The never-ending series of governance and transparency lapses have contributed to the rapidly declining brand value of the IPL
Packed stadiums, close finishes and a brand new winning team owned by the country’s biggest movie star – the fifth edition of the Indian Premier League (IPL) was all these and more. Yet, brand IPL has taken a few hard knocks following a series of controversies. Result: decline of ratings and advertiser’s interest.
IPL, which was once considered an equivalent of Superbowl — an advertisers’ delight — has finally given everyone financially associated with the event a reality check. “IPL is essentially two things — cricket and content. Going ahead, one has to reduce the distraction around sport. It is a sports league, and banking too much on entertainment is a very short-term strategy as it fades quickly. You just have to focus on making the cricket entertaining. Adding glamour just doesn’t prop up the brand in the long run,” says Santosh Desai, CEO Future Brands.
Off-field controversies are nothing new to sporting leagues. Big sports leagues — the NFL, the NBA and the EPL — deal with such stuff all the time.
|IPL BRAND VALUATIONS|
Value ($ bn)
|Source: Brand Finance|
But the punishments are stringent and there is an anti-corruption team which looks at proper governance within the league. For instance, when football authorities and investigators found that Italian club Juventus was involved in match-fixing, the club was stripped of its titles and relegated to lower divisions.
|FIFTH SEASON BLUES|
|IPL 1- 2008||4.81||102.2|
|IPL 2 -2009||4.17||122.7|
|IPL 3- 2010||4.65||143.6|
|IPL 4 -2011||3.39||160.9|
|IPL 5- 2012||3.27||159|
|Market : All India, TG : CS4+
Source: TAM Sports - for first 68 matches
“The seemingly never-ending series of governance and transparency lapses have contributed to the rapidly declining brand value of the IPL. It will not be too long before the IPL would have regressed to its benchmark value of $2 billion in 2009, putting the whole ecosystem and value creation of franchises under pressure,” says Unni Krishnan, global strategy director, Brand Finance Plc.
The recently released Brand Finance report pegs the current brand value of the IPL at $2.92 billion (around Rs 16,162.5 crore), a drop of 29.29 per cent (in dollar terms) over its peak of $4.13 billion in 2010 (around Rs 19,675.3 crore then). Last year, IPL’s brand value was down to $3.67 billion (around Rs 16,632.4 crore then).
Sports marketing agents and brand experts also say if the Board of Control for Cricket in India (BCCI) wants IPL to be in the league of EPL, it just has to run like one. “By having auctions every year and inter-changing players, loyalties are lost. Brands associated with the league feel it is expensive. The teams as well take long time to build their own brands and fan-base,” says Desai.
In addition buying new players every year puts financial strain on the franchisee, making the league expensive and unviable.
Major controversies surrounding IPL
Kochi Tuskers hit the headlines following a spat on Twitter between the then IPL boss Lalit Modi, and Shashi Tharoor, then a Union minister, over ownership of the team. BCCI suspends Modi on alleged acts of misdemeanours and issues a show-cause notice. The Enforcement Directorate is looking into corruption charges and violation of the Foreign Exchange Management Act against Modi
BCCI terminates contract with Rajasthan Royals and Kings XI Punjab for breach of contracts; asks Kochi for clear ownership structure.
After several warnings, BCCI terminates Kochi Tuskers franchise
Sahara withdraws from Pune Warriors' ownership just hours before the players' auction, as its requests regarding players and the number of matches were not accepted by the BCCI. The two-week deadlock ends abruptly.
May 14 ,2012
A leading news channel conducts sting operation and claims that many players have confessed to under-the-table transactions.
May 17, 2012
Mumbai Cricket Association proposes ban on Kolkata Knight Riders co-owner Shah Rukh Khan for five years for misbehaving with its officials
May 18, 2012
Royal Challengers Bangalore’s Luke Pomersbach is accused of molesting a US citizen and beating up her fiancé. Both reached an out-of -court settlement.
However, BCCI puts up a brave face and says when you buy business, one does not want the value to be underwritten in one year. “If someone buys a business for 100 crore, with Rs 10 crore payable every year for the next 10 years, one doesn’t expect to start earning Rs 10 crore in the first year itself. It’s an investment (and) it will appreciate,” says a BCCI official.
BCCI’s modus operandi, however, will be tested next season as most tie-ups and sponsorship are up for renewal. Fresh valuations of the billion-dollar IPL brand and of the nine franchises will eventually determine the power of the BCCI to market its money-spinning property.
Title sponsor DLF and associate sponsor Volkswagen have already indicated to BCCI that they are not interested in renewing their deal. Even in the fifth season, some big sponsors of the past such as LG and Godrej stayed away, and Samsung, Micromax and Canon, among others, cut ad spends. Maxx Mobiles, the mobile handset provider, pulled out as the strategic time-out and official play-off sponsor, with a year’s contract still remaining. The ad rates have been reportedly trimmed. The ad hoc decisions of the council have already negatively impacted the cricketing product and the franchisees.
The manufacturer of some of the most iconic brands is now doing a course correction