Virat Kohli's Rs 110-crore deal with Puma may sound earth-shattering, but it's actually a steal

“A new era begins now. With @PUMA. #Forever #ForeverFaster”

It all began with a single tweet posted on Sunday evening by the Indian cricket captain, Virat Kohli. Accompanied by a photo of the 28-year-old cricketer, dressed in a Puma-branded tee, trainers and shoes, the tweet set the microblogging platform alight – by Wednesday evening, it had got nearly 3,000 retweets and 27,000 likes.

The day after the announcement, the business papers had dug out the details. “Virat Kohli has become the first Indian sportsperson to sign a Rs 100-crore endorsement deal with a single brand,” reported the Economic Times. “The unusually long eight-year deal – which could go on to cover the 28-year-old’s remaining career with the Indian team – involves a fixed payment and royalty depending on the brand’s business performance.”

It’s an unprecedented deal for an Indian sports personality – Rs 110 crore over eight years works out to Rs 13.75 crore, or approximately $2 million, annually. And that’s just with one single brand. According to this report in the Economic Times, published in March 2016, Kohli endorses at least 13 brands, including Indian tyre manufacturer MRF (who pay him Rs 6.5 crore a year to stick their logo on his bats), German premium car manufacturer Audi (18-month deal worth Rs 5 crore), American cola giant Pepsi, and Swiss luxury watch maker Tissot. Since December 2016, Kohli has also signed up with Chinese smartphone maker Gionee and luggage maker American Tourister as their brand ambassador.

Apart from these endorsements, Kohli also invests in other ventures. In the last three years, he has dipped his toes into sports such as football (he part-owns Indian Super League franchise FC Goa), tennis (co-owner of International Tennis Premier League team UAE Royals) and wrestling (co-owner of Pro Wrestling League side Bengaluru Yodhas); he has also launched his own fashion label called Wrogn, a gymnasiums chain (Chisel) and a sports-tech startup (Sports Convo).

According to this Rediff Business report, Kohli pockets almost Rs 1.5 crore every day from his endorsements. While it’s impossible to verify that figure, as many of the deals have valuations that are undisclosed, there’s no doubting that Virat Kohli is one of the biggest brands in India. His brand value, according to an October 2016 report by a global valuation firm Duff and Phelps, was reported to be $92 million. Only Shah Rukh Khan, arguably the most popular actor in Bollywood, is a bigger Indian brand, with a valuation of $131 million. Not Sachin Tendulkar. Not MS Dhoni. Not Amitabh Bachchan.

Kohli’s brand value has shot through the roof ever since he was appointed the Indian captain across all three formats of cricket in December last year. According to this report in Mint, his brand value has gone up 20%-25% since he took over from Dhoni as captain in the limited-overs formats.

And why not?

Kohli is currently the world No 1 batsman in Twenty20 Internationals, No 2 in Test cricket and No 3 in the one-day format. He recently became the first batsman in the world to hit four double centuries in four consecutive Test series. In January last year, he became the fastest batsman in the world to score 7,000 ODI runs. The international records of Tendulkar, once regarded untouchable for at least a generation, could be broken in this decade itself the rate at which Kohli is going.

Breaking the Adidas-Nike duopoly

Puma’s decision to lock Kohli in for a period as long as eight years should, therefore, not come as such a big shock. At 28, he is at the peak of his game and the captain of the Indian team. He’s got at least seven or eight more years of cricket in him, and don’t count it against him to go on longer, considering how devoted he is when it comes to his fitness and diet. Kohli is a superathlete. And a very charismatic one at that. The risk Puma has taken in giving him an eight-year-long contract is microscopic considering his credentials.

“The deal reflects the talent and the charisma of the player concerned,” said Sayantan Choudhury, executive creative director at advertising agency J Walter Thompson. “When the two match, and they very rarely do, you get to see such long deals. Brands would want it because the risk of losing the star to a rival brand a few years down the line, far outweighs the risk of the star player running out of steam.”

The risk of losing the star to a rival brand is something Adidas knows about. In 2014, the German sport apparel giant had signed Kohli on for a three-year deal worth Rs 30 crore, which is Rs 10 crore per year. Whatever the reasons, the contract was not renewed in 2017, and Puma barged in. Now, they have themselves a coup. Their American rivals Nike might be sponsoring the Indian cricket team, but Puma have the captain, the best batsman, the most interesting personality in the bunch.

“That’s the reason why Nike has lifetime deals with LeBron James, Cristiano Ronaldo and Michael Jordan, and Adidas with David Beckham,” said Choudhury. “The long-term deal could potentially cover Kohli’s remaining career with the Indian team. Again, this is an exception, rather than the rule. But when you are talking about incredible, once-in-a-generation charismatic talents like Virat, these deals are common and they make great sense.”

Choudhury also believes that Puma roping in Kohli signifies a substantial and serious effort to take on the Nike-Adidas duopoly. “Getting the Indian cricket captain and the player who is currently head-and-shoulders above everyone in terms of talent, personality and charisma, is a loud statement of intent,” he said. Prahlad Kakkar, a leading ad film director, agrees. “Virat Kohli is like [Don] Bradman or Sachin Tendulkar. He is a phenomenon. He is no longer just Indian property. He is international property.”

How can Nike and Adidas counter this? Can they counter this? “Well, there are many ways to skin a cat,” said Choudhury. “You can use your marketing to tell a better brand story to the consumers. You could possibly take the moral high ground and change the conversation – by championing sports and sportspersons who have traditionally been kept out of the spotlight, by projecting Puma as the brash, monied brand, while you are a brand that truly stands for all of Indian sport. In the West, Under Armour has created a powerful brand that has taken on the traditional biggies, by telling a more evocative, performance story.”

Niranjan Kaushik, CEO of SkyNinja India, an advertising agency, believes that Adidas and Nike have the advantage of their legacy and should not worry too much about Puma. “If I were working for Nike or Adidas at this stage, I wouldn’t get my knickers in a twist over this. I will perhaps wait and watch for a year or two before counteracting against Puma’s move. And who knows, by then a new star will be born. Just sign him on instead.”

Nothing earth-shattering about it

Coming back to the deal itself, Rs 110 crore is a lot of money. Only Sachin Tendulkar and MS Dhoni come close when it comes to the valuation. Both have been in the Rs 100-crore league, but only via multiple brands. Kohli has one-upped two of the most legendary cricketers to have played for India, and at such a comparatively early phase of his career.

However, Kakkar does not think that this Rs 110-crore deal is earth-shattering or game-changing, by any means. In fact, he thinks that the German footwear company have got themselves a steal, compared to international standards. “If Puma had to pay any international star, it would not be less than $5 million a year. They are getting Virat for $2 million a year and that’s a very good deal,” he said.

He’s got a point. While this deal may be unprecedented in India, it’s nothing compared to the deals that international sports stars get. Take the world’s fastest man, Usain Bolt, for example, who is also sponsored by Puma. According to Bloomberg, the multiple-time Olympic gold-medallist signed a $10 million-a-year deal with Puma in 2013 through to 2016, an “extra $10 million” if the Jamiacan takes part in the 2017 World Championships in Athletics, and an additional $4 million annual salary to be a “Puma ambassador” after retiring. According to Forbes, Bolt’s deal with Puma runs through to 2025, which will be long after his retirement.

Basketball legend LeBron James, who signed for Nike in 2003, currently has a shoe deal with the American manufacturer that may be worth more than $1 billion. James signed a lifetime deal with Nike in December 2015. It was reported to be “the largest single athlete guarantee” in Nike’s history. Footballer David Beckham was one of the first sportspersons to sign a lifetime endorsement deal – worth around $160 million with Adidas in 2003. Cristiano Ronaldo currently gets nearly $22 million annually from Nike, while his rival Lionel Messi pockets around $20 million per year from Adidas. Let’s not even go to Michael Jordan.

To be fair to Kohli, it would be rather unfair to compare his sponsorship deals with these sportspersons. That he earns less than Ronaldo or Messi or Bolt should by no means be interpreted as him being any less of an athlete. “Talking strictly in terms of sporting ability, Virat is arguably in the same league as the stars mentioned,” said Choudhury. “But that does not mean he’s on the same pedestal as them [as an international brand].”

Kaushik said, “Cricket as a game is still very small in the global scenario. Given the number of nations that play football or tennis or athletics, Ronaldo or Roger Federer or Bolt are far more popular. If Virat goes to Columbia or Brazil, will he be mobbed? I doubt it. Meanwhile, imagine the frenzy if you caught Cristiano Ronaldo on a street in [Mumbai’s] Lower Parel [area].”

Does this mean that an Indian athlete will never be considered big enough to bag a lifetime sponsorship deal? Kakkar does not believe so. “Everything is going to happen in India,” he said. “Look at the numbers we are talking about. Kohli is going to play cricket for another 10 years. Then, he is going to retire and become a role model, a coach, go on worldwide tours and give lectures on character building, he is still very viable. Look at Sachin today – he is worth more than what he was as a player.”