Unlocking Private Funding for Large-Scale
Sports Infrastructure

Unlocking Private Funding for Large-Scale
Sports Infrastructure

Neeraj Lodha & Srinjoy Mukhopadhyay | 5th Jan 2023

Traditionally, large sports developments such as sports stadia, complexes and Centres of Excellence (CoEs) have been publicly-funded in India. This is either directly through the government, or through several associated organisations under the Ministry of Youth Affairs and Sports (MYAS).

The logic behind using taxpayers’ money has always been that such developments are for public good and are meant to be accessible to athletes and amateur players at a reasonable price point. At the same time, from a financial standpoint, stadiums are envisioned form the centre of new economic development which creates additional direct and indirect revenues, flowing back to the government. For example, taxes from ticketing revenues, surrounding real estate and commercial development or direct (imputed) rentals or use of the asset for both sporting and non-sporting initiatives.

Private Engagement: An Urgent Requirement

In India, as is the case for much of its public investments, the situation has been contrasting. Rather than enabling holistic talent creation and usage, sports facilities have become white elephants which are rarely used to their full capacity. Being too few and far in-between, only a select few are able to benefit from them.

Take for example, India’s flagship multipurpose stadium – Jawaharlal Nehru Stadium in New Delhi. Since its refurbishment in 2010, there have been only two instances when it operated to full capacity. Over the past decade, the government has employed several schemes of generating revenues from the massive development of 100+ acres at the heart of the city which includes renting out office spaces (like the Income Tax department), hosting non-sporting initiatives (food fests, music festivals and much more) etc.

Even flagship stadia like these remain woefully underutilised, thereby not generating enough revenue which negatively impacts maintenance, upgradation and overall readiness.

Although government has made considerable progress in recent decades to increase infrastructure investment (including sports), they increasingly face budgetary constraints in sustaining that investment from public sources. Overall levels of public sector debt in emerging economies stand at record levels, and many countries have seen budget deficits increase in recent years. This makes it imperative that governments unlock greater private sector infrastructure investment and financing, both foreign and domestic.

It is in this light, as with other sectors, the government has increasingly felt the need to privatise and monetise its sports assets. For the first time, sports assets have been included under the National Monetisation Pipeline (NMP). Three key stadia, including Jawaharlal Nehru Stadium are part of NMP.

The National Sports Policy released in 2014, highlighted infrastructure as a critical requirement for overall development of sports in the country. ‘Let’s Play – An Action Plan for Revitalising Sports in India’, the 20-point action plan released by NITI Aayog intends to target 50 medals in the upcoming Olympics and also highlights the increased involvement of the private sector towards the development of sports facilities in India.

Requirements: Unlocking Private Investments

Commercial sustainability is a major aspect of attracting private players and investments towards sports infrastructure. In India, there has been a mushrooming of private investments and ownership of sports franchises and clubs. This includes IPL teams and similar franchises in football, kabaddi and much more. However, private ownership of sports infrastructure, especially stadia, remain low. Ekana Sports stadia and TransStadia, Lucknow are a few examples.

Globally, there have been several examples of privately owned or operated stadiums running successfully. Johan Cruijff ArenA (JCA) is a case in point which was formed as a Special Purpose Vehicle (SPV) and is commercially sustainable. Wembley Stadium is another one which was initially supported by Sport England, and then through lottery tickets. All such stadiums have unique revenue streams aided by catering to local requirements. While Wembley relies a lot on round-the-year hospitality events and commercial activities, JCA runs unique initiatives like Living Lab which turns the stadium into a test bed for running challenges and Proofs of Concept, also a major source of income.

India too, needs to come up with Public-Private Partnership (PPP) models that serves its unique requirements. A major constraint is finding an anchor tenant. At JCA, for example, Ajax performs this role, having a long-term lease and forming the backbone of successful commercial operations and upkeep. Indian stadiums, however, have comparatively lesser flagship events. Even cricket stadiums at cities which have IPL franchises, like Eden Gardens, or Firoz Shah Kotla, do not host more than 10-12 matches annually, compared to over 50 for most European stadiums.

Three kinds of initiatives and innovations that governments and Development Finance Institutions (DFIs) can consider to establish sports infrastructure as an investible asset class.

• First, they can increase availability of funds (liquidity) from both domestic and international providers of capital

• Second, they can increase the scale of investment by bundling together individual projects and providing a portfolio of products in which such providers of capital can invest

• Third, they can address the governance and capability gaps that often hinder private-sector investment

Planned and Structured Approach

Considering the unique challenges, commercial models and structures needed to be worked upon, the focus should be on creating pilot projects which can serve as case studies for larger projects.

India, over the last two decades, has already seen a complete transformation of critical and investment-heavy sectors through private investments. Airports, roads, urban metro and energy are some such sectors. If we are to go by some of the recent PPP projects, the Bengaluru airport transformed and opened the market for all other major projects, Delhi Metro’s runaway success; the success of such projects creates confidence that the market has matured for such commercially-viable sports models as well.

To enable the same, the government needs to play an enabling and supporting role, rather than a regulator’s or operator’s role. Business cases and best practices need to be identified from global models and experts who were engage in creating transparent forecasts and valuation, customised to Indian conditions.

Starting small, but right, is crucial. In pilot projects, policy-makers may consider flexibility in revenues or a lower-than-expected valuation. The private sector, including industry leaders and experts, must be consulted right from the framework and policy-making phase of the project. It should also support the investor/ concessionaire in enhancing skills, removing barriers and creating additional revenue streams to make the project viable and generate return on investment (ROI). This is crucial to offset additional risks faced by first movers.

To offset some of the initial risks for initial investors, certain guarantees / assurances can also be built in. These could include the right of first refusal if commercials are matched for upcoming projects. Or the chance to consult in the creation and implementation of similar future projects. For example, Delhi Metro earns significant revenues from consulting metro projects all across the country.

Pilot projects will catalyse private sports infrastructure where larger experiments can be conducted. Assets across classes and rural-urban divide can be consolidated to create packages which allow commercial gain, as well as social development.

To attract the private sector, policy-makers must focus on some key aspects. Utmost transparency and real-time appraisal must form the bedrock of such multi-stakeholder relationships. Key assumptions for valuations and forecasts must be clearly disclosed and a consultative approach must be followed. A credible Project Management Unit (PMU) can be institutionalised between all stakeholders to act as a neutral convener and create frameworks, SOPs and standards for effective compliance. The PMU will also play a major role in crafting dedicated strategy and implementation must showcase the success of pilot projects to create outreach and visibility among targeted and interested investors.

Initial successful projects will also generate large-scale interest among foreign funds and developmental organisations. In addition to adopting the best practices, sustainability will be a major consideration factor. Environmental sustainability, though simple to understand, is a vast area which can include use of sustainable construction material, energy conservation systems as well as generation of off-grid renewable energy, rainwater harvesting, waste management and circular economy solutions and much more. The traditional approach may view this as an additional overhead, but the higher overhead can be offset through lower operational costs and energy savings.

Interventions to increase the available pool of funds in the infrastructure space

There are important opportunities to increase the available pool of funds (liquidity) in the sports infrastructure space by supporting the risk–return characteristics of investments

• One such opportunity is for government to partially mitigate private-sector risk by providing a liquidity backstop through guarantees. To achieve this in a sustainable manner, government can develop long-term infrastructure plans in which delivered assets are used as collateral to guarantee the private financing of new infrastructure. An example comes from Peru, where the Banco de la Nación de Peru created a trust division in 2000 to provide collateral and support to infrastructure investors and developers. To date, the Banco de la Nación has acted as a fiduciary to more than 60 infrastructure projects, including road infrastructure, irrigation, water, and sanitation.

Other countries have used the income and assets of state-owned enterprises (SOEs) as the basis of such guarantees or collateral. Governments can also allocate a proportion of the assets of sovereign-wealth funds and investment companies to support guarantees; often these are based on natural resource wealth.

• Governments can also foster the development of secondary markets that enhance liquidity by allowing infrastructure investments to be recycled; the funds released can be redeployed to other infrastructure investments. Governments can issue long-term fixed bonds in the secondary market to boost activity and to set a long-term yield curve that allows infrastructure borrowers to price their bonds effectively.

Finally, there are several specific steps that government and regulator could take to generate liquidity by directing domestic pools of capital into infrastructure. Those include the following:

• Instituting favourable regulatory investment limits pertaining to sports infrastructure-related sectors—which could help ensure that domestic pension funds and insurance companies participate in long-term sports infrastructure investments.

• Optimising capital risk weights associated with infrastructure financing to incentivise domestic investors, as well as local banks, to finance infrastructure projects. (Capital risk weights prescribe the minimum amount of equity capital that lenders need to maintain for every dollar of lending provided.) Such optimisation can be achieved by prescribing different risk weights for each sport infrastructure asset class, depending on its historical non-performing loan-ratio—rather than applying a single risk weight broadly to all project financing.

• Offering favourable tax treatment for infrastructure investments. India’s use of tax-free infrastructure bonds is one example of unlocking domestic investment in infrastructure. The National Highway Authority of India (NHAI) issues tax-exempt bonds to attract domestic investment, the proceeds of which are used to finance road projects across the country. The NHAI takes a similar approach to attracting foreign investment: it issues “Masala bonds,” rupee-denominated bonds that enable capital raising in global markets


Sports infrastructure needs to form the bedrock of future talent creation. Past successes through private participation, which has completely revamped several sectors, means that it has the potential to do the same in sports.

It is thus important to engage and bring together like-minded stakeholders which includes investors, thought / industry leaders, transaction advisors, project advisors and structuring experts, sports development professionals and much more. In addition to commercial-viability, these stakeholders need to deeply appreciate the social role of sports for communal and national development.

Through a well-strategised approach, led by the government, interesting case-studies can be created. These need to be transparently analysed before scaling-up. A sound PMU is critical in formulating business plans, ensuring transparency and providing trustworthy support, valuations and forecasts to all stakeholders involved.

To improve international investors’ confidence in emerging markets, governments might consider establishing autonomous institutions to act as an interface with the private sector. Such institutions can be designed and established in collaboration with DFIs and global partners—and can support governments in implementing global best practices in project structuring, financing, procurement, execution, and contract management.

These institutions can take several forms, including public–private partnership (PPP) units, infrastructure-delivery companies, infrastructure banks, and infrastructure funds. Through these institutions, government can adopt a systematic approach to accelerate private-sector participation in sports infrastructure development.

sports infrastructure, PPP models, case studies, stadia, private investment, commercial sustainability