After the windfall gains from the IPL media rights, the Board of Control for Cricket in India (BCCI) is being forced into taking some course correction measures. IPL partners Unacademy aren’t extending the partnership, next year. Indian cricket team’s title sponsors Paytm want out and jersey sponsors Byju’s have pending dues.
It's not that Indian cricket has become unattractive overnight. But the underlying theme of leading fintech and edtech unicorns experiencing a cash crunch is a reality that even the
After the windfall gains from the IPL media rights, the Board of Control for Cricket in India (BCCI) is being forced into taking some course correction measures. IPL partners Unacademy aren’t extending the partnership, next year. Indian cricket team’s title sponsors Paytm want out and jersey sponsors Byju’s have pending dues.
It's not that Indian cricket has become unattractive overnight. But the underlying theme of leading fintech and edtech unicorns experiencing a cash crunch is a reality that even the nation’s favourite pastime can’t escape. Amid a global funding crunch, splurge spending has given way to cost curtailment with a greater focus on profitability amongst start-ups – small and big. Half of them are amongst the top 15 advertisers in Indian cricket.
“The last three years with IPL were amazing. Our brand went to another level. I recommend all upcoming brands to partner with IPL. Our focus has changed. Hence the decision to not do IPL next year,” Unacademy founder Gaurav Munjal tweeted, last week. Unacademy top management has been reportedly taking pay cuts and Munjal wants his employees to embrace frugality as a core value. The edtech company was shelling out around ₹40 crores per year for their IPL deal.
Paytm have been BCCI partners since 2015. From picking up title sponsorship rights at ₹2.42 crores per match, they extended the contract in 2019 at ₹3.8 crores per match ( ₹326.8 crores over 4 years). Now, they no longer find the investment sustainable.
"Given the Covid situation, during the last 2 years, Paytm’s many businesses have needed to make dynamic changes in their plans and marketing spends," reads an internal BCCI note.
On July 1, Paytm wrote to the BCCI to allow sub-licensing their contract to Mastercard. That’s likely to be accepted. But with only 9 months left in the existing contract, BCCI will have to hunt for a long-term partner.
Byju’s case is more intriguing. They had extended their jersey contract with the BCCI at a 10 percent incremental value this year, until the 2023 ODI World Cup. But the company is yet to furnish the new bank guarantee and the BCCI, as per their internal note, is staring at overdue payments amounting to ‘Rs. 22,22,76,000 (Net of TDS) March 2022 as of (previous contract term)’ and ‘ ₹86.21 crores (new term)’.
Byju’s denies the same. “We are extremely proud to be the principal sponsor of the Indian cricket team. No outstanding payment is due. We are extending the contract, the payment terms for which will be in compliance with the new contract,” a company spokesperson said.
Those well versed with the contract terms believe Byju’s could be negotiating value. They also have an ongoing partnership with the International Cricket Council (ICC) and FIFA for this year’s World Cup in Qatar.
Many of the sponsorship slots of IPL franchises have also been picked up by start-ups. Besides, when companies enter into sponsorship deals, they also buy corresponding ad spots. If the new-age companies cut ad costs, the impact will also be felt by cricket broadcasters. These companies amount to approximately 15 percent of total ad spending in cricket. That’s around ₹12000 crore across verticals.
“With global factors such as Ukraine war, global economic uncertainty and US interest rate hike impacting liquidity, the global funds who were supporting these companies have become conservative. The days are gone when you would have 10 start-ups and all of them would become unicorns five years down the line,” said Karun Taurani, media and internet research analyst. “Cricket is a compelling property. But we could still be looking at only a 2-3 percent ad revenue growth as opposed to 10-12 percent.”
However, cricket and particularly IPL has overcome several headwinds through the years. Sponsorships and advertising have transitioned seamlessly - an ailing segment bailed out by a new one wanting to benefit from cricket eyeballs. From colas, telecom, smartphones, fantasy gaming to e-commerce, the BCCI has rarely been at the receiving end for too long.
"As businesses evolve, requirements change depending on prevalent environments,” BCCI treasurer Arun Dhumal said. “We provide corporates with a medium to reach out to a larger audience for their brand. At different points of time, people who want to leverage their brands will continue to connect with the BCCI."
Do team India sponsorships face a stiffer challenge from global factors as opposed to the IPL?
“It all depends on what the spectators and fans want. This traction will determine the market value of sponsorships,” another BCCI official said.
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