In this blog post, Debiyanka Nandi, a final year BA LLB student at Department Of Law, Hazra Campus, Calcutta University and pursuing a Diploma in Entrepreneurship Administration and Business Laws from NUJS, Kolkata, describes the process of starting a sports club in India.
Introduction
The attitude of Indian society towards sports has changed drastically over the past decade. Initially, sport was a loss-making affair, in which, cricket was the best of the worst. Cricket was one of the few sports which got recognition at state, national and international level, leaving behind a series of underdeveloped and traditional sports. In the past couple of years, some great initiatives have been taken to change the face of Indian sports such as;
Pro Kabbadi League
Indian Super League (football)
Indian Badminton League
Indian Premier League (cricket)
Hockey India League
International Premier Tennis League
Champions Tennis League
Indian Volley League
The above-mentioned initiatives have created a stir in the society which believed that only cricket would succeed in India. The success of these initiatives has resulted in showing the Indian society a world of sports beyond cricket and a bright future of the business of sports in India. Owing to the changes that have occurred in this field, there has been a rapid growth in the number of a sports club in India. The business of sports is considered to gain profit in the long run rather than short term. It has extended the ambit of the traditional business structure.
Starting A Sports Club
Starting a sports club is not a one day process; it requires a lot of time and effort. The process can be divided into various stages. Some of the steps are listed below:
Type of sport: India is a land of diversity, and the same is applied to the sports played. A large number of sports are played by people all across India which can be categorised under the following heads;
Olympic Sports –
Football
Field hockey
Cricket
Tennis
Badminton
Basketball
Table Tennis
Golf
Boxing
Wrestling
Weightlifting and Powerlifting
Archery
Volleyball
Handball
Taekwondo
Rugby
Cycling
Equestrian Sport
Kayaking
Athletics and Triathlon
Gymnastics
Non-Olympic Sports –
Billiard and Snooker
Chess
Kabaddi
Motor Sports
Korfball
Karate
Floorball
Netball
Throwball
Lacrosse
American Football
Polo
Baseball and Softball
Rock Climbing
Sepak Takraw
Winter Sports –
Bandy
Ice Hockey
Traditional sports –
Seval Sandai
Jalikattu
Gilli-danda
Kancha
Kite flying
Indian Martial Arts
Kho-Kho
Pallanguzhi
Bambaram
Dhayakattai
Aadu puli attam
Atya patya
Langdi
Surr
Sitolia Bridge
Carom
Cycle Polo
Fencing
Judo
Gatka
Mallakhamb
Roller Skating
Rowing
Shooting ball
Soft tennis
Squash
Swimming
Tug of War
Ten-pin-bowling
Tennikoit
Yachting
Yoga
Choosing the right kind of sport is one of the most important steps towards success in sports business. Sports like cricket and football are played by a maximum number of Indians and thus have a higher profit value. Other than that, sports like swimming, badminton, tennis, etc. are also popular.
Affiliations: Administrative bodies which sanction affiliations to the various sports organisations varies depending upon the type of sport. Political liability for sports in India is vested in the Ministry of Youth Affairs and Sports managed by National Sports Federation with an only exception of BCCI which is the governing body for cricket but not managed by National Sports Federation. Another administrative body responsible is the Sports Authority of India. The international body governing association football, futsal and beach soccer is FIFA. Some of the other sports governing administrative bodies in India:
Football– State Football Association (affiliated with All India Football Federation (AIFF) which is affiliated by Federation Internationale de Football Association (FIFA)).
Cricket– Board of Control for Cricket in India (BCCI)
Hockey– Hockey India
Archery– Archery Association of India (affiliated with International Archery Federation(IAF), Asian Archery Federation(AAF) and Indian Olympic Association(IOA))
Boxing– Indian Boxing Federation
Badminton– Badminton Association of India
Chess– All India Chess Federation
Tennis– All India Tennis Association
Basketball– Basketball Federation of India; etc.
Location of the club: Choosing a right location can give a remarkable boost to the success of the sports club. The location of the club must be chosen depending upon the type of sport you chose. Location incites a feeling of regional connectivity and gives a homely feeling to the viewers as well as participants. The club should be situated in such a position from where it will be easier to perform its functions and hold meetings. It must be at convenience to the members of the administration as well as the players so that a maximum number of people can participate.
Organisation Structure: The organisation structure means the division of workforce of the organisation into specific roles, duties and responsibilities which are to be performed by different people to meet the goals of the club. The common method of dividing work is based on functions, according to which, total work is divided based on the different types of function to be disposed of and then people are employed in the respective fields to ensure a productive and profitable outcome. The organisational structure of a club varies depending upon the type of sport and scale of function (large scale or small scale). In general, the organisational structure comprises of the following:
Owner
Board of Directors
President
Vice President
Club Service
Club Service Coordinator
Security Officer
Health Officer
Customer Service Coordinator
Techniques Development
Professional Development Coordinator
Director of Coaching
Sports Headhunter
Business Operation
Director of Finance
Accountant
Cashier
Trustee
Director of Administration
Registrar
Team Administrator
Marketing Manager
Above mentioned structure is not absolute. The structure may vary according to the necessities and functions. Other than determining the division of work there are various functions which come under organisational structure and attracts equal attention and caters to the success of the club significantly:
Determining the name and logo of the club
Electing the members of administrative bodies
Recruiting employees
Membership formalities
Framing the constitution of the club
Providing basic amenities to the players
Maintaining the ethical value of the club.
Holding regular meetings, etc.
Business Structure: Business structure means the type of ownership of the club. The structure of business determines the division of the right to enjoy profit and liability of loss upon the owner or owners. In India there are mainly the following types of business structures:
Sole Proprietorship- Sole Proprietorship is the basic form of business structure in India. There is only one person, the owner, who is responsible for the profit and loss of the enterprise. As there are no partners to the business, the owner is not answerable to anybody for his business policies. One of the main advantages of this type of business is that it is cheap, easy and hassle free but at the same time entire burden of work including the liability to overcome the loss, is laid on the shoulder of the owner which is one of the main disadvantages. The liability to meet the loss is not just restricted to the business assets but also to the private assets of the owner.
Partnership- Partnership is a comparatively complicated form of business structure. Business to be called a Partnership business must require 2 or more persons who agree to the terms and conditions of the business through a legally processed written contract. The partners must voluntarily participate in the business. There must be a common interest and an intention of establishing and running a business as they share ownership, responsibilities and finances of the business. In India, there can be 2 to 20 partners in a particular business including active and non-active partners.
Public Limited Company- The Companies Act of 1956 provides for the settlement of Public Limited Companies. There is a separate existence of the company apart from the members. The company receives its funds in the form of shares from the members who are known as the ‘shareholders’. There is a separate board of directors who determine the policies of the business and the way the business is to be run, rendering no rights to the shareholders to take a decision or give their opinion in these matters. There must be a minimum of 7 members to constitute a Public Limited Company.
Private Limited Company- The provisions for setting up a Private Limited Company are also laid down in The Companies Act, 1956. The concept of a private limited company is almost same as that of a public limited company except for the exception that the members’ shares can only pass among the shareholders. The company should be registered with the Registrar Of Companies. The board of members must consist of 2 to 50 members, and the board of directors must consist of 2 to 12 members.
Limited Liability Partnership- In Limited Liability Partnership the partners can directly oversee the operations of the business yet have limited liability in the actual shares of the company. An LLP can be formed with a minimum of 2 members whose intention is not a charity and by registering an incorporation document with the Registrar.
One Person Company- One Person Company, as the name suggests, is a company with only one shareholder and only one director. The concept of One Person Company was first introduced in Companies Act, 2013. The owner of the company must be a citizen of India and should not be a minor. The company must be registered with the Registrar Of Companies. The liabilities to overcome the loss does not extend to the personal assets of the owner; it is only limited to the assets of the company.
Financial aspects: Having a strong financial support is the base of setting any business. Sports clubs carry out their business with the membership fees or subscription fees. Fundraising is also an effective way of providing financial support. Nowadays, various governmental organisations provide funds to the clubs.
The owners of the club use the grant forms provided by these entities to see if they could use the financial aids provided by them. Various companies act as sponsors who act in collaboration with the club. Funding is not always received in the form of cash. The club can even ask for other necessary items such as equipment for sports or even property in the name of the organisation.
Constitution of the Club: The constitution of the club is a written document which contains all the rules and regulations of the club. It also contains the code of conduct among the members of the club and the procedures to be followed for the smooth running of the general course of business. Only if a constitution of a club strong and effective, can a club reach its heights of success? It acts as a guardian to the organisation. As the constitution contains the rights and duties, it must also contain necessary punishments which a person will be entitled to on not abiding by it.
Policies of the club: Every sports club comes with its own policies. As the club grows there comes a need of setting up club policies which will state in details how the club and its members should operate. Some of the common policies of a club are:
Membership Policies: This includes the procedure of becoming a member and the grounds under which a membership can be cancelled.
Equal Opportunity Policies: An equity statement is established and implemented
Code of Conduct for Fair Play: This ensures a standard of conduct which needs to be followed and an assurance of being judged on fair grounds.
Child Protection: Security to the children to participate in the activities without the risk of abuse is insured under this policy.
Health and Safety: This covers the issues of first aid, risk management, insurance, etc.
Club Development: Issues of development and betterment of the club is covered under this policy.
Ethics in Sports: ‘Ethics’ are not only important in daily life but also in sports. Having a strong ethical policy ensures a feeling of fair play and security within the club.
Conclusion
Sports business is globally regarded as one of the largest industry in term of revenue and employment. The efforts made by various governmental and non-governmental organisations have succeeded in creating a new phase in Indian history of sports. Conducting professional leagues of developed sports such as cricket, football, hockey, etc. has increased the chances of exposure to new talent and stretching the wings of business. There has been a significant development in the case of underdeveloped heritage sports. Various traditional sports have started getting recognition in national and international level. Therefore setting up a sports club is definitely a profitable venture owing to the changing circumstances.
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