CHENNAI: The Indian Premier League’s Governing Council meets this week to review sponsorship deals including title sponsor Vivo’s, in the wake of the border stand-off with China. They have a huge task. With three years remaining in Vivo’s five-year deal, nearly Rs 1,320 crore is at stake as market experts keep monitoring developments.
In 2017, Vivo acquired IPL title rights for Rs 2,199 crore for five years, which comes to Rs 440 crore annually. However, recent developments at the border have forced BCCI and IPL GC to review existing deals.
Santosh N, managing partner of D And P India Advisory Services LLP and external advisor of Duff and Phelps India Pvt Ltd, which has studied brand IPL for six years, has this to say: “I’m not sure how soon BCCI will be looking to get somebody on board, in the scenario of Vivo going out. I’m sure BCCI will be able to find someone, as cricket is the most sought after (sport). But whether it will be a premium to Vivo’s bid amount or at a discount is what we have to see. There will be a challenge in terms of value, but it won’t be difficult to get a replacement.”
Apart from Vivo, IPL has seen Chinese smartphone brands Oppo, Xiaomi, Realme and OnePlus taking up prime ad slots. They spend nearly Rs 500 crore annually. Duff & Phelps in 2019 valued the IPL ecosystem at Rs 47,500 crore.
“The way we estimated is based on the league’s growing potential and the cash flow it’s expected to generate. One season getting cancelled will impact the valuation. However, if the season doesn’t get cancelled and goes ahead without crowds, the impact won’t be much because you are losing Rs 2 crore from ticket sales and may be another Rs 2 crore from FMCG sales, which is nothing for the IPL,” said Santosh.
“Because of the current scenario, IPL could also benefit. People are forced to be indoors and movies are not releasing. So more and more might watch IPL if it happens in September. Viewership numbers might get bigger. Which means, more advertisers will be interested. This is also a scenario,” he added.
Not all are convinced. Sandeep Goyal, chairman of Mumbai-based marketing and communication firm Mogae Media, believes terminating Vivo’s contract won’t be easy just because there is sentiment in favour of boycotting Chinese products.
“In the current economic climate, to look for someone paying Rs 440 crore is a challenge. The substitute could be another mobile brand. But last year, Vivo’s sister brand Oppo walked out of the sponsorship of Indian cricket team. That’s how Byju’s came in and they are owned by Tencent, another Chinese brand. The most visible advertisers are all Chinese. IPL has lost sponsors in the past like Pepsi because of fixing, but this situation is different. You don’t know if IPL will happen, and it won’t be as interactive without fans. So a replacement may not be willing to pay the same amount. It will be theoretically impossible,” he said.