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IPL victory puts KKR in the black

Swati Garg  |  Kolkata 

When Kolkata Knight Riders (KKR) beat two-time defending champion Chennai Super Kings to win their first ever title in the Indian Premier League (IPL) on Sunday night, the Knights not only shed their underachievers’ tag, but also pocketed Rs 10 crore in prize money, ensuring that the T20 cricket franchise was able to make profit this season.

It is estimated KKR spent about Rs 100 crore, including Rs 50 crore for hiring players, this season. Four players — Gautam Gambhir, Jacques Kallis, Sunil Narine and Yusuf Pathan — alone cost KKR Rs 30 crore.

“Had we not won, it would have been difficult to register profits this year, it would be an almost-there situation, but for the champion’s kitty which now puts us firmly in the black,” said a KKR official.

How teams at the IPL earn and spend
Revenue Expenditure 
Ticket sales Cost of hiring players
A percentage of the IPL broadcasting 
rights sold to SET Max and YouTube
shared by BCCI with franchisees
Travelling cost, 
Sponsorship Taxes
A percentage of revenue earned by BCCI  
from title sponsors such as DLF & Karbonn
Source: Industry

A franchise normally earns revenue from ticket sales and sponsorships, besides a cut from the broadcasting rights sold by the Board of Control for Cricket in India.

After the win, KKR said they did not rule out an increase in sponsorship rates for next year. “A lot of existing sponsors have contracts which have a mandatory 10 per cent cost increase clause in-built within the contracts. But we might ask more of new sponsors from next year,” the KKR official said.

KKR, which host teams at the 65,000-capacity Eden Gardens, have 18 sponsors, the highest among all teams. This year, revenue from ticket sales was bolstered by the Rs 35-lakh entertainment tax relaxation that KKR got from the state government. Eight matches were played at Eden Gardens, and KKR sold 40,000 tickets a game at denominations of Rs 300, Rs 700 and Rs 1,500. Also, 10 corporate boxes costing Rs 10 lakh each were sold per game. The cost of a non-jersey partnership with KKR is Rs 60 lakh and a jersey sponsorship is upwards of Rs 1.5 crore. This year, KKR made roughly Rs 35 crore from sponsorships.

KKR’s sponsors include Nokia, Birla Sun Life, DishTV, ITC Vivel, Rose Valley, Royal Stag, Concast Steel, Bisk Farm Biscuits, Coca-Cola, Emta, Manyawar, Freecultr and The Telegraph.

“The association with KKR works especially well for us, given the instant brand recall that the jersey logo creates,” said Gautam Kundu, chairman of city-based Rose Valley Group. Rose Valley paid Rs 5 crore for a place on the KKR jersey.

The KKR official justifies the franchise’s brand value, saying: “North, West and South have more than one team to support. The East, however, has just KKR. This means as a brand, KKR has a larger following than any other team.”

According to brand and image consultancy firm Brand Finance, for any team to gain in brand value, three metrics have to be in place — core product quality or the quality of cricket played, marketing effectiveness, and governance.

While KKR have consistently been a brand to reckon with, given Khan’s star power and marketing prowess, the team has never been known for its performance, making the playoffs for the first time in the past four seasons last year.

“This will change with the win yesterday, ensuring that the KKR franchise’s value gets a major push. Also, the issues around governance and controversies that surrounded KKR till year before last seem to have been sorted out,” said M Unnikrishnan, managing director of Brand Finance.

That performance is a key index to brand value is clear from last year’s team brand rankings. The value of Chennai Super Kings — which won IPL for two consecutive years in 2010 and 2011 and were the finalists this year — was pegged at $75.13 million, making them the most valuable team in the IPL. Mukesh Ambani-owned Mumbai Indians, who have been consistent performers, were placed second, with a cumulative brand value of $63.58 million, while KKR were placed third at $57.576 million.

Ranking and value of each team were bound to change after KKR’s win yesterday.

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First Published: Tue, May 29 2012. 00:27 IST