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Home Magazine May 2015 The Golden Touch: The Art & Science of New-Age Dealmaking

The Golden Touch: The Art & Science of New-Age Dealmaking

In today’s world, the efficacy of established global groups like McDonald’s has been challenged by the millennial world, and they are losing lustre to new ideas and fresh concepts like Five Guys and a Burger and Chipotle. Another example is that of Nokia that could not understand the smartphone generation at the right time. The millennial generation has a wider range of choices than any generation before them.

BY Punita Sabharwal | COMMENTS ( 0 ) |

Within India, roughly half of the population is under the age of 25, meaning that there is an astonishingly large number in India being trained in the Generation Y way of mind at the moment. Of which, the young population living in Tier 2-3 cities has 35 per cent higher fanfare and star aspiration than its urban counterpart.

The time calls for understanding the consumer sensitivities and addressing them with his/her perspective. This new-age consumerism calls for strategic thinking and fresh partnerships. It demands striking the right deal with the right people at the right time. It also calls for having the spirit of a start-up even within an established enterprise.

The Midas man behind helping celebrities extend their names to business propositions is none other than the profound Chairman of Franchise India, Gaurav Marya. Whether sports icons like Virat Kohli, MS Dhoni and Yuvraj Singh, designers like Neeta Lulla, or Bollywood stars like Lara Dutta, Bipasha Basu and Shilpa Shetty, have time and again called upon Marya to extend their celebrity status to business propositions.

It’s the time to move ahead from celeb endorsement and think about real business, involving passion, grit and commitment. As they promote products and lifestyles, these powerful individuals prescribe Indian taste. Earlier, celebrities were restricted to ribbon-cuttings, now it is the time for them to create bigger and lasting opportunities. It’s the time we see them getting into building an enterprise and working in tandem with a partner.

THE BIGGEST DEALMAKER

Gaurav Marya has spent his past 20 years helping people realise better business deals. Some of those deals involved large sums; some didn’t. Corporates, celebrities and entrepreneurs from all the over the world have reached out to him to carve out the sweet deal. Marya shares his personal observations about life at the dealing table.

Dealmaking in celebrity licensing, whether it is sports or fashion or entertainment, is the ultimate people skill. He believes it is about appealing to the human side of the celebrity in business. Stars tend to live large, so a usual offer probably won’t do for them individually or for their millions of fans and prospective consumers. As per Marya, “A stardom of 15-20 years is no longer the going norm. For celebrity endorsements, the time period has reduced substantially.” Working with designers and celebrities and sports people, those who are emotionally attached to their fields and want to transgress beyond that – needs first and foremost that their unlock value be found and brought to light. Tracing this progression from celebrity as entertainer to celebrity as entrepreneur speaks to an ultimate understanding of the surrounding the celebrity and the larger Indian taste.

Marya points out that while working to transcend traditional boundaries of celebrities as entertainers to extend their power to various facets of entrepreneurial sphere, the idea is to look out for four kinds of fits. “Strategic fit, financial fit, operational fit and marketing fit. Marketing fit is there as they are already brands and very popular. Financial fit is also there because everybody likes to invest in them. For operational fit, we always bring in an operational partner who has great excellence in doing that business. What they need to be careful about is there has to be a strategic fit. If these four fits are there, then it’s a great business opportunity,” he says.

“There is a great Intellectual Property (IP) which lies with these stars with a very big operational excellence. Sports or film stars have around 200 days committed to what they are doing. If they start businesses with their own investment, they will flop because they don’t have time to supervise and they don’t come with any kind of capability.

Having worked with bigwigs like MS Dhoni for Sports Fit, Yuvraj Singh for UVX, Shilpa Shetty for her spa business, Lara Dutta for a fashion line with Chhabra 555 and more recently Virat Kohli for Chisel fitness centres, these celebrity entrepreneurs make a business of branding themselves as an extension of their products and ways of life. People aspire to be like them, and buy into their images as a means of prescribing to their taste.

The question often arises what is the celebrity’s brand value? It can be estimated as an average of his/her earnings coming from fees, high-profile endorsements, marketing levies, smart/passive investments and business profit sharing arrangements. As the celebrities grow in popularity, they put a bigger focus on smart investments and business profit sharing arrangements. About a decade ago, celebrities concentrated on pure endorsements. Now, they are thinking how they can build their own enterprises. These stars can maximise their brand values when they are at the peak and which will help them get the maximum unlock value. Having said that, many celebrities can manage to have good valuation even after their heydays.

If we look at big stars and their brand values, MS Dhoni ranks third with his brand value measured at Rs 441 crore. Virat Kohli comes next with Rs 346 crore ranked at number four. While actor Salman Khan’s brand value is measured at Rs 318 crore ranking him at number six. The report on India’s most valuable celebrity brands by consultancy American Appraisal ranks King Khan at number 1 with a brand value of Rs 1,011 crore.

Internationally, NBA Basketball player, LeBron James, comes second in the world’s most powerful celebrities with earnings of $72 million. Also ranked amongst the top 10 list of world’s most powerful celebrities is Boxer Floyd Mayweather with earnings of $105 million as per Forbes 2014 data.

FIT FOR GROWTH

The case in point is of the dashing cricketer Virat Kohli who is all set to come up with his own chain of gyms and fitness centres. With the investment of Rs 190 crore in sight, the plans are to launch 75 centres in three years under the brand name Chisel.

This brand is jointly owned by Kohli, Chisel Fitness and CSE, the sister concern of Cornerstone Sport & Entertainment, which is the agency that manages Kohli. “We will launch gyms of various sizes and with different facilities according to their locations,” says Satya Sinha, Director, Chisel Fitness, a Bengaluru-based start-up that specialises in corporate fitness. Franchise India is the commercial and marketing partner in this venture. Talking about the right strategic fit, Marya says, “Now, Virat Kohli cannot start a furniture line because there is no relation or strategic fit per se. He is a youth icon, and the decision of buying furniture is usually taken by the elderly in the house. So it’s a misfit. As a consulting firm, we look at these balances. We see how we can get adequate capital in their businesses. What is the strategic value a star can bring in which I can unlock.”

Giving another example, he tied up with Actor Shlipa Shetty. “When we partnered with her for a spa business, we also looked at her being very fit, well-groomed, yoga passionate and a well-being person. So she running a spa brings in a glamour quotient. Also she was a great icon to be attached to spas. The idea is to finding the right match.”

Explaining it further, he says, “Every celebrity has two quotients one is emotion, he/she should bring in a great amount of emotional quotient. Then there is certain amount of mystery about him/her which people want to know. People want to know more about celebrities. But you have to be careful not to overdo these two.”

As per him, the greatest example to this is Being Human. Salman Khan is popular with all segments of the society. Hence, Being Human got popular with all strata of society. Now, it’s time to get the aspirational customer get hooked to it. For this, Being Human has partnered with Mandhana Group.

The next generation of these celebrities has distribution ease because of e-commerce. They can reach out to global marketplaces. Then if not distribution what is concerning in such celebrity businesses. To this Marya says, “Celebrities should not move out of their strategic line, should be adequately financed, have right operational value, and not overdo marketing. So you have to clearly see who your operational partner is.”

“Earlier, stars used to come out with anything that may or may not sell. So now we are looking at these two: emotions and unlock value. Some stars are popular but there is no emotion or unlock value they have. I have no interest in them. I have interest in strategic people who have some unlock value. A-category stars, some celebrities have exceptional leadership capability like Anupam Kher. His acting studio was a great idea.”

SEAL THE DEAL

But working with the celebrities is no cakewalk. On what he looks out for while selecting the right celebrity, he says, “Either he/she shows a huge amount of consistency or has an IP for which that individual stands out, that is what the opportunity is. Our role is to go to these brands and hand-pick them. For example, Fashion designers like Rohit Bal; while he displays a titanic influence over public fashion opinion; yet there is mystery around him, people want to know what he is doing, where he goes, his party life; so that unlock value is a great buy.

“The aim is to find such icons, brands that can be sold globally and nationally. Then we find an operator, adequately capitalise the venture, make a prototype and franchise. In coming times, we will have many such brands. We are constantly talking to multiple players, our interest is to develop these businesses and take them to the next level.”

But working in tandem with all these doesn’t come easy. What does it take working with them? “It’s difficult is to manage these guys. The celebs have to be here for a long-term play; should stay invested and aim to build an enterprise. It will come in five years. They need patience. Second is finding a good operating partner, who has no commercial relation, have to be friendly like a family member. The stars have more doubts and cannot supervise, so finding the operator who can match these expectations and can bring early success is required. They have high expectations because they are larger than life images. Managing that is what we do,” he concludes.

Franchise India is looking at new assets, talking to lots of people in Bollywood, not just cricket but other sports as well, and is seeking out PE players to partner.

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