More bad news for the Indian Premier League as brand valuation
of the cash-rich league has fallen further to $2.92 billion
and is in the striking distance of falling to the first year's
level of $2 billion, according to latest study from the brand
valuation firm Brand Finance.
IPL brand, as a single entity including all the stakeholders,
was valued at $4.13 billion in 2010, when the tournament was
at its peak with former chairman Lalit Modi at the helm.
the controversy involving Modi and former Minister of State
for External Affairs Shashi Tharoor around the now defunct
Kochi franchise which led to unceremonious exit of the former
IPL chairman and a multiple agency probe into alleged financial
frauds in the tourney further deteriorated the valuation of
controversies eroded the IPL's long-term brand value by $460
million which was valued at $3.67 billion last year when the
study was conducted.
latest round of study will certainly ring alarm bells for
the Board of Control for Cricket in India (BCCI) which will
be forced to take corrective measures, particularly in the
wake of a sting operation by a news channel which blew the
lid over spot fixing menace in the league and other unlawful
transactions between the IPL franchises and players.
seemingly never ending series of governance and transparency
lapses have contributed to the rapidly declining brand value
of IPL. By brand value, we mean the commercial sustainability
of IPL or the value in the long run that this iconic property
could deliver for all stakeholders. On a fairly regular basis
stakeholder relationships and the 'Trust Flows' between IPL
and its partners have got impaired," explained Brand
Finance Global Strategy Director M Unni Krishnan.
latest report shows that $1 billion of cash flows have dried
up as a result of this and it is still diminishing. It will
not be too long before which IPL would have regressed to its
benchmark value of $2 billion in 2009, putting the whole ecosystem
and the value creation of the franchisees under intense pressure.
The proverbial Golden Goose is being systematically gutted."
it's not just the BCCI which had to bear the brunt of off-field
controversies the nine IPL franchises as the second biggest
stakeholders in the IPL also have nothing to cheer about as
their brand valuation has plummeted by at least 15-20 per
cent across the board.
brand valuation of last year's table topper Mumbai Indians
has shrunk to $48.21 million from $57.13 million last year,
while the brand valuation of India Cements-owned Chennai Super
Kings, which had second best valuation, dwindled by $10.09
million to $45.28 million.
Vijay Mallya-owned Royal Challengers Bangalore, which had
a valuation of $47.58 million, has dropped to $41.15 million.
Shah Rukh Khan owned Kolkata Knight Rider has been valued
at $39.03 million, compared to a $46 million in the year before
Finance noted, "While the core product asset and its
innovative game format continues to draw in record crowds
to the ground, IPL's owner needs to wake up to the larger
stakeholder ecosystem meltdown which is happening due to the
conduct of the organization and its decision making process.
"It might be tempting for the owners to wish away all
the ominous signs and take comfort under the blanket of business-as-usual.
This is no longer an option as IPL's value is steadily diminishing
and it will not be too long before which it will hit the $2
billion rock bottom valuation of 2009."
brand valuation has cautioned the IPL franchises to become
more proactive and shape the governance process of the tournament,
which is currently run by the BCCI with franchises having
little say in the running of the league.
the commercial sustainability of the pivotal franchisee stakeholders
who have already crossed five years of operations is coming
under intense pressure. The revenue sharing terms from central
pool of IPL will change from the current year progressively
decreasing for the next five years.
only another five years left to make something of their significant
investments, the franchisee owners must proactively choose
to salvage the league and ensure that its governance systems
are worthy of IPL's true potential. They must become active
participants and shape the governance processes of the league
rather than being passive observers as they have the most
Finance has valued the 'brand' IPL, using the Royalty Relief
methodology, which is based on the notion that a brand holding
company owns the brand and licenses it to an operating company.
The notional price paid by the operating company to the brand
company is expressed as a royalty rate and the NPV of all
forecast royalties represents the value of the brand to the