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IPL franchises stare at Rs 30 crore revenue loss due to Vivo-BCCI fall out

While the backlash against Chinese brands could be a reason for Vivo backing out, the handset manufacturer is also known to be pushing BCCI for an over 25 per cent reduction in sponsorship fee which didn't go down well with the cricket body

twitter-logoAjita Shashidhar | August 6, 2020 | Updated 16:50 IST
IPL franchises stare at Rs 30 crore revenue loss due to Vivo-BCCI fall out

Who will replace Vivo as the title sponsor of IPL 2020? During COVID times when advertising spends are down by over 60 per cent and broadcasters and other media platforms are forced to resort to offering heavy discounts in order to woo advertisers, getting a title sponsor will be an uphill task for the Board for Control of Cricket in India (BCCI). Vivo pays a massive Rs 440 crore per year to the BCCI for the title sponsorship rights, and industry experts say that the apex cricket body will be lucky even if it manages to get half of what it gets from Vivo. "I don't expect the replacement sponsor to pay more than one-fifth of the current price," says Founder of Nimbus Communications, Harish Thawani.   

The Chinese smartphone manufacturer is known to have given up the IPL title sponsorship rights for a year. While the backlash against 'Made In China' brands could be a reason for Vivo backing out, the handset manufacturer is also known to be pushing BCCI for an over 25 per cent reduction in sponsorship fee which didn't go down well with the cricket body. Can BCCI or the IPL franchises afford this fall out? After all, 60 per cent of the title sponsorship fee is shared by the franchises. Each of the franchises earn around Rs 30 crore from the title sponsorship and losing this revenue is the last thing that the franchises would want, especially at a time when their other revenue sources such as gate revenue is zilch (IPL 2020 will happen in UAE and will not be open to spectators) and team sponsorship having reduced by half. The gate revenue of Mumbai Indians, for instance, is in the region of Rs 32 crore, while a lower rung team such as Kings XI Punjab makes around Rs 15 crore. Similarly, the local sponsorship revenue for the franchises can range anywhere between Rs 20-40 crore.

ALSO READ: Under Swadeshi pressure, Vivo pulls out of IPL title sponsorship

"The loss per team will be in the region of Rs 25-30 crore, which will bring them dangerously close to break-even," explains Thawani. The franchises will also have to incur additional costs of moving their respective teams to UAE which would cost them an additional Rs 15-20 crore. So, if an average team earns a revenue of Rs 260 crore it will come down to around Rs 215 crore.

While the BCCI is supposed to invite fresh bids for title sponsors, Hitesh Gossain, Founder of sponsorship platform Onspon, says that brands usually don't find merit in investing in title sponsorship deals unless it is for the long-term. "Brands invest in title sponsorship to build salience. They would be willing to pay a premium of Rs 400-500 crore per year provided they get the right of extension. In this case, it will be just for a year, therefore BCCI will have to compromise on the value."

ALSO READ: IPL 2020 to be hosted by UAE; to start from Sept 19

The BCCI, says Gossain, will be have to considerably sweeten the deal in order to woo advertisers. "They 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."

Advertising gurus and media planners' imagination is running wild as to who would be the new title sponsor. From ed-tech, ecommerce and gaming companies to FMCG majors such as Amul and Patanjali, everyone is playing the guessing game. In fact, Amul through the lockdown has been an active advertiser and many brand experts zeroed down on Amul as a serious contender. "The India story is very strong now and I expect a strong Indian player such as Amul or Patanjali to make the plunge," says a senior media planner. Amul, however, has always been extremely picky about its media associations. In the last ICC World Cup, for instance, the dairy major chose to advertise on the jerseys of the Afghanistan team and Amul MD, R.S. Sodhi had said that the Indian team jersey was too expensive. "I don't think its worth it in present conditions," says Sodhi, when asked about his interest in the IPL title sponsorship.

ALSO READ: BCCI invites bids for Team India kit sponsorship, merchandising partner rights

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