IPL 7: Fewer sponsors, more headaches for franchises
A trend is taking shape and it doesn't bode well for the IPL franchises. Sponsors, the lifeblood of any sport, are not the same bubbly self as the controversy-ridden Indian Premier League returns for its seventh edition in less than a week's time.Updated: Apr 10, 2014 09:49 IST
A trend is taking shape and it doesn't bode well for the IPL franchises. Sponsors, the lifeblood of any sport, are not the same bubbly self as the controversy-ridden Indian Premier League returns for its seventh edition in less than a week's time.
Not just the Delhi Daredevils, Kings XI Punjab and newcomers Sunrisers Hyderabad too are struggling to pull megabucks, and all this is showing in their frenetic search for sponsors.
HT has learnt that last-minute marketing strategies are being formulated to get sponsors on board, so that targets are met, though some other teams seem well placed to pull it off.
Delhi Daredevils, for example, are looking for a team sponsor whose name will adorn the cricketers' shirts — both playing and practice — and replicas sold through retail outlets, and various other commodities. Muthoot Group, the sponsor of the Delhi franchise last year, has not signed the deal for this year's IPL.
Besides, Panasonic, which was the 'right- chest' sponsor and Adidas, which sponsored the 'non-lead arm' last year, have not shown interest this year. Only telecom operators Idea and Manyavar have stuck with DD.
Similar tale to tell
Kings XI Punjab and Sunrisers Hyderabad too have similar tales. From 15 sponsors, KXIP are down to just four. And they are not even the main sponsors.
The Sunrisers' sponsorship cupboard looks bare with just five of them — Make My Trip, Live In, Sheltrex, Puma and Red FM. However, its CEO K Shanmugam put up a brave front. "We are in the process of finalising a few sponsors…discussions are on. In a day or two, we will announce our sponsors," says Shanmugam.
The sales pitch of the teams HT accessed shows how various franchises were pitching the sponsorship at a premium despite the current market situation. For team sponsorship, the front chest is being pitched in the range of around Rs 21 crore per year by a franchise.
Similarly, the right chest is being marketed in the range of Rs 8-10 crore per year, while the non-lead arm is being offered at Rs 3.5-4 crore. Besides, sponsors will have to fork out another Rs 50 lakh or more if a team qualifies for the semifinals. But the way the trends are right now, there is room for bargains and negotiations.
In a Flux
"The sponsorship scenario is in a bit of a flux for a couple of reasons. Since the first leg of the tournament is being held in the UAE, sponsors are a bit worried as it is going to affect their marketing activation and promotional activities, which are localised in nature.
"UAE would hardly offer them opportunity for branding and promotional activities. Secondly, the turbulent phase IPL is passing through owing to recent controversies, the sponsors are wary of putting money on an investment where returns look dodgy," said Atul Srivastav, managing partner of Gaames Unlimited, which manages a few current India cricketers and also scouts for sponsors.
A franchise official contacted by HT refused to divulge the details of his team's sponsorship deals, saying it was a "sensitive financial matter". He, however, admitted that the market sentiments were dampening the spirits of the sponsors.
An official of another franchise said, "Every year, expenses are going up; it all adds up to our operational costs. Unless we cover it through sponsorship and gate receipts, it's becoming difficult for us. Besides, we cannot undersell those sponsorship spaces which will affect our bottom line."
On an average, a franchise makes about Rs 30-35 crore by selling various spaces on the jersey — front-right chest, leading and non-leading arm, back, lower jersey, cap and helmet — but given the current scenario, these spaces may not get many takers this time around.
Still prime property
"IPL is still prime property; it will not go unsold. There will be last-minute negotiations. I see a lot of last-minute deals getting finalised with lot of small brands in the cell phone and real estate sectors at a lesser price," said Atul Srivastav.
Meanwhile, Muthoot refused to comment on why it was ending its association with DD, while Panasonic MD, Manish Sharma, said, "The mass interest in IPL has gone down considerably every year, resulting in lowering of the return on investment. As a result, we are likely to spend less on IPL this year.
"Although we will continue to spend on advertising in IPL this year as well, our investment will be directed more towards this year's elections, which have more public leverage. We plan to invest in ad spots on properties featuring the general elections," said Sharma.
Adidas, the official jersey sponsor for Mumbai Indians, did not give an official statement at the time of going to press.
Rajasthan Royals, Mumbai Indians, Chennai Super Kings and Kolkata Knight Riders are sitting pretty with their existing sponsors backing them. "Our sponsors are always with us, and our growth in terms of sponsorship is 15-20% per annum. With the kind of brand that MI has built around its franchise, we have been successful in getting sponsors like Bridgestone and Walt Disney who were not in cricket space before. One more global brand is soon going to get associated with MI for this year," said an MI official.
MI is said to have the highest sponsorship coffer vis-à-vis other franchise. While others make around Rs 35 crore a year, MI rake in around Rs 60-65.
Ditto for Rajasthan Royals. "All our sponsors are back and have reposed faith in our partnership. We are happy with the way our sponsorship deals have gone through for this season," said an RR official on condition of anonymity.