22 October 2020 last updated at 16:35 GMT
 
Franchises may face big revenue loss without BCCI support: Parth Jindal
Sunday 16 August 2020

MUMBAI : Some team owners in the Indian Premier League (IPL) are bracing for a drop in revenue of up to 30% this year, compared to last year, if the Board of Control of Cricket in India (BCCI) doesn’t compensate them for missing in-stadia spectators. As part of a recent interview with Mint, Parth Jindal, Chairman of the Delhi Capitals IPL team, said that, in the absence of spectators at the live cricket matches and sponsorship deals being renegotiated downwards, franchise owners will face a significant loss in revenue this year
“From a commercial standpoint, with Vivo going out and no fans coming into the stadium, franchisees are waiting for clarity on how much of that amount will be compensated by BCCI. But it’s very likely that a major chunk of each franchise’s losses will get compensated by the BCCI," Jindal told Mint. “There will be a slight commercial impact, but I don’t think more than 10% compared to last year. If the BCCI doesn’t compensate, there will be a significant loss to each franchise, about a 30% drop in revenues. But we do believe the BCCI will do something for the franchisees."
With covid-19 restrictions in place, the BCCI has moved this year’s instalment of the IPL to the United Arab Emirates. The matches will still be played to empty stands, because of which a significant revenue stream - gate receipts – won’t be part of the income pool for franchise owners this year. Earlier this month, Chinese smartphone maker Vivo pulled out of a ₹2,199 crore five-year sponsorship deal with BCCI after a disagreement over a discount in sponsorship fee and the growing local opposition to a Chinese brand bankrolling the tournament.
The BCCI has invited expressions of interest for the title sponsorship of IPL 2020. Mint reported on 12 August that the bids may come at a 20% to 30% discount to Vivo’s offer of ₹439 crore per annum, owing to challenging market conditions. Amazon India, ed-tech platforms Unacademy and Byju’s, gaming firm Dream11, Coco-Cola India and Tata Sons are believed to be in the fray for title sponsorship.
At this point, however, with lower title sponsorship fee and no gate receipts and the added expense of creating a “bio-bubble" for players’ safety, compensation for lost revenue from the BCCI to franchise owners seems unlikely. Brijesh Patel, Chairman of the IPL Governing Council, did not respond to phone calls and text messages from Mint on this question.
The largest revenue stream for IPL comes from the broadcast revenues. Star currently holds the media rights of the IPL, uptill 2022, as part of a ₹16,347.50 crore deal. As the official broadcaster, it pays the BCCI ₹3,269.50 crore per year. Star may see its own revenues during IPL fall if brands are not willing to fork out as much as they used to for primetine slots in previous years.
“From a viewership standpoint, I think this year will be the highest viewership ever (for IPL)," Jindal said. “Everyone’s at home and super frustrated and there’s only a limited amount of Netflix and Hotstar one can watch. This year will be a record year in terms of both TV and digital viewership. There has been a drop in value in sponsorship for the franchisees predominantly because now there is no more meet and greet with the players, there are no free tickets in the stadiums. So that component of the value is coming down. We are renegotiating those, anywhere between 15-20%. The upside is the larger viewership the IPL is likely to garner."
Jindal said that Delhi Capitals has replaced their principal sponsor after the air conditioner manufacturing company Daikin pulled out. The JSW group, where Jindal oversees the paints and cement business and a part of the steel operations, is the new principal sponsor. “JSW got a slight discount over what Daikin was paying because of no ticket sales, no meet and greet. But we’ll be showcasing our steel, cement and paints brands during IPL and we will be advertising also on Star and Hotstar."
“The impact is a lot lesser on the bigger IPL franchises, like Chennai Super Kings and Mumbai Indians who might see their revenue fall by 15%, than the smaller ones, who are likely to see it fall by twice as much," a sports marketing executive and a former franchise manager told Mint on condition of anonymity. “The smaller franchises who haven’t filled up their jersey logos will be impacted the most. Any compensation from the BCCI will depend on who the Vivo replacement is and at what price point they come in. I think the BCCI’s logic is that franchises will still make money from broadcast; I doubt they will look into this request for compensation."
While corporate budgets have been reduced across the board this year in the absence of any consumer demand, the executive said that the jury is still out on whether ad revenues from broadcast will fall. “For IPL, you’re not looking at the entire universe of brands but 60-70 top brands and they will pay a premium because they can afford it. This will include brands like Flipkart, Amazon, e-learning firms which have seen valuations shoot up, they’ll put money into the IPL. Many marketing budgets for the festive season may get re-directed into the IPL."

MUMBAI : Some team owners in the Indian Premier League (IPL) are bracing for a drop in revenue of up to 30% this year, compared to last year, if the Board of Control of Cricket in India (BCCI) doesn’t compensate them for missing in-stadia spectators. As part of a recent interview with Mint, Parth Jindal, Chairman of the Delhi Capitals IPL team, said that, in the absence of spectators at the live cricket matches and sponsorship deals being renegotiated downwards, franchise owners will face a significant loss in revenue this year.

“From a commercial standpoint, with Vivo going out and no fans coming into the stadium, franchisees are waiting for clarity on how much of that amount will be compensated by BCCI. But it’s very likely that a major chunk of each franchise’s losses will get compensated by the BCCI," Jindal told Mint. “There will be a slight commercial impact, but I don’t think more than 10% compared to last year. If the BCCI doesn’t compensate, there will be a significant loss to each franchise, about a 30% drop in revenues. But we do believe the BCCI will do something for the franchisees."

With covid-19 restrictions in place, the BCCI has moved this year’s instalment of the IPL to the United Arab Emirates. The matches will still be played to empty stands, because of which a significant revenue stream - gate receipts – won’t be part of the income pool for franchise owners this year. Earlier this month, Chinese smartphone maker Vivo pulled out of a ₹2,199 crore five-year sponsorship deal with BCCI after a disagreement over a discount in sponsorship fee and the growing local opposition to a Chinese brand bankrolling the tournament.

The BCCI has invited expressions of interest for the title sponsorship of IPL 2020. Mint reported on 12 August that the bids may come at a 20% to 30% discount to Vivo’s offer of ₹439 crore per annum, owing to challenging market conditions. Amazon India, ed-tech platforms Unacademy and Byju’s, gaming firm Dream11, Coco-Cola India and Tata Sons are believed to be in the fray for title sponsorship.

At this point, however, with lower title sponsorship fee and no gate receipts and the added expense of creating a “bio-bubble" for players’ safety, compensation for lost revenue from the BCCI to franchise owners seems unlikely. Brijesh Patel, Chairman of the IPL Governing Council, did not respond to phone calls and text messages from Mint on this question.

The largest revenue stream for IPL comes from the broadcast revenues. Star currently holds the media rights of the IPL, uptill 2022, as part of a ₹16,347.50 crore deal. As the official broadcaster, it pays the BCCI ₹3,269.50 crore per year. Star may see its own revenues during IPL fall if brands are not willing to fork out as much as they used to for primetine slots in previous years.

“From a viewership standpoint, I think this year will be the highest viewership ever (for IPL)," Jindal said. “Everyone’s at home and super frustrated and there’s only a limited amount of Netflix and Hotstar one can watch. This year will be a record year in terms of both TV and digital viewership. There has been a drop in value in sponsorship for the franchisees predominantly because now there is no more meet and greet with the players, there are no free tickets in the stadiums. So that component of the value is coming down. We are renegotiating those, anywhere between 15-20%. The upside is the larger viewership the IPL is likely to garner."

Jindal said that Delhi Capitals has replaced their principal sponsor after the air conditioner manufacturing company Daikin pulled out. The JSW group, where Jindal oversees the paints and cement business and a part of the steel operations, is the new principal sponsor. “JSW got a slight discount over what Daikin was paying because of no ticket sales, no meet and greet. But we’ll be showcasing our steel, cement and paints brands during IPL and we will be advertising also on Star and Hotstar."

“The impact is a lot lesser on the bigger IPL franchises, like Chennai Super Kings and Mumbai Indians who might see their revenue fall by 15%, than the smaller ones, who are likely to see it fall by twice as much," a sports marketing executive and a former franchise manager told Mint on condition of anonymity. “The smaller franchises who haven’t filled up their jersey logos will be impacted the most. Any compensation from the BCCI will depend on who the Vivo replacement is and at what price point they come in. I think the BCCI’s logic is that franchises will still make money from broadcast; I doubt they will look into this request for compensation."

While corporate budgets have been reduced across the board this year in the absence of any consumer demand, the executive said that the jury is still out on whether ad revenues from broadcast will fall. “For IPL, you’re not looking at the entire universe of brands but 60-70 top brands and they will pay a premium because they can afford it. This will include brands like Flipkart, Amazon, e-learning firms which have seen valuations shoot up, they’ll put money into the IPL. Many marketing budgets for the festive season may get re-directed into the IPL."

(Courtesy: Mint)

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