’ve been thought of three, four, five…franchises. then, you get into some crazy bidding war, and you just can’t do so. So, I had told my think tank – head coach and staff, that I wanted to see a line-up which is more based on position and skills. I said, “Don’t give me a name, but give me positions and skills that you are looking for”. Then, for each of those positions, we created a grid, to now look at options. I was forcing the team to come up with 8 options per position. So, if I wanted a aggressive wicket-keeper batsman at the top, I said, “here’s the grid. Now give me eight names from the roster, the auction list. You should do enough homework, that if I produce one of the names at the end of the auction, you should still be happy, no matter who it is.
We went through that kind of a process, and did enough mock-auctions as well. We had ten different groups, because there were ten different teams, and we ran several mock session to see what the trend is, and what the price is. I wasn’t very happy with that. So, I actually wrote a strategy for every team. I mean, like, “If I were so-and-so, what would my strategy be?”. We ran mock auctions on that basis. The other thing that I did was, to put a value on every player. There is circuit breaker. Once we hit certain numbers, because you don’t want to get emotionally attached. You only have $9 million to spend, that’s what we had last year. So, that’s how we went in last year. But, we realised that having given up the option of retaining anyone, and there were teams who retained players, as you know, if we had to compete, we had to build a core. And we were willing to put our money on the core. We defined a core group of players as our “Core Players” and we said atleast two, or maybe three, of these. We would’ve been happy with two, but we were fortunate we got three – Gautam Gambhir, Yusuf Pathan, and Jacques Kallis. But, everybody talks about only these three names, because these are the ones whom we paid good chunk of money. But what people don’t realise is, that we picked twelve players from the auction, and if you take these three players out, for the other nine, I paid $500000 or less, for each of those. I call them the “Value Players”. In fact, I now call them as the “Moneyball Players”, because, slowly we have developed the reputation of picking players that the others have not noticed yet. I can name several of them. Ryan ten Doeschate’s name comes to my mind. Nobody knew about him, and we picked him. He was one of our stars, really. Bats beautifully, probably one of the best fielders I’ve ever seen. He bowls very usefully. He’s a real value player, in terms of an all-rounder. If you look at James Pattinson… in fact, I kept texting/SMSing Wasim Akram, who is the bowling coach and works as a commentator for a broadcaster, and he was doing a stint in Australia. I kept texing him saying, “I hope you are giving KKR some credit for identifying Pattinson before Australia did. Australia had not even picked him. After we picked him, Australia picked him, and now he’s become a star and he has tormented India. We got him for $100000. And now, in the latest auction, we picked up Marchant de Lange, who is the South African sensation. We got him for $50000. Iqbal Abdullah is another example that i can give you. He is an uncapped player who plays for Mumbai in the Ranji Trophy. He’s a terrific left arm spinner, and a really talented left arm lower-order bat(sman). Last year, in all of IPL, he was voted the best emerging player. We have a lot of these kind of things. We are trying to continue to do that. Yes, the attention is there on the high-paid players, but there is a lot of this happening as well, which balances things off!
SJ– When you are in the middle of a bidding war, during the auction, who has the final say? Is it the CEO (you), or the coach, or a joint decision, or do you have set limits like, “We are not going to go past a limit, say, $1.5 million” for a particular player. Who makes that call?
VM- The way things work is that, there is a lot of discussion and planning that goes before the auction. And, so we are all on the same page, in terms of our strategy, in terms of the pecking order, and what-if kind of scenarios. Ultimately what happens is, when you are sitting at the table, I make the final call because there are times when you have to react to the situation and for the most part, I think we were able to get the players we wanted at pretty much the same price as we wanted. But there is also a commercial decision that’s involved and a certain amount of tactics that one has to engage in at the table and on the spot. That final call, I take. But, there is a lot of preparation that leads up to that.
SJ– How do you go about scouting the talent? Is it just paying attention to the T20 leagues around the world or do you have an extensive scouting system where there are names not yet at Ranji level, and you are sending scouts following the Ranji teams as well?
VM– Absolutely! All of the above that you mentioned. We have people who have been carefully handpicked in different markets, in India as well, people that I have built a bit of an equation with that I respect their judgement. Those types of people are constantly giving inputs to me. We evaluate (them) and we have a terrific analyst who is the part of our team. This guy is a wealth of information and is able to quickly able to produce whatever reports and analysis I’m looking for. We are constantly keeping an eye out for talent. At the same time, you would notice that among all the teams, we decided to keep the smallest squad. We were 20, and we have now added 3 players, so we are 23. Whereas, you are allowed to go upto 33, and many teams are very close to 33. My point of view, and luckily all the coaching and support staff agreed with me – was that – we shouldn’t have too many players sitting on the bench and every single player must get a realistic chance of playing in the XI.
SJ– That is one of the questions, from Monish – How do you handle the players who are on the borderline of may or may-not getting a chance to play? How do you take care of them if they do not get sufficient opportunity to play?
VM– It is always difficult. Having played cricket and other sports at certain level, I know from first-hand experience also, that at whatever level I played in, I always wanted to be out in the middle and performing. I think that is the case with all sports people. It is all about the kind of atmosphere you create. The coaches play a big, big role in creating a happy atmosphere in the dressing room. Communication is a big, big part of it to make sure that everybody understands that there is a strategy and there is transparency in thinking and that the goal is a common goal for the whole team. It takes a lot of effort to build that and to create that kind of environment of openness and what-not. Players who were left out of the team, I know, I’m observing and talking to them, that they are craving to play and perform. But, one needs to handle that very carefully. Best you can do is to have a very honest and transparent and have an atmosphere where people understand at some level saying that, “Ok, I understand why this is the combination today”. And we have worked very hard in making that happen. We’ve had reasonable success doing that. But, it is always a continuous process.
SJ– There is a question from Saurabh Malhotra, who wants to know your thoughts on the number of Indian/foreign players allowed in the team.
VM– That’s a point of debate, and I know that this has been a point of discussion in the last several weeks for several reasons. I think, the balance is just about right at this point. Because you do need the international players to bring in the diversity to the league that one is looking for from the spectator’s standpoint and from a game’s standpoint as well as to make sure that the standards are appropriately high . and at the same time, being an Indian premier league, the idea also clearly is to create the platform for Indian kids to come out and perform. Iqbal Abdullah, Jaidev Unadkat, who have come out of the Calcutta franchise would not have come out had there not been the emphasis to play Indian players appropriately.
SJ– Let’s briefly talk about the viability, the marketability of IPL this season, and moving forward. There are a few questions on them. Last year, IPL came close on the heels of 2011 World Cup. So, initially thee wasn’t as much crowd for the matches and it was said that it was because of fan-fatigue, jaded people, jaded with all the cricket happening and there was no opportunity for the fans and the players to savour the victory, it comes once in a generation – 28 years. Are the franchises worried about the dropping TRPs and possibly, the general public apathy?
VM- Yeah, I think it is definitely we need to be cognizant of, and we are cognizant of that. I don’t know about apathy, because we were very fortunate that despite being the biggest stadium in the country, the refurbished Eden Gardens has a capacity of 70000. As I first said, except for the first game, we were pretty much sold out for all the other games that we played there. It suffices to say that this is something that this is really something that is a challenge for all the franchises. It challenges us, from the point of taking care of the fans and marketing it really well. We are working on several ideas in terms of making sure that we can make the fan experience a really enjoyable one. I’ve given a challenge to my team, saying that we have to make it very easy for the fans to make business with the KKR. For ticket sales, we used to have the ticket counters just outside the Eden Gardens. People used to come, stand and buy. This year, we have introduced a variety of ways in which the fans and spectators can buy tickets. My point of view is that, if someone can pick up the phone and order a pizza and have it delivered at home and you pay cash, there is no reason why they can’t do that for a KKR match at the Eden Gardens. So, we are really putting a lot of effort into really ensuring that the fan experience is good, and so there are strategies in building a fan-base, ensuring that they derive value out of becoming a fan of KKR. And, keep building on it.
SJ– A question from Aditya Kumar – “Why not KKR have a fan-zone, where average fans get an opportunity to interact with the players?”. Like, for example, I live in the (United) States, and i go my local minor league baseball game, and there is a little zone before the game and the players of the game will be available to give autographs and get their pictures taken with. That sort of thing…
VM– Absolutely! The intension is always to do things like that and we have done several such activities. Some unique things that happen with cricket and in India are the number of people and the kind of a stuff that the players will be subjected to, is much, much more challenging than any country in any other sports that you can imagine. And, also, there are security concerns right now. And, therefore, to balance all these things, we have done several interesting things in terms of fan-gratification, where, sponsors of KKR, who run contests to activate their own brand and fans who follow these and get selected as winners are invited for, what we call, a Meet And Greet. It is organized in a very formal manner, mostly in the hotels where the players all stay. There is appropriate security arrangements that are made. The people who have won a contest come in and get photograph opportunities, autograph opportunities, and some memorabilia that we give out. So, they have a lot of fun doing that. While we would love to throw it open for all fans, as a practical matter it just becomes difficult. But, we are working on several different ideas to make it similar.
SJ– That’s true. Going back to the viability aspect of IPL, Bharathram has a question for you – Between IPL 4 and 5, ther have been three new domestic T20 leagues that have sprung up around the world. How does IPL maintain its brand-value and stay above the competition and stay as the go-to league?
VM– What makes IPL special, is the combination of things that contribute to the success of IPL. To start with, you have got a country with the size of the population that you know about, where cricket is a passion and I’ve heard people in the marketing field talk about India having two religions – one is cricket, the other is Bollywood. We are fortunate to have them both in our team.You have that, and you have the TV viewing audience. So, there is a willing broadcaster whjo is able to market this particular product, attract sponsorship and advertisement revenue. There were sponsors who believed in these products who have been able to demonstrate to our sponsors that there is significant value that they derived by being a part of the KKR story. When the games are held in cities like Calcutta, where it is held at Eden Gardens, and similar kinds of grounds around the country, there are people who love to come and enjoy the experience of personally being there. So, all of these things not only make it a tremendous sporting and cricketing spectacle, but also makes it a very viable financial model. I think, that is what is unique about IPL, and this uniqueness will continue. So, the model and the basis on which it is built is a solid one. And it will continue to grow. I think, it is very difficult, as you look around, to see any other country or place where a similar league will have all of these things coming together. Competition is good, it’s good to have these kinds of league – whether it is the Big Bash or the Bangladesh (Premier) League or wherever else something like this takes place. But, you will obviously see that it is not in the same league or same scale as what IPL is. This was the right concept, at the right time, in the right country, with all these other contributing factors, which has not only made IPL into what it is today – as a premier product, but also in terms of seeing all these things will continue to play out.
SJ– But, we have had issues with the Kochi franchise, and Rajasthan, Punjab, and even recently – Pune, which shows that not everything must be hunky-dory with the IPL. And, you mentioned in the beginning of the conversation that KKR was the first team to be profitable. So, how profitable is the IPL to the team owners, and how profitable is the sustainability?
VM– If you look at the business models – there are two business models – one applies to the first eight teams, and the second is the model that came in to play for Kochi and Sahara (Pune), at a significantly higher bidding price. If you talk about the first eight teams, we were one of them, fortunately, we were the second lowest in terms of bidding for a team – we paid $75 million, that is payable over ten years. With that as an outflow, if you do a good enough job of generating sponsorship and generating revenue, ticket revenues – you do well with that, and you do some interesting things with merchandising and licensing. Then, the revenue model can be reasonably healthy and of course, you will have to combine it with a really hard-nose step in expense management. If you are able to do that, which we did, you will not only break even, but you will end up making a decent profit. So, that is for the first eight teams. Is it sustainable? It is a challenge. Because, it is only sustainable if you can keep identifying new streams of revenue. Because, the original streams of revenue don’t have the potential to keep growing. So, you have to keep identifying new streams of revenue and managing your expenses. Then, yes, you can continue to be a profitable venture and that is one of the way you differentiate yourself as a business model. But, if you don’t identify new streams of revenue, then it will plateau out at some point. And expenses keep going up, there is only one direction where expenses go – it is up. And it is very difficult to break even let alone profit.
But, the other two franchises that came in, I think they have a significantly bigger challenge. Probably one of the reason that Kochi has gone out, is because they realised that quickly that financially, this is not viable. At those kind of franchise fee, it would require a very different kind of business model, a very different kind of creativity in terms of how you can afford that kind of franchise fee which was five times what we are paying.
SJ– So, what are the prospects for 2012, and for about three to five years beyond, both on and off the field, especially off the field?
VM– We are extremely excited about 2012 IPL. Because, obviously, we are coming out of a really good IPL season. We coming off out of a very good Champions League campaign. The team has really come together. We shouldn’t forget that this was a team that we put together only last year. But, as they went through the IPL and the Champions League, they came together really well. (They) enjoy each others’ company, respect each other and there is a lot of professionalism in which they go about their work. Plus, the three players that we have added in the most recent auction really adds to our strength, with some of the young boys we have signed. We are excited about it, as a season. As a business venture, yes. Coming out of this year, our year ending is March, and I’m sort of jumping a gun in sharing that as a business we are the first franchise to become profitable. The intention is to build on that platform both on and off the field. So, yes, there is a lot ahead for us. We’ve embarked on several new initiatives. We launched a digital marketing initiative a year ago, social media in particular. And today, among IPL teams, we have become the no.1 on Facebook, no. 1 on Twitter and no.1 on YouTube. Most recently, Twitter had launched this awards – the Shorty Awards. And in the Shorty Awards among all the sports teams that were nominated in the world, including all the NFL teams and the EPL teams and F1 and what-not, KKR came in no.1!! so, we are really excited about that. That is a reflection of all the hard work that has gone into building a online community. And our endeavour is to ensure that the online community eventually become fans of KKR rather than just a community. We’ve also launched a business vertical on merchandising and licensing, so you will see a lot of activities on that front in terms of creating a range of merchandise at various price points and various touch points. All of these efforts are to ensure that we have new streams of revenue coming in and when we start doing financially better and we start investing into the team a lot more, that’s the goal. As the team continues to do well, it makes our job much easier. All in all, I see a lot of optimism. So, I see a good run for us in the next several years!
SJ– On that note, Venky, thank you so much for coming on to the show. I wish you the very best on and off the field, mostly off the field since I’m a CSK fan! So, I hope KKR makes it to the final and CSK wins it!
VM– OK! We will be happy to make it to the finals. And once you are in the finals, it is anyone’s game. Let’s hope for the best. I like CSK as well, I like the folks there, a lot of mutual respect. Not just CSK, we have built a good fraternity (in IPL) that gets along very well with each other. Thanks a lot! It was good being here, and we are looking forward to a very strong season as well.
SJ– Cheers. Bye!
VM– Cheers! Bye-bye!
Episode transcribed by: Bharathram Pattabiraman