A worldwide economic downturn is an expression missing from the lexicon of an extravaganza such as the Indian Premier League cricket tournament — outwardly, at least.
When Pepsi forked out Rs 400 to become the main sponsor of IPL — double the amount DLF paid five years ago — it had set off expectations among franchises of attracting greater revenues from sponsors. But team sponsorships appear to be a different matter altogether.
As the league gets set for its sixth season, IPL team franchises are battling with tepid response from firms in their hunt for sponsors.
While Hero recently pulled out as the primary sponsor of Mumbai Indians, Hyderabad SunRisers and Rajasthan Royals are yet to announce their partners. Only teams that extended existing associations such as Delhi Daredevils with Muthoot and Chennai Super Kings with Aircel are sitting pretty, say industry experts.
“Monetisation through on-air ads and event sponsorship is easy,” said Navin Khemka, managing partner at ZenithOptimedia. “But to earn decent returns on investment on teams is difficult, especially when companies are cutting corners.”
Mumbai Indians, Hyderabad SunRisers and Rajasthan Royals have confirmed that they are in the hunt for new sponsors.
Media buyers — the agents who liaise between teams and potential sponsors — predict a tough year for franchises.
“It will take longer to negotiate and close deals this year,” said one media buyer. “Franchises are looking for at least 40% increase in fees, but companies are not willing for a hike of more than 15-20%.”
IPL5 had evoked a muted advertiser response, and team identities seem to be getting diffused. “It is not that we have fewer companies in queue to take over the team sponsorship,” said a senior official from Rajasthan Royals. “But the negotiations are harder and hectic.”
“Brand loyalty, which was the revenue growth enabler for franchisees, seems to be diluting,” he added.
The third edition of IPL has so far been the best in terms of viewership and sponsorships. It is likely that the coming season, which begins on April 3, will pull team profits down.
“Costs have increased due to inflation and the slowdown has led to a lukewarm response from sponsors which may lead to a drop of about 30-40% in revenue for IPL teams,” said one media buyer at media buying agency Madison India on condition of anonymity.