In the first four years of the IPL, you could not duck the marketing bluster, the advertising blitz, the Bollywood razzmatazz a week before the runaway hit cricket tournament. In the first year, filmstars Akshay Kumar, Hrithik Roshan and Katrina Kaif were cheering fans to watch their heroes. But in its fifth edition, interest from viewers and advertisers is, at best, lukewarm. Advertisers and sponsors, who have stood by IPL till now and paid a heavy premium, are having a rethink.
While MSM is insisting it will not reduce rates, sources reveal that negotiations are on and rates will get hammered for IPL-5. Many companies like Godrej have preferred to stay away from it as they feel the property is overvalued and there was too much clutter for any brand to get visibility. Even a regular like LG, one of the largest sponsors till last year, has pulled out. A company source says the RoI (return on investment) from IPL has been below expectation. At the time of going to press, Samsung, another IPL regular, was still undecided. Says Nikhil Rangnekar, CEO, Spatial Access, a media marketing company, “There is lower demand for IPL inventory this year as compared to last year. In the last four years, rates have been increasing, but this year, rates are going to be lower by 5-10 per cent.” Last year, ad rates were at Rs 5-5.5 lakh per 10-second spots; it could be much less this time. “In the previous years, IPL has sold on its own. Not this year,” adds Shubha George, COO, South Asia, MEC, a leading media agency. Experts say the gap between the IPL TRPs and that of general entertainment channels on TV has narrowed, making IPL less attractive to advertisers.
Even at the franchisee end, things have not been looking too bright. Marketing sources say many teams have been pushed to reduce sponsorship rates by up to 50 per cent. Says a marketer engaged in selling franchisee sponsorships who requested anonymity: “Title sponsorships are being offered at around Rs 8 crore this year against Rs 16-18 crore last year. Even the front chest space on jerseys, one of the most premium spaces, is being sold for as less as Rs 4 crore against Rs 8 crore last year.” The overall finances of teams are still in bad shape with none of them close to breaking even, barring possibly Mumbai Indians and Chennai Super Kings (CSK), who still have a brand value. “Nobody knows what is really happening at the franchisees,” says Rangnekar. “I don’t see any franchisee breaking even before Season 7. According to declared numbers by the teams, no one can make profits now.”
And he is talking of declared numbers; if you consider the amount of money spent behind the scenes, the actual losses could be far worse for the team owners. “We had lost at least Rs 40 crore until the end of last year’s season,” one senior Kings XI Punjab official told Outlook. For bigger teams, losing Rs 20 crore for one year is nothing, says a team official. “They own the players, they lord over everyone on the grounds, they’re in TV and newspapers—and are also able to promote their products. It’s not a big deal.” For smaller teams, though, the notional and actual numbers don’t add up to anything near profitable. A Delhi Daredevils official says that they’re unable to compete with the big teams. “There are loopholes in player spending rules,” he says. “So, when Chennai bought Ravindra Jadeja via a tiebreaker, we learnt that they paid Rs 30 crore. Similarly, Bangalore retained Chris Gayle for a massive sum. They’re clearly not interested in making money from the business.” Charu Sharma, who headed operations for Royal Challengers Bangalore in 2008, says making money from the IPL was never a possibility. “IPL was never going to be a financial success,” he says. “The only possibility of making money from IPL was through gains in valuation.”
Any takers? The 2012 IPL player auction in progress in Bangalore
And that is the game most teams are playing. Brand Finance, a UK-based consultancy, had pegged IPL’s brand worth at $2.01 billion in 2009, $4.13 billion the next year and $3.67 billion in 2011. The brand worth of teams has wildly fluctuated—for instance, Mumbai Indians ($40.80 million) were ranked below Rajasthan Royals ($45.16 million) in 2009. A year later, Mumbai were top of the table at $57.13 million and Rajasthan at bottom with $33.78 million. It has become difficult for teams to get stakeholders into a business which shows no sign of making any money. There were reports that Royals could sell their majority stake to a Calcutta-based businessman for $200 million. However, there have been similar reports of such deals over the last few years—from the Hyderabad, Calcutta, Delhi, Punjab and Rajasthan teams. “The smaller teams are desperate to offload equity, and they’ve been trying that for quite a while now,” says a Rajasthan Royals official. “And it becomes very difficult to sell equity if you’re not a profitable business.” Fact is, the recent issues with former IPL commissioner Lalit Modi, litigation and allegations of money laundering have not helped either. Raj Kundra and Shilpa Shetty did buy an 11.7 per cent stake in Rajasthan Royals for $15.4 million in 2009, but since then, no deal has been struck.
But the tournament itself would need a bigger push when it opens next week. IPL bosses have roped in another SET of superstars—Amitabh Bachchan and Salman Khan—to lure people. If this ploy works and the first few matches garner high TRPs, their gamble may yet pay off. If it doesn’t, many in the IPL ring will have no clue what hit them—something like a bowler feels when Chris Gayle is in full flow.
By Arindam Mukherjee and Rohit Mahajan
They say cricket is a religion in India, but most forget the drawbacks of excess (The Turf Ain’t That Green Anymore, Apr 9). The biggest casualty of too much cricket, masala and otherwise, is not dropping trps, but injuries, fatigue and loss of motivation that bedevil an international cricketer. It leads to important players missing out on important tours, injuries on tours, or just an inability to concentrate on Test cricket with its exacting demands. The results are an embarrassment: eight consecutive Test defeats abroad, 11 losses in odis. Money is understandably important for a cricketer, considering they give their best years to the game, and that when their playing years end, it leaves them relatively young, with a long life ahead. But they also need to draw a line somewhere.
Bal Govind, Noida
Well, in the whole article, the word ‘money’ was mentioned eight times, and ‘brand’ eight times. Guess what? ‘Cricket’ was mentioned once. That pretty much sums it up.
In India, sports is not really a part of our lives. A very small percentage actually play any sport as a part of their routine. At the same time, we have retained a healthy love for any sort of tamasha, especially ones providing cheap thrills. Hence the fascination for IPL. But familiarity breeds contempt, hence the slackening interest.
Rajesh Chary, Mumbai
The IPL, it seems to me, is like the great Indian rope trick which people have now decoded. They have understood the illusion behind it.
Rajneesh Batra, New Delhi
“IPL is like the ‘Great Indian Rope Trick’ which people have now decoded and understood the illusion hidden behind it.”
In India sport is not really part of our lives. A very small % (outside the professional community) actually play sport as a part of their routines. At the same time we have retained our ancestral genes which enjoy a good 'tamasha'. People in the sub continent enjoy Cricket because it offers a lot of drama (sixers and fours and no balls and powerplays) - add sex and bollywood - and it is a potent mixture. So people will watch it. Of course if anyone else can provide a better tamasha, then they'll ditch cricket for munni badnaam hui...
Yesterday there was a thriller of a hockey match in WSH which went into penalties after a last minute equaliser - how many column inches were devoted to it? if you didnt look closely at the newspaper, you would not even be able to find it. But then hockey is hard work, 70 unrelenting minutes of non stop running (no where to hide fat, ageing superstars) - and a bit simple as well - no tamasha to keep the masses entertained...
Well, In the whole of the article Money was mentioned 8 times, Brand 8 times and guess what? what were we talking about? oh yeah !!! cricket, this was mentioned Once. That pretty much sums it up
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