Fantasy sports major Dream 11 has bagged the title sponsorship rights for the 2020 edition of Indian Premier League (IPL) for Rs 220 crore (Vivo had bagged the rights for five-years at Rs 440 crore per year). While Dream 11 is an Indian start-up, a significant stake -- 10-13 per cent, as per the company sources -- is owned by Tencent, a leading technology major from China.
The Board of Control for Cricket in India's (BCCI) association with Dream 11 could yet again rekindle the anti-China sentiments, which had forced Chinese handset manufacturer Vivo to take the tough call of staying away from IPL this year.
The major reason for Vivo's exit from IPL, however, is because of the BCCI not relenting to the mobile manufacturer's demand for a close to 25 per cent reduction in the title sponsorship fee in the wake of the coronavirus pandemic.
"Considering that the BCCI had stated that the bid amount will not be the only consideration, I wish it had lived up to the expectation of avoiding China-backed companies and gone with one of the other companies such as the Tata Group," says Harish Thawani, Former Chairman, Nimbus Sport.
Apart from Dream 11 and Tata Group, other companies including Patanjali, Reliance Jio and Amazon were also in the race, and experts were confident an Indian company would bag the rights.
The BCCI did give the rights to an Indian company but one wonders if it noted that Dream 11 has a Chinese investor that holds a significant stake in the company. "China is back in the race through a backdoor entry," adds former Vice-President of Star Sports, Anirudh Kalia.
With an investment of $100 million, Tencent is known to be the one of the biggest investors in Dream 11. Dream 11 has raised $120-$160 million in five rounds so far.
The latest round of fundraising, according to sources, happened in March this year, which was led by TPG, Advent, Lupa and ChrysCapital. "This round of fundraising gave exits to Kalaari Captial, Multiples and Think Investments. Tencent remains their biggest investor," says a senior industry expert.
Dream 11's Rs 220 crore investment in IPL 2020 is indeed a huge relief to the BCCI and the cricket franchises, which are struggling to make ends meet this season with their sponsorship appetite extremely low amid the coronavirus pandemic.
"The franchises will still lose Rs 10-12 crore of title sponsorship revenue as Dream 11 is paying less than half of what Vivo would have paid," points out Kalia.
He says both the BCCI and the franchises will have to work extremely hard to get local sponsorship and on-ground advertising revenue. "TV advertising itself has dropped, around 4,000 advertisers have abandoned TV. Even though IPL 2020 is expected to have a record growth in viewership it is unlikely to translate into advertising revenue as advertising in the new normal is de-linked from viewership. In such a situation, it will be extremely difficult for the franchises to get ad revenue for their local pool," Kalia explains.
Almost 15-40 per cent of the franchise revenue comes from gate collections, which also has dried up as IPL 2020 will be played in empty stadiums this year.