Financial Daily from THE HINDU group of publications
Thursday, May 09, 2002
Promotions & Offers
Marketing - Promotions & Offers
It's a different ball game for Mallya
KOLKATA, May 8
THE United Breweries supremo, Mr Vijay Mallya, may have scored a victory by getting elected to the Rajya Sabha, a new turf that will allow him to vent his feelings on national affairs.
But his experience elsewhere has been a bit different. In his attempt to corporatise Kolkata's Mohun Bagan Football Club, Mr Mallya is finding it a problem getting past the club's traditional supporters who stand between him and his goal.
Currently, the club is mired in myriad controversies.
Celebrations by the club's 10 million supporters after their team won the third national league came to an abrupt end when some powerful members decided not to sign on the players for a fresh stint with the club.
Inside sources say that Mr Mallya has already pumped in more than Rs 8 crore for the Mohun Bagan soccer team during the last five years. However, the company has not been able to use the McDowell brand on the players' shirts as the move has been stayed by a court order.
Ever since the Union Government banned liquor companies from using the print and electronic media for product promotion, sponsoring sports events had become a lucrative avenue to gain mileage. However, legal hassles have only worsened UB's cause because the company has not been able to get the necessary exposure it expected from sponsoring the Mohun Bagan football club.
Sources say that the first deal between UB and the club was signed on December 27, 1997, where it was decided that the club would own all the shares of the new joint venture company to be formed for the purpose.
However, a fresh agreement was signed on February 25, 1998, where the club and UB decided to own a stake of 50 per cent each. The assets were transferred to the joint venture company, called United Breweries Mohun Bagan Football Team Pvt Ltd. Thereafter, there was an attempt to rename the club as United Mohun Bagan, but this was stalled by the court.
Sources said the capital base of the company is Rs 1 lakh and it comprises 10,000 equity shares of Rs 10 each. The company has been recording losses, and for the year ended March 31, 2001, the losses were Rs 3.15 lakh. In the previous two years, the losses were Rs 1.90 lakh and Rs 2.20 lakh.
However, UB's venture with the other soccer giant of the city, East Bengal Club, has proceeded smoothly. The team has been renamed Kingfisher East Bengal. Incidentally, sources said UB has decided to reduce its exposure to Kolkata's football world in the ensuing season, 2002-03. It has slashed its budget for each club by Rs 35 lakh, which means that the two will be getting Rs 1.55 crore each for the season.
When asked, Mr Kalyan Majumdar, East Bengal's Assistant General- Secretary and a director of the joint venture company, declined to explain the corporate structure of the club or comment on the issue of fund slashing.
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