Business Today

Taking guard in a downturn

Pay top dollar for the best, and go easy on the rest—that seemed to be the motto at the player auctions for the second season of the Indian Premier League.

Anusha Subramanian | Print Edition: March 8, 2009

Can the shortest version of the game of cricket— and arguably the most popular— prove an antidote to the downturn blues that have spooked urban India? Or has the game itself become a victim of a sputtering economic engine? Last fortnight, when auctions began for players for the second series of the Indian Premier League (IPL) that’s set to begin from April 10, the signals were mixed. True, Vijay Mallya, the owner of the Royal Challengers, and the India Cementsowned Chennai Super Kings (CSK) were liberal with the purse strings, coughing up record-breaking sums for two English cricketers. But the action down the line wasn’t that electrifying. If you compare the top 10 bids of last year and those of this year, the difference between the two is a cool $2.42 million. Last year, Chris Gayle was the 10th most expensive player, with a bid of $800,000. For the second season, Jesse Ryder, who is at #10, could attract just $160,000. From a pool of 50 cricketers, only 17 were picked, with 33 remaining unsold. In the inaugural season, only two players out of 80 remained unsold (this, however, may not be strictly comparable as the first season was when teams formed for the first time, and teams had little choice but to bid). Clearly, cash conservation was the mantra, with the eight teams in the fray spending just $7.5 million of their total auction kitty of $13.95 million.

But there was money streaming into the IPL from other directions. Raj Kundra, a London-based entrepreneur and business partner of starlet Shilpa Shetty, put up Rs 77 crore for 11.7 per cent stake in last year’s champions, Rajasthan Royals (RR). Says Manoj Badale, Chairman and Joint Owner, RR: “The selling of a stake is a part of our long-term strategic approach to build the Rajasthan Royals into a global sports brand. This investment enhances the off-field commercial potential of a brand that is already recognised.” The franchisees, for their part, are moving full steam ahead with their marketing and promotional plans. Mohit Burman, Co-owner of Kings XI Punjab, says: “We have set aside approximately Rs 3 crore as our marketing budget for the second season (last year’s budget was Rs 4 crore). This season we are more focussed on promoting the team in all our catchment areas such as Himachal Pradesh and J&K.”

Revenue streams are also being maximised. RR and CSK are banking big time on their fan clubs. The latter pockets a membership fee of Rs 1,000 per member to King’s Club, and claims to have 3,000 registered members so far. Similarly, RR, which has set aside $3 million (roughly Rs 15 crore) for marketing, recently launched a five-tier Royals Army fan club membership programme; the programme has five fan categories: Maharaja Club, Captain’s Club, Royal Lions Club, Royal Bugles Club and Young Royals Club, with membership fees ranging between Rs 2,500 and Rs 1.5 lakh.

The Rajasthan Royals have also chalked out extensive licensing and merchandising plans that will cover not just India but also the US, UK and Australia. The team has started selling its merchandise online through its official website. The prices for the various products range between Rs 1,000 and Rs 1 lakh. The company is looking at partnerships in different categories like consumer goods, linen and kids products.

So, will the IPL prove an effective foil to the economic downturn? Lalit Modi, Chairman, IPL, is optimistic. “The inaugural season helped prove that India can sustain a franchise-based model in sports, and quite profitably,” he says. Adds Rakesh Singh, Marketing Head, India Cements: “The first year was too short a period for IPL and for the franchisees. This year, will definitely be better for us. Many advertisers who were not even looking at sports as an avenue are now looking at this league for advertising and sponsorships.”

Indeed, brands like PepsiCo are getting associated with the league for the first time this season. Sandeep Singh Arora, Executive Vice President (Marketing), PepsiCo India, says: “PepsiCo remains extremely interested in activating and being present in IPL and we are currently in discussions with some IPL franchisees regarding possible associations.” Pepsi, say IPL sources, has finalised a tie-up with CSK.

As part of its merchandising initiative, CSK has once again teamed up with its licencees, Reebok and Peter England, for sportswear and formal apparel under the CSK umbrella. Furthermore, the franchisee has roped in new merchandising partners, including Future Group, which would be creating a range of products from toys to casual wear. Aircel continues with the team as a sponsor. Other franchisees are working overtime to tie-in their sponsors. April 10 is some time away, but the big hitting has already begun.

Superstar Shah Rukh Khan and former Indian cricketer Saurav Ganguly have announced a talent hunt to choose new cheerleaders for KKR; the whole process will become a television show called Knights & Angels to be aired on NDTV Imagine. CSK has already stitched deals with STAR Vijay for two reality shows/ talent hunts— Chennai Super Kings Juniors (CSK Juniors) and Chennai Super Kings Cheerleaders (CSK Cheerleaders). CSK captain M.S. Dhoni will be supporting these shows—and no doubt bowling maidens over.

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