18 May 2024 last updated at 10:26 GMT
Revenues shrink for IPL franchises
Friday 04 April 2014

The confusion over venues and match dates, and the change of guard at the Board of Control for Cricket in India (BCCI) is likely to push down sponsorship revenues of Indian Premier League (IPL) team franchises by as much as 20%, making it difficult for them to meet their revenue targets. While the schedule for the first leg of the IPL in the UAE has been finalised, the BCCI is yet to provide a schedule for the rest of the tournament.

A senior executive of a North India-based IPL team said till there is complete clarity on venues and match dates, sponsors are not willing to sign the agreement. "It is hampering the process," said the executive, requesting anonymity. "I am under a lot stress. I really need to try and close some deals to achieve our target."

"It is a difficult task to secure sponsorship this year. Talks started a long time back but potential sponsors want to know the final schedule," said the chief executive of a South India-based IPL team. The T20 tournament has gone through a tumultuous phase in the last few months because of the betting and spot-fixing controversy that broke out last year. While the Supreme Court last week allowed the IPL to go ahead unhindered, it replaced cricket board president N Srinivasan with former Indian captain Sunil Gavaskar as incharge of IPL affairs.

The IPL schedule was tweaked as the government refused to provide security at the venues on account of the Lok Sabha elections beginning on April 7. While the first 16 days of the tournament, which starts on April 16, will be played in the UAE, there is still uncertainty over where the rest of the matches will be held. Bangladesh has been kept as a standby venue for the second phase from May 1-12. 

BCCI said recently that it has got clearances from various state governments to hold matches in Ahmedabad, Bangalore, Bhubaneswar, Kochi and Visakhapatnam, though no final dates for matches have been announced.

"Till such time there is a clear cut understanding of the schedule, it will be difficult to close deals. We usually go by historic data on TRPs to decide on the valuation of a deal," said Shashin Devsare, executive director at Karbonn Mobile, which has not yet signed a sponsorship deal with any team. "How will we decide TRPs for new venues where IPL matches have never been played?" he asks.

That is the dilemma teams are stuck in. Advertisers usually decide a year in advance. "Following that, they get at least three months before the tournament to plan their advertising around IPL. There is no time this year," said a senior media planner.

Advertisers such as Pepsi, Idea Cellular, BookMyShow, Garnier, Nokia, Reebok and Aircel have been associated with IPL teams over the last few years. "I can understand the advertisers' anxiety regarding team and on-ground sponsorship. IPL is a premium property and, therefore, marketers need at least six weeks lead time to plan their advertising around the event. If that is not possible, return on investment could be a huge issue," said Basabdutta Chowdhury, CEO at Platinum Media, which is a part of Madison Media Group of agencies. Two senior media planners from India's top two media agencies said they anticipated the troubles and have advised their clients to stay away from team and on-ground sponsorship and to instead invest only in on-air advertising.

"From a short-term perspective, there will be a big impact if things remain in flux. But it could be a case of short-term pain for long-term gain," said Unni Krishnan, managing director of brand consultancy Brand Finance India, referring to the intervention by the Supreme Court. A course correction by the court, said Krishnan, will safeguard the long-term value of the league.

"The way it was going, it was headed for the catastrophic phase," Krishnan said, adding that sponsorship revenues for franchises could be shaved off by about 15-20% this year. The uncertainty around IPL has also forced some advertisers to pull out of IPL and invest in the on-going ICC T20 World Cup. Chirantan Chandran, senior principal partner at Dentsu Media India, said, "When the uncertainties with IPL reached its peak, our client went ahead to put its kitty in T20 World Cup."

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