Private bankers want to tap a new section of consumers -- sportspersons. While private banking for sportspersons is a $70-billion industry globally, in India this has not been the case as only cricketers made big money till recently.
But, with the tribe of non-cricket sportspersons steadily growing and the money they earn increasing, bankers are getting ready to offer specialised services to them.
"We are keen to develop a close relationship with Indian sports and offer specialised services to sportspersons," says Dolf Collee, member of the managing board at ABN Amro. ABN Amro, HSBC, UBS, Credit Suisse and Merrill Lynch are some of the players keen to exploit this field.
While banks are unwilling to reveal names, they point out that with a limited career span of 10-15 years accompanying high risk, sportspersons have special needs. They generally rely on the advice of their independent asset manager or private banker and only a few make investments themselves, offering an opportunity to professional wealth managers.
The services are not limited to managing the portfolio of investment. "The number of budding tennis players in India is rising and success stories like Sania Mirza's lead to more and more kids joining tennis," says Richard Krajicek, the former Wimbledon champion who heads ABN Amro's European Sports Desk, having over 500 sportspersons as clients.
In India, sportspersons have generally found it tough to raise money; even cricketers are recognised only after they have made it to the national team. That could change in the coming years if banks bring in the kind of services they offer abroad.
For racing driver Christijan Albers, ABN Amro developed a business model that made it possible for potential investors and sponsors to invest in a company set up for the driver. This helped him raise funds for a seat in Formula One, with Minardi this year and with Midland for 2006.
While India may not have many budding Formula One drivers, where does a budding sportsperson requiring ¤ 500,000 to train and tour go if he does not have a sponsor? Some of the banks are ready to step in with innovative solutions like finding 1,000 investors willing to invest in him Euro 500 each for five years.
Internationally, banks also offer solutions like a fund in which high net worth individuals invest to finance a group of budding players. The players in turn repay the money out of their earnings and also sign up for free sport clinics etc for their investor groups.
Generally, it is the business associates and friends of sports clubs that invest in this market. Risk and reward can to some extent be compared to investing in start-up companies.
Kicking off a new era
Why the delay: Only cricketers made big money till recently
Reasons for change of gear: A sudden spurt in the number of sportspersons coupled with an increase in earnings
Potential investors: ABN Amro, HSBC, UBS, Credit Suisse, Merrill Lynch