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[Archived] Business Standard of India article on venky's

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not sure if this has already been posted, it's from the main business paper in India... gives a good account of the last 18 months.

Venky's gets feathers plucked by Blackburn Rovers fans

Varada Bhat / Mumbai May 12, 2012, 00:45 IST

When Pune-based Venky's Chicken bought Premier League club Blackburn Rovers for Rs 163.3 crore (£23 million) in November 2010, chairperson Anuradha Desai told an English daily she “watches cricket, hockey sometimes; but never football”.

Her words may come back to haunt her. Eighteen months after the acquisition, Rovers have been relegated from the premier league and are being booed by home fans. The owners are planning a range of cutbacks, sale of current squad players and seeking possible bailout from buyers in Asia. “Officials at Blackburn are gearing up for a redundancy of up to 40 per cent,” agencies have reported. The troubles seem to be getting worse. Yesterday, the Rovers said in a statement on their website that deputy chief executive Paul Hunt had left the club. Agency reports said Hunt had been sacked, following claims that he wrote to the club's Indian owners, Venky's, calling for the dismissal of manager Steve Kean, in a bid to help stave relegation from the Premier League.

Kean was quoted in a UK-based daily, Telegraph, that he still had the backing of his players, despite a dismal season overshadowed by fan unrest and relegation. “I am not going anywhere and neither are the owners. The objective is to sit down and build a squad that will help us get straight back up. They are obviously disappointed but agree we must now look forward. I am here for the long term. These are challenging times for the club and the owners, but I believe Venky’s are 100 per cent the right owners.” he was quoted.

Mails sent by Business Standard to Venky’s Chicken remained unanswered. Venky's, which bought the club from Jack Walker Trust in November 2010, became the first Indians to own an English Premier League club.

Different ball game

“It seems Venky's failed to read the sheer passion of the English football fan. Football is to an Englishman what cricket is to an Indian. The first Indian group to own an EPL meant good publicity for a company with ambitions of expanding in European market,” said Indranil Das Blah, chief operating officer of KWAN Entertainment and Marketing Solutions.

But most British media and fans seemed to have concluded that the root of the Rovers' problem is that Venky's suffers from a “poor understanding” of the football business. That has resulted in the owners alienating fans and the board, they say. Fans are upset that Venky's, as they see it, has “broken all the promises” made at the time of purchase, including buying players like Kaka and Ronaldinho.

“Venky's are venal people who either bought something they didn't understand or are involved in some truly horrible goings-on which involved knowingly crashing Rovers into relegation. Whichever way, England's finest town club has suffered the most calamitous 18 months in its history,” said a fan on brfcs.com, the Blackburn Rovers official fan site.

Being in the lower end of the league means less scope for revenue and slashed season-ticket rates, as opposed to the lucrative English Premiership. According to agency reports, Rovers will be hit by a contraction in commercial revenue. “So far, only 1,200 season tickets have been sold in the club’s early-bird ticket programme. A company which once rented a large executive box at Ewood for Rs 11.25 lakh (£15,000) a season was offered the same package for Rs 2.64 lakh (£3,000),” said a report.

According to www.sportingintellgence.com, the club debt rose from Rs 159 crore (£21 million) to Rs 226 crore (£26.3 million), while wage expenses grew to Rs 430.9 crore (£49.9 million) in 2011 from Rs 390 crore (£47.4 million) in 2010. However, club ticket sales dropped to Rs 47 crore (£ 5.5 million) from Rs 52.5 crore (£6.1 million).


The English Premier League is made of 20 clubs, which, unlike the Indian Premier League (IPL), play soccer

The big clubs are Manchester United, Arsenal, Chelsea, Manchester City & Liverpool. The 'medium clubs' include Aston Villa, Newcastle, Sunderland & Everton. The rest are smaller clubs. Blackburn Rovers is one

Like IPL, clubs have 3 income streams

* Ticket sales

* Central Premier League funds, which include TV rights and league sponsorship

* Team sponsorship — deals and merchandise sales

In November 2010, Venky’s became the first Indian company to own an EPL club. The poultry giant bought the club for Rs 163.3 crore (£23 million)

Blackburn Rovers was the Premier League champion in 1995, the only club besides the Big Three, Manchester United, Arsenal and Chelsea, to have won the title

What is wrong with the Rovers

Internal problem after resignation of board members

Angry fans as owners failed to keep promises

Embarrassing ads: players are shown eating chicken before matches

Financial woes: club’s debt rose to Rs 226 crore ( £26.3 million) in 2011 from Rs 159 crore (£ 21 million) in 2010. Venky's was also asked by bankers Barclays to make a £10-million deposit or risk crossing the overdraft limit

At present

Team has been relegated from the Premier league, following a 1-0 defeat by Wigan Athletic on Monday

Deputy chief executive Paul Hunt quit the club

Warning signs

The first sign of crisis came when it sacked Sam Allardyce as coach and replaced him with Kean. Differences emerged between the owners and the board members, John Williams (chairman), managing director Tom Finn and finance director Martin Goodman, who left the club at different intervals in 2011, leaving the Raos the sole decision makers.

A TV commercial showing Rovers stars tucking and eating into Venky's chicken before kickoff received a lot of flak from the fans. The crisis deepened when Barclays, sponsor of the league, told Venky's it must deposit £10 million by December end. While Venky's did eventually clear it, the club's deputy CEO, Paul Hunt, pointed to the need for additional funding to pay wages.

Hunt wrote in the letter, leaked in the British press, “We continue to try and work with Barclays but they are very quickly losing patience, as we cannot give answers. We have been forced to agree to additional spending against our wishes (Christmas hampers, sponsoring the Princes Trust event, etc) and I am fearful that the situation will only get worse. The position with the finances is a cause for grave concern.”

Sports marketing agents feel Venky's see a sale as a distinct possibility. “Venky's may have to plan an orderly exit if it fails to commit big bucks to Premier League survival or prepare to rebuild for the next season. The situation, most brand experts say, is not beyond repair,” said a sports marketing official.


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