Why freezing of Sahara accounts will make Indian sports tense

With market regulator Securities and Exchange Board of India (Sebi) freezing the bank accounts of two Sahara Group firms — Sahara India Real Estate Corporation (SIREC) and Sahara Housing Investment Corporation (SHIC) — and promoter Subrata Roy in the Rs 24,000-crore optionally fully convertible debenture (OFCD) issue, there are questions around whether this would affect Sahara Group's involvement in sports.

The Sahara group has invested heavily in sports -- it sponsors India's national cricket team and owns one of the Indian Premier League team, the Pune Warriors. They also own a 42.5% stake in Formula One's Force India Formula 1 Team and sponsors the India national field hockey team as well. It has also 'adopted' sportspersons in Indian Boxing, Wrestling, Archery, Shooting, Track & Field and Tennis, covering support of a total of 101 sportsmen in these 6 games who are potential medal winners.

File photo of Subrata Roy. AFP

File photo of Subrata Roy. AFP

Apart from this, Sahara has also extended support to the Indian Volleyball by sponsoring the Men’s National Teams (Senior & Junior) for a span of 4 years till 2016. The group also supports the the Calcutta Football League. They have also extended their sponsorship to the Uttar Pradesh senior cricket team, ‘Sahara Warriors’ – a polo team and ‘Uttar Pradesh Wizards’ – the Lucknow franchise of Hockey India League.

However, for the moment, Sahara is confident that sports will not be affected by the Sebi order. Abhijit Sarkar, Director – Sahara Adventure Sports Limited and Head Corporate Communications, told Firstpost that the group's interests in sports will not be affected at all.

"See, we are a very big group -- made up of many companies. We have interests in many fields and we are run professionally and like any professional company, we make allocations and plan ahead of time. All our sponsorships and investments in sports are made through Sahara Adventure Sports Limited, which is a group company of Sahara India Pariwar."

"Allocations have already been made, bank guarantees have been made, payments have been made. We are in the clear with cricket, Formula One, IPL and hockey. There is no cause for concern, we know what we are doing."

Many analysts have said that after the Sebi order, the group will face difficulty in running its day-to-day operations and it may also struggle to raise money from the market.

Sahara is also stakeholder in the newly-built Maharashtra Cricket Stadium (MCA) on the outskirts of Pune. But that has landed in a legal tangle because of pending money matters. According to a report in the Mumbai Mirror, the Pune Warriors have refused to play in Pune after the Maharashtra Cricket Association removed Sahara chief Subrata Roy's name from the stadium.

The Maharashtra Cricket Association reportedly took the decision because of non-payment of dues last month.

But that isn't all. Sahara also sponsors a lot of sportsmen in the country. The sportsmen include Saina Nehwal, Gagan Narang, Abhinav Bindra, Tejaswini Sawant, Vijender Singh, Sushil Kumar, Mary Kom, Yogeshwar Dutt, Vijay Kumar, Sania Mirza, Dola Banerjee, Asher Noria, Kapil Dev, Sourav Ganguly, Jyotirmay Sikdar, Zaheer Khan, Rajyavardhan Rathore, Gagan Ajit Singh, Harbhajan Singh, Yuvraj Singh, Leander Peas, Rahul Dravid, Virendra Sehwag and Bula Chowdhury.

All these commitments mean that according to estimates, Sahara ends up shelling out around Rs 1500 crore every year towards sports. In the IPL alone, they are committed to paying Rs 170 crore every year as franchise fee for owning the Pune Warriors. In hockey, they have promised to pump in Rs 10 crore per year till 2016. And in cricket, Sahara pays the BCCI Rs 3.3 crore per match as team sponsorship.

For the moment, the group seems to be confident that it will be able to keep its investments in the sports arena in order. But if they were to fail, Indian sport will be hurt in more ways than one.

Updated Date: Feb 15, 2013 12:40 PM

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