Television

'We are not in talks with anybody to sell stake' : Rajasthan Royals CEO Raghu Iyer

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Indian Premier League (IPL) franchise Rajasthan Royals has had a topsy-turvy journey in the last five years. It had a dream start when it won the inaugural IPL trophy under Shane Warne. Another high point in its five-year journey was when British-born businessman and actress Shilpa Shetty‘s husband Raj Kundra bought 11.7 per cent stake for $16.8 million, valuing the franchise at $140 million.

Just when everything was going hunky dory, the BCCI threw a bombshell by terminating its franchise contract with Rajasthan Royals for breach of agreement. That was followed by a prolonged legal battle that ended in the courts reinstating the franchise in the IPL. That‘s not the end of it. The company‘s Foreign Direct Investment (FDI) was rejected by FIPB several times. Besides, it was under the scanner of government agencies for alleged Fema violations.

However, Rajasthan Royals has put all that behind it and is now focused on building a strong sporting franchisee. Rajasthan Royals CEO Raghu Iyer believes that the best way to do this is by playing its own brand of cricket so that a fan loyalty is built over the years.

In an interview with Indiantelevision.com‘s Ashwin Pinto, Iyer talks about the challenges that IPL franchises face and how Rajasthan Royals can grow to the next level.

Excerpts:

Q. The Rajasthan Royals franchise was bought for $67 million in 2008. What would be its estimated worth today?



A. I don’t know what it would be valued at. But there are figures varying from $150-200 million.

Q. Are the promoters considering selling stake?



A. There are no talks with anybody at this stage. We are focused on delivering a very good product.

Q. There have been allegations about lack of adequate corporate governance and transparency. Do you feel there is scope for improvement?



A. If you are asking whether we lack in corporate governance, I would completely disagree. I would say that we were probably the only guys who went out and voluntarily made disclosures, including when we applied to the FIPB. Corporate governance is top priority for us and we would like to believe that we have ticked that in the box.

There might have been some procedural misses here and there, which happens in any business. This is something that we want to address. When income tax and other government authorities ask questions, then you realise that you might have missed a couple of things here and there. We are being advised by top professionals.

Q. Is it fair to say that the BCCI would not have terminated the franchise had there been more transparency?



A. I would like to believe that we were transparent and so were the BCCI. The reason that the whole thing came up was something I don’t want to comment on as it is subjudice.

‘There will be some revenue growth this year but not exponential. Though more brands are coming in for sponsorship opportunities, their outlay is not as high as expected‘

Q. The enforcement directorate has slapped a Rs 1 billion fine on the franchise. Have you appealed against this decision?



A. Yes! We have appealed to a tribunal in Delhi.

Q. What is the gameplan to grow the franchise’s brand value going forward?



A. You have to focus on the product to grow the brand value. The quality of cricket the team plays is your product. We have won only three or four less games than the Chennai SuperKings.

As long as you keep playing cricket well, the brand value will take care of itself. Obviously you add to that different things like licensing and merchandising.

Q. What sort of revenue growth you expect this year?



A. There will be some growth but not exponential. This will be impacted by the slowdown. The key is to go out and look for far more opportunities and not wait for them to knock on your door. You also need to be astute in terms of how you spend. That is what the franchises are trying to do.

Q. What impact is the economic slowdown going to have in terms of revenue generation for the IPL?



A. I would be lying if I said that it has not had an impact. There are more brands coming in for sponsorship opportunities. We have 15 sponsors and partners, including local brands like the State Bank of Jaipur and Bikaner. But the outlay the sponsors are putting in is not as high as expected. Earlier if a deal with a sponsor was worth say Rs 150 million, will he renew it for Rs 200 million? Probably not! But then you will get five smaller local guys who are each willing to pay Rs 10 million. So you will have to look at playing the volume game.

Q. Is the situation as bad as 2009 when revenue fell by over 10 per cent for franchises?



A. No! 2009 was a different situation. There was a complete global crisis going on. Currently that is not the case.

Q. Who are the sponsors that are on board?



A. We have prided ourselves on having a team that delivers value to sponsors. The only way that you can judge whether that is true or not is to see if sponsors keep coming back. The top notch brands have kept coming back like Ultratech (which remains the lead sponsor), Supertek, Garnier, Valvoline and Tata Consultancy Services.

We ensure that what sponsors and partners want out of the IPL are met. We play our part in that whole thing. We have a fantastic client servicing team that ensures that this happens. We offer innovative products like investing in digital content. You have to give sponsors more value.

Q. Could you talk about the YouTube initiative?



A. The YouTube channel of ours has clips and behind the scenes stuff that cricketers do. Fans find this exciting. Is there a way in which sponsors can tap into that and do something innovative? Yes! Everybody acknowledges that digital will grow and be the medium of the future. Digital allows you to do different things in a cost effective manner.

Q. What are the licensing and merchandising efforts made this year?



A. Besides flags, T-shirts and bells and whistles, we are looking at an innovative merchandising option. This is about grassroots Rajasthan. Licensing and merchandising is a long term play. It takes four to five years and will depend on making sure that there is year round visibility for the franchise. Once that happens, licensing and merchandising will take off.

Q. In terms of marketing, there doesn‘t seem to be much activity till two weeks before the IPL starts. Is two weeks enough of a time frame to generate fan interest?



A. As a call to action, two to three weeks is enough. People know about the IPL already.

We also look at innovative opportunities that come our way. Earlier this year we associated with the Jaipur Literary Festival and organised matches there. When important events happen in your city, you need to find a way to participate in them. But for focused marketing, two to three weeks of activity is enough.

Q. Reports indicate that the IPL franchises are increasing ticket prices. Isn‘t this tricky given the economic slowdown?



A. We haven’t increased the basic ticket prices. The hospitality prices have gone up. But we have enhanced the hospitality product offering so that the viewing experience is much better. We are negotiating with a five-star hotel for different kinds of food.

Q. Are the Rajasthan Royals being remembered as a brand having famous faces like Shane Watson?



A. The loyalty factor from our perspective is to ensure that fans remember the brand of cricket that we play. We have achieved this. We remain the underdog team but we have wooed fans by the quality of cricket we play. Hopefully, retention of a few players will be allowed.

Q. Is it a good idea to keep having auctions every few years?



A. There may be some confusion about who plays for whom, but it will even out over time. The key is that the brand of cricket that the different IPL franchises play has to be distinct. So the teams that are selected will reflect the brand of cricket played by that franchise.

You need auctions so that the league remains competitive. Team composition strategies have to be built to reflect the team personality. There are also transfer windows which ensure that gaps can be filled.

Q. The IPL will have a new team owned by a television media company. What impact will this have?



A. It is a major development. When they (Sun TV) go out and sell sponsorships, there will be cross synergies that they can offer.

From the league’s perspective, it is cool that franchises like this will use their platform to advertise their team. It means more visibility for the IPL. The challenge, though, is that the Hyderabad team is still associated with ‘Deccan‘. So a complete re-branding exercise will have to be done by Sun TV.

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