The Indian ‘Paisa’ League

What began as a fledgling franchise in 2008 is today a world-renowned property with brand value pegged at $3.03 billion in 2013 and the highest at $4.13 billion in 2010.

The Indian Premier League (IPL) - the fallout of an altercation between the board of control for cricket in India (BCCI) and the now-defunct Indian Cricket League (ICL) - has transformed cricket into an enterprise.

An American Appraisal India report - based on a survey of 300 key participants of the IPL ecosystem including team managements, sponsors, advertisers, advertising agencies and broadcasters - found 57 per cent of the respondents saying that their advertising budgets towards IPL had either risen or remained constant over the last five years. Whereas only 14 per cent of the respondents said they had actually cut their ad spends on IPL over the past five years. Over 52 per cent of the respondents also said that franchise-led sponsorships could be between Rs 15 crore to Rs 75 crore per season.

According to the report, Chennai Super Kings and Mumbai Indians have emerged as the most powerful brands valued at $72 million each, followed by Kolkata Knight Riders ($69 million), and Royal Challengers Bangalore ($51 million). Rajasthan Royals ($45 million) and Delhi Daredevils ($40 million) are somewhere in the middle, with Kings XI Punjab ($32 million) and Sunrisers Hyderabad ($25 million) at the bottom of the pile.

While each team is trying to claw its way back with operational improvements, trust flows with stakeholders will eventually determine the health of IPL’s long-term liquidity and profitability. For the current eight teams to sustain, their short-term operational movements need to be aligned with their strategic plans for the tourney.

Further, the report estimates the merchandising valuation of IPL at $40 million, as compared to $2 billion for Spain’s La Liga. Despite having a population which is 25 times larger and an economy which is at least 25 per cent larger than that of Spain, India’s IPL is only two per cent of Spain’s La Liga in terms of merchandising. The reason is piracy and the availability of counterfeit products apart from the fact that the prices of original IPL merchandise are quite high from an Indian point of view.

While there is a huge potential for the merchandising market to grow, the report also predicts it will grow ten-fold by 2020 - from $40 million to $400 million.

Coming to broadcasters in the IPL universe, the tourney is currently in its seventh edition and will continue its long-standing association with Multi Screen Media (MSM), the official broadcaster of IPL, after Sony coughed up nearly $1 billion for a period of 10 years in 2008. Between 2008 and 2012, DLF was the sponsoring partner ($50 million) while from 2013 to 2017; Pepsi won the title sponsorship for a bid of nearly $66.5 million, beating its closest rival in Airtel.

For the seventh edition, MSM’s two channels - Sony Max and Sony Six - have already started their Pepsi IPL campaign. The network is reportedly hiking its ad rates by 15-20 per cent and expects the revenue generated to be anywhere between Rs 900 - Rs 950 crore, despite the reduction in the number of matches played from 76 to 60. The broadcaster is learnt to have floated rates in the range of Rs 4.75- Rs 5 lakh per 10-second spots, and expects to increase them as the tourney gathers momentum.

As far as viewers go, IPL’s reach was pegged at over 200 million viewers in 2013, as against about 163 million viewers in 2012. The total viewership in 2013 has been 2.6 per cent, up from the 2.2 per cent in 2012. Correspondingly, MSM earned Rs 750 crore in ad revenues in 2012 and upped it to Rs 950 crore in 2013, according to FICCI KPMG 2014.

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