Dream11 grabbed the title sponsorship for the Indian Premier League (IPL) 2020 days after the Board of Control for Cricket in India (BCCI) and Chinese smartphone-maker Vivo suspended their contract. However, the deal may have come at a price for BCCI as the fantasy cricket league platform won the bid for Rs 222 crore, as against Rs 440 crore per year under the agreement with Vivo. The amount is just half of what the Chinese company was offering to the richest cricket board in the world.Vivo has a five-year commitment of Rs 2,199 crore.
After the suspension of contract with Vivo earlier, BCCI president Sourav Ganguly had refused to acknowledge it as a financial crisis. "I wouldn't call it a financial crisis. It is just a little bit of a blip," Ganguly had said. "BCCI, it's a very strong foundation - the game, the players, the administrators in the past have made this game so strong that BCCI is able to handle all these blips," he had also said.
Can BCCI or IPL franchises afford this?
Franchises share nearly 60 per cent of the fee generated out of title sponsorship. Nearly Rs 30 crore is earned from the contract by each of the franchises. Now, with this amount falling to half, especially at a time when their other revenue sources - such as gate revenue - don't exist (IPL 2020 will happen in UAE and will not be open to spectators), the situation can be a bit tricky for them. Franchises generate different amounts through gate revenues. Mumbai Indians, for instance, makes nearly Rs 32 crore, while Kings XI Punjab makes around Rs 15 crore.
A few days back, founder of Nimbus Communications, Harish Thawani, had told BusinessToday.In: "I don't expect the replacement sponsor to pay more than one-fifth of the current price."
"The loss per team will be in the region of Rs 25-30 crore, which will bring them dangerously close to break-even," Thawani had added.
The franchises will also have to take into account additional costs of moving their respective teams to UAE, where this year's IPL is being held. This could cost them an additional Rs 15-20 crore. So, the revenue will come down to nearly Rs 215 crore for an average team earning a revenue of Rs 260 crore.
Similarly, Hitesh Gossain, founder of sponsorship platform Onspon, had said: "They (BCCI) have to offer freebies such as getting marquee players to endorse the potential title sponsor's brands and so on. Despite doing all that, BCCI will be lucky if they manage to garner even half of what Vivo paid them." And, the BCCI has managed to do exactly the same.