interview with Rajasthan Royals CEO Raghu Iyer
concrete offer has come from Jain Group'
on 3 May 2012
Royals recently grabbed media attention for a reported
$200 million offer from Kolkata-based Jain Group of
Industries to acquire majority stake. The deal failed
to fructify and the Indian Premier League (IPL) franchise
is busy working out its future growth plans.
controversies over shareholding issues, Rajasthan Royals
has furiously pursued its low cost model and is one
among the few franchises who have broken even. It has
kept its costs under control even as revenue from central
pool and team sponsorship has grown year-on-year.
being profitable, the franchise has had its fair share
of challenges, the biggest one being the termination
of franchise agreement by the BCCI. While the franchise
was reinstated into the IPL after winning the legal
battle, the arbitration with the BCCI is still on.
In an interview with Indiantelevision.com's Ashwin
Pinto, Rajasthan Royals CEO Raghu Iyer shares the
franchise's journey and its plans to become a successful
Q. Is it true that Rajasthan Royals was offered $200
million for diluting majority stake?Are you now waiting
for the BCCI's permission before cashing out?
Many offers keep coming our way. Interested parties
come and talk to franchise owners. One of them was from
the Jain Group, but it is not on the table anymore.
So far no concrete offer has been made. We are not waiting
for the BCCIs permission to sell the franchise.
Q. Has Rajasthan Royals broken even?
We have. We run a tight ship and are in the black.
We have not gone berserk on buying players, which is
a big cost area. You need to spend only where it is
Q. Does the arbitration process with the BCCI make it
harder to plan long term?
No, the arbitration process continues. Our operational
business also moves along.
Q. Are Lachlan Murdoch and Suresh Chellaram silent investors
or are they active in the team's functioning and operations?
We are a professionally managed franchise and owners
dont get into day to day activities.
seldom does a property come and take over the entire
playing field. The IPL has changed the business
of sport. It is one of the largest brands that India
has created and is one of the largest sporting brands
Q. What impact has the IPL had on the business of cricket
and sports marketing?
Very seldom does a property come and take over the
entire playing field. The IPL has changed the business
of sport. It is one of the largest brands that India
has created and is one of the largest sporting brands
globally. If you look at the various stakeholders, everybody
has gained significantly from it.
most important part is that the domestic cricketers
have a platform to perform and also an opportunity to
earn a very decent living. You can earn between Rs 1-3
million which is a decent amount of money for somebody
who five years back would have struggled to make good
money. Next comes the broadcaster Max who is very happy
and has really raked in the moolah. Sponsors have been
happy like DLF.
franchisees bought into the league and did not think
that it would grow so much. The growth has been helped
by the investment that each franchisee has put in. The
paying public are also happy. One thing that is significant
for this years IPL is that all the stadiums are
pretty much full. Our home matches have been sold out.
Barring one odd match here and there, most matches are
Q. But the ratings this year are showing a downward
trend. Is this because the IPL has lost some of its
novelty sheen and matured as a property?
I wouldnt call it a downward trend. The cumulative
reach has plateaued at the 140 million level. In terms
of ratings, even the average of 3.6 is a success. Name
one property on television that delivers this rating
day in and day out - whether it is at 4 pm or 8 pm.
Of course, if you compare it to the initial years where
the IPL managed a 4.8 rating, it is low. I will give
you the example of KBC which launched with a rating
of 20 and then settled down at a rating of 5-6. Even
soaps like Kahaani had a rating of 10 and then settled
wouldnt say that the IPL has matured as other
leagues have been around for 40-50 years. The IPL is
still a baby. The fact of the matter is that with so
many ups and downs, it is still delivering ratings and
advertisers are coming in for the teams, Max (the official
broadcaster) and the BCCI. This shows that the IPL is
heading in the right direction.
In hindsight was adding two more teams a possible mistake
as a longer tournament means increasing the danger of
I dont think that there is a viewer fatigue at
play. Fans are flocking to the stadiums for tickets.
A rating of 3.5 is not fatigue. There are other factors
- perhaps, there is fragmentation of media. And it is
not that ratings have dropped drastically - it is a
marginal drop in the initial period. The number of close
matches has increased and if you observe the buzz, people
are following the league.
Q. Do you feel that it might be a mistake to hold an
auction every few years which leads to confusion among
fans regarding who is playing in their team?
I wouldnt call it a mistake. Having an auction
is so that the teams have an even playing field. The
idea of the auction and a salary cap was that all the
franchises taking part would have an equal opportunity
to pick up players and build decent teams. In order
to address viewer confusion, the IPL introduced player
retention. As a franchise what we would want is for
the fans to remember Rajasthan Royals for the brand
of cricket that we play.
is the challenge that is not unique to us. It is present
for all teams. Our motto is find a way to win from anywhere.
We did this under Shane Warne. This character was shown
in the match against the Deccan Chargers when we chased
down an almost impossible score. We want fans to remember
our brand of cricket rather than this being Shane Warnes
team or Rahul Dravids team.
underdog story was something that people identified
with. People thought of us as underdogs. We have built
on this story. We have romanticised the story of us
winning from nowhere. Over the last four years from
research, we realised that fans remember that we have
the X factor that is mercurial at times and can surprise
the opposition. This is something we want to build on.
Is it fair to say that Chennai and Mumbai are at an
advantage in terms of fan following because they have
managed to retain the nucleus of their sides?
These teams along with Bangalore are at an advantage
due to the cities. The people in those cities are loyal
and passionate about their team and this is evident
from how the local film industries are passionate about
their team. The fans there are more loyal than the fans
in some of the other cities. Player retention was allowed
to all the teams. Some franchises chose to retain. We
chose to retain Warne
and Watson as we felt that those were the two players
around which the Rajasthan Royals name was pretty synonymous
Does the IPL Governing Council need a franchise representative?
would be nice if the IPL governing council had franchise
representatives. Having said that, the IPL has interactive
workshops with the franchises. As long as the IPL Governing
council is addressing our problems, it is fine. The
IPL makes it a point to ensure that franchises points
One thing that is plaguing the IPL is the lack of fan
engagement activation being done by franchisees during
the off season. It is just about two months and then
it is forgotten. Why isn't more being done
in this regard?
This issue has been brought up in the workshops.
To be fair to the IPL, they have taken cognizance of
this and have promised to address this. One challenge
is the lack of availability of players. There is the
Champions Twenty20 League but the franchises who have
not qualified have to think of interesting things to
keep their brand alive. We tied up with a school in
Jaipur and ran a school tournament in November.
in January we tied up with the Jaipur Marathon. Ideally
it would be great if we could have Rajasthan Royals
B and C teams playing cricket. This would keep the younger
boys well oiled. Bit cricketers have commitments. They
either play in the Ranji Trophy, Duleep trophy or the
national side. It is not an IPL issue; it is a cricket
issue. Franchises try to get around this. Delhi Daredevils
has a soccer tournament. Kings XI Punjab does a talent
Q. What marketing initiatives have the Rajasthan Royals
been doing to boost fan loyalty this season?
We started off with Rahul Dravid as the captain.
Once he retired, his brand value shot up to a different
level. We piggy backed on this to some extent. Locally
in Rajasthan we did on-ground activities. The aim was
for the fans to meet and greet players. We also had
a huge bunch of local Rajasthan players in the team
which was not there earlier like Pankaj Singh and Ashok
Maneria. Along with Dravid, we took them to hangouts
like malls where they could meet fans.
terms of above the line we always look at support from
our sponsors. There is an HDFC ad which is about the
values that Rajasthan Royals brings to the table. It
is about promoting youth, it is about Dravid increasing
the challenges to the youth within the team. It is about
how the youngsters rise to the challenge. We are a team
that promotes youngsters. We have 19 partners, up from
17 last season. Each one activates it in a different
manner. TCS is doing a different activation for instance.
Q. What was the brief given to FoxyMoron?
Social media is growing in importance. All franchises
have focussed on this area this season. This is the
best way to keep in touch with fans and get responses.
Post the player auctions, we got fan responses about
whether they were happy or not happy with our picks.
Post the sale of Ross Taylor, some fans were disappointed
and wrote in.
are number four among IPL teams in terms of social media.
So for a Mumbaiite if the first most popular team is
Mumbai Indians, the second is Rajasthan Royals. FoxyMorons
role is to ensure that content remains fresh.
Q. Has this been a challenging season in terms of mopping
up revenues due to the economic slowdown?
We have a hard working team and have managed good
results. We have got a 15 per cent hike in sponsorship
revenue. To be honest, it did take some amount of selling
to get in the sponsors. We have 19 partners brands on
board including Ultratech, Puma, Pepsi, and HDFC Life
who have come back as sponsors. There was a question
mark initially about how good the IPL would be after
last year. But this year we are happy about how things
have gone so far.
Q. How do you break through the clutter to offer maximum
returns to sponsors?
Creative initiatives come from the clients as they
want to break clutter in their category. For example,
Ultratech Cement is with us and in their category there
is only one company associated with another franchise
in a smaller manner. In life insurance, HDFC Life is
with us and I dont see any brand in that category
in the IPL. They take the trouble to do some really
good advertising. Clients are with
us not just as advertisers but also to gratify their
sales force and distributors.
important thing is that four local brands have tied
up with us which is something that was not there last
year. This shows the penetration that the IPL and Rajasthan
Royals give. Bikajee is with us as a snack partner and
it was a matter of prestige for them to tie up with
us. They are doing good stuff in the interiors of Rajasthan
which will in turn grow our brand.
Q. What is the split in the local revenue streams?
The trading window is starting to generate good
revenue. It can become a significant area if teams look
at this in a serious manner. Ticketing has been fantastic.
Sponsorship, though, accounts for 60 per cent of revenue,
followed by ticketing. Licensing and merchandising is
the item that should show exponential growth this area.
It is waiting to explode. I dont think that it
has done that for any franchise so far. To go back to
your earlier question on how to keep the brand alive
throughout the year, this is it: L&M has to come
What is the split between central and local revenue
and by when will local revenue dominate?
55 per cent of our revenue comes from the central
pool. The key is licensing and merchandising. Once that
takes off, then local revenue will go past what we make
from the central pool. The healthy share of television
revenue will hopefully still be there. It will take
four years for licensing and merchandising to grow.
Q. What are the plans in terms of growing licensing
The first plan is to keep the franchise brand alive
across the year because if you sell merchandise for
just two months, then it will not work. It has to be
available for at least 10 months in a year. The second
issue is to make merchandise more affordable.
come out with Jerseys for Rs 800-1000. I dont
think that Indians can afford this. It has to come down
to Rs 200. For the next season, we want to tie up with
a merchandise partner. Puma has been our merchandise
partner and they have been pushing our brand, but the
challenge is to penetrate into the interiors of the
market to ensure that merchandise is sold.
are different reasons why franchises have not turned
licensing and merchandising into a serious revenue stream
so far. In the first year, nobody knew about the IPL
and in the second edition, the IPL went to South Africa.
This is the first year where franchises have been able
to sit down properly and think about how they want to
go about things. Licensing and merchandising is a long
Q. Have you approached ticketing and hospitality in
a different manner this time?
We brought down the ticket prices starting at Rs
200 for stands that are price sensitive. Some of the
hospitality tickets are at Rs. 4000-5000 compared to
previous years when it was only Rs 30,000-40,000. For
the first four matches, we really stripped it down.
We needed to see what the off take would be. We have
Q. After this year, central revenue contracts (like
DLF's deal) come to an end. How do you see the BCCI
faring in terms of stitching together new deals with
more value, given that viewership has fallen?
The IPL is a unique property and platform. It is
something that people will be willing to pay a premium.
I dont see the BCCI not being able to get in sponsors
at the value that they are forecasting.
Q. Champions Twenty20 League doesn't seem to be going
anywhere in terms of viewer interest despite getting
Bollywood stars to promote it. What is the reason?
It will take some more time to deliver as far as
ratings are concerned. The quality of cricket is excellent.
They will get in ratings when the same foreign teams
play in it more often.
the local audience will identify with those teams. One
team that will get a big fan following is Trinidad and
Tobago. They have been coming and doing pretty well.
This season will be their third season. If a team comes
in three to four times, fan following will go beyond
the IPL teams.
for Executive Dossier Archives