Rajasthan 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.

Amid 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.

Despite 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 sporting franchise.

Excerpts:

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 BCCI’s 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 necessary.

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 don’t get into day to day activities.

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.

The 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.

The 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 year’s 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 full.

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 wouldn’t 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 down.

I wouldn’t 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.

Q. In hindsight was adding two more teams a possible mistake as a longer tournament means increasing the danger of viewer fatigue? 
I don’t 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 wouldn’t 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.

That 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 Warne’s team or Rahul Dravid’s team.

The 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.

Q. 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 with.

Q. Does the IPL Governing Council need a franchise representative?
It 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 are addressed.

Q. 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.

Then 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. KingsXI Punjab does a talent hunt.

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.

In 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.

We are number four among IPL teams in terms of social media. So for a Mumbaiite if the first most popular team isMumbai Indians, the second is Rajasthan Royals. FoxyMoron’s 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 don’t 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.

Another 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 don’t 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 into play.

Q. 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 and merchandising?
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.

Teams come out with Jerseys for Rs 800-1000. I don’t 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.

There 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 term play.

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 done well.

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 don’t 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.

Then 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.