'Fan passion makes sports M&As unique': Lawyer Siddharth Marwah
As the size and scale of the Indian sports industry expands, so too does the level of complexity around sports M&As. In such a scenario, the demand for specialized sports lawyers is increasing to help professionals navigate trans-national mergers and acquisitions (M&As), negotiate nimble player and club contracts, and a whole lot more.
In 2019, top European football club Manchester City’s parent company acquired a 65% stake in Indian Super League side, Mumbai City FC. This was reportedly the first time that a European club had purchased a majority stake in an Indian football franchise. Siddharth Marwah, a principal associate with leading law firm Khaitan & Co., advised on this transaction and has witnessed the rapid corporatization of Indian sports first-hand.
Sportskeeda's Business of Sports caught up with Marwah, via an email interaction, to better understand the evolution of India’s sports sector. Further, the emergence of cross-border M&As, the importance of due diligence, and the various legal and policy considerations when negotiating multi-faceted contracts were discussed as well.
Q&A with lawyer Siddharth Marwah on sports M&As involving Indian clubs
Q1) How has the landscape of sports M&As evolved in India in recent years?
Siddharth Marwah: In recent years, the landscape of sports-related mergers and acquisitions in India has witnessed significant growth and development. The increasing popularity and commercialization of sports have led to a rise in M&A activities within the industry.
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Sports organizations and clubs are seeking strategic partnerships, investments, and acquisitions to enhance their competitiveness, expand their reach, and tap into new revenue streams.
Additionally, the emergence of professional leagues in various sports disciplines has created opportunities for investors and acquirers to enter the Indian market and leverage the growing fan base and commercial potential.
Q2) How are sports M&As similar or different, when compared to M&As in other domains?
Siddharth Marwah: Sports M&As have some unique characteristics compared to M&As in other domains. One key difference is the passion and emotional attachment that fans have for their favorite sports teams, which can influence the dynamics of negotiations and stakeholder expectations.
Additionally, sports M&As often involve considerations beyond financial aspects. This includes things such as the preservation of the team's heritage, maintaining fan loyalty, and complying with sporting regulations and league requirements. The involvement of governing bodies and regulatory frameworks specific to the sports industry adds another layer of complexity to sports M&As.
Q3) You were part of the team that handled City Football Group’s acquisition of a majority stake in Mumbai City FC. Without going into the specifics of this transaction, what was the significance of this deal in the larger context of sports M&As in India?
Siddharth Marwah: The transaction involving City Football Group's acquisition of a majority stake in Mumbai City FC was significant in the larger context of sports M&As in India.
It showcased the growing interest of international investors and renowned sports organizations in the Indian football market. The deal not only brought financial investment, but also brought expertise, global best practices, and international exposure to the Indian football ecosystem. This transaction acted as a catalyst for increased global interest in Indian football, and set a benchmark for future investments in the sports industry.
Q4) What are the current legal and policy concerns that weigh heavily on the minds of foreign acquirers of Indian sporting clubs?
Siddharth Marwah: Foreign acquirers of Indian sporting clubs need to consider several legal and policy factors.
Some key concerns include compliance with foreign investment regulations, understanding and adhering to the rules and regulations of the specific sports federation or league. Further, ensuring compliance with competition laws, and navigating complex tax and corporate governance frameworks are important as well.
Additionally, safeguarding intellectual property rights, addressing labor and employment law considerations, and managing contractual obligations with players and stakeholders are crucial aspects that foreign acquirers must carefully evaluate.
Q5) Do you see the continued emergence of cross-border sports M&As in Indian clubs, as an imminent reality? If yes, from the legal compliance standpoint, what are the general parameters that Indian clubs need to keep while negotiating such acquisition enquiries?
Siddharth Marwah: Yes, the continued emergence of cross-border sports M&As in Indian clubs is likely to be an imminent reality. From a legal compliance standpoint, Indian clubs need to be well-prepared when negotiating such acquisition inquiries. Key parameters include conducting thorough due diligence to assess the potential acquirer's credentials, financial capabilities, and strategic alignment with the club's goals.
It is essential to have robust legal documentation. This includes carefully drafted share purchase agreements, shareholders' agreements, and other contractual arrangements that address specific concerns related to ownership rights, intellectual property, governance, and regulatory compliance.
Q6) Just like how the sports industry is expanding in India by leaps and bounds, are we seeing similar domain specialization within the legal industry too – with experts in specific niches like ‘sports M&As,’ ‘player contract negotiations,’ ‘league structuring,’ ‘sports media’ etc?
Siddharth Marwah: Yes, as the sports industry expands in India, we are witnessing a similar trend of domain specialization within the legal industry. There is a growing demand for legal experts with specific knowledge and expertise in sports-related matters.
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Professionals specializing in areas such as sports M&As, player-contract negotiations, league structuring, sports media, and other relevant niches are increasingly sought after.
These specialists possess in-depth understanding of the unique legal and commercial considerations within the sports industry. They are equipped to provide tailored advice and solutions to clients operating in this dynamic sector.