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The game's biggest year ever

T.V. Mahalingam & Anusha Subramanian     January 24, 2011
For connoisseurs of the game, the last day of the Cape Town Test, January 6, 2011, epitomised what Test cricket is all about. Team India, faced with an insurmountable target, played out for a draw as the South African bowlers led by fire-breathing Dale Steyn hurled short-pitched deliveries at Indian ribcages.

Even as the Indian batsmen ducked and weaved, 8,000 kilometres away, some of their former teammates - Parthiv Patel, Mohammad Kaif, Murali Karthik and Irfan Pathan - walked down a makeshift ramp. It was an event to announce the launch of value retailer Big Bazaar's merchandise for the International Cricket Council or ICC World Cup. The ICC is the game's governing body.

For the 10-minute "appearance" and a 10-yard walk down the elevated platform, the cricketers would have pocketed a couple of lakh rupees each - not a fat sum, considering what cricketers make these days. But barely 48 hours later, on January 8, Delhi Daredevils picked up Irfan Pathan at an auction for the fourth edition of the Indian Premier League or IPL for Rs 8.74 crore. Within a day, the others, too, were picked by various teams for sums varying between $130,000 (Rs 58.5 lakh) and $400,000 (Rs 1.8 crore).

The great Indian cricket tamasha of 2011 kicked off in style for these cricketers. And with back-toback big-ticket tournaments, the ICC World Cup and IPL-4, lined up, it can only get better. Over $1.5 billion worth of commerce is likely to happen around these tournaments, making it the biggest year for cricket ever.

According to analysts, the bulk of this, about $1 billion, will be in the form of sponsorship revenue and TV rights for both tournaments. About Rs 1,000 crore is being spent on refurbishing stadiums in the Indian subcontinent. "In India alone - the World Cup will also be played in Bangladesh and Sri Lanka - the amount spent is Rs 750 crore," says Board of Control for Cricket in India, or BCCI, Secretary N. Srinivasan. "This includes sprucing up of stadia in Chennai (Rs 180 crore), Mumbai (Rs 250 crore), New Delhi (Rs 100 crore) and Kolkata (Rs 60 crore)." A brand new stadium is being built in Nagpur for Rs 100 crore, he adds.

In return, the ICC will pay local cricket boards $750,000, (Rs 3.3 crore), for every match hosted, says Ratnakar Shetty, Tournament Director for the 2011 World Cup. "We expect over a million people to watch matches in stadiums during the World Cup," says Campbell Jamieson, General Manager, ICC. Including IPL, calculations reveal that over Rs 400 crore worth of tickets will be sold between February and July in India alone.

 
Sanjeev Agarwal, Joint CEO, Big Bazaar

We hope to sell a million units of merchandise during the ICC World Cup
Sanjeev Agarwal, Joint CEO, Big Bazaar
Players are also charging a lot more. "Even younger players like Virat Kohli and Suresh Raina are asking for Rs 20 lakh to Rs 30 lakh for a short-term (year-long) brand endorsement deal. They know that with these big tournaments coming up, companies are desperate to add brand ambassadors and shoot commercials," says the CEO of an FMCG company. Industry watchers point out that in 2011 alone Indian players are expected to make upwards of Rs 100 crore in brand endorsements.

Add to this the nearly Rs 500 crore that IPL teams will pay as salaries to players, coaches, consultants, managers and you might think that cricket these days is less about runs and more about the money.

For those keen to ride on the cricket wagon, the sheer scale of the game is the biggest attraction. Consider, for instance, sports merchandising, which has not been a success in India because of high price points. "How many Team India jerseys can you sell when you price a unit at Rs 2,500?" asks an industry watcher.

But that might change with Big Bazaar bagging the contract to be the ICC World Cup's official merchandising partner. "We hope to sell a million units of merchandise during the ICC World Cup," says Sanjeev Agarwal, Joint CEO, Big Bazaar, whose range of World Cup clothing starts at Rs 199.

Also, with the ICC World Cup being broadcast in high definition, or HD, format for the first time ever, electronics companies are expected to launch marketing campaigns to push LCD models. "The LCD TV market is doubling year-on-year anyhow. The cricket season might just add to that growth," says L.K. Gupta, Chief Marketing Officer, LG India. The company, which has a marketing budget of Rs 800 crore, spent just Rs 45 crore to Rs 60 crore around cricket-related events in 2010. "In 2011, we expect to spend Rs 80 crore to Rs 100 crore in marketing and advertising expenses related to cricket," adds Gupta.

Similarly, Castrol India COO Ravi Kirpalani estimates that a fourth of the company's Rs 150-crore marketing budget will be spent on cricket this year. This includes a two-year brand endorsement deal with star batsman Sachin Tendulkar. Even though Castrol officials refuse to comment on the size of the deal, market watchers told BT that Tendulkar would have charged between Rs 8 crore and Rs 12 crore.
 
The World Cup Hoopla
Both Castrol and LG have long-term sponsorship contracts with ICC, which will give them in-stadia visibility until 2015 at ICC events of their choosing, including the ODI World Cup, T20 World Cup, and the Champions Trophy. In fact, the ICC has inked similar long-term sponsorship contracts with 10 companies, including Reliance Communications, Pepsi, Hero Honda, Reebok and MoneyGram. Market watchers point out that the deals, signed in the last three years, vary anywhere between $10 million and $100 million depending on the duration and depth of the engagement. Such contracts, along with television rights for ICC events, which ESPN Star Sports bagged for $1.1 billion for nine years in 2006, form the bulk of ICC'S revenues.

Analysts expect the ICC to pocket Rs 1,500 crore from marketers and TV rights from ESPN Star Sports this year alone. ICC refused to comment on revenues. The World Cup and the IPL together are expected to rake in over Rs 1,500 crore worth of revenues for their respective broadcasters - ESPN Star Sports (ICC World Cup) & SET MAX (IPL), according to Prasanth Kumar, Managing Partner (South Asia) at GroupM Central Trading Group, India's largest media buying entity. If one were to add India's overseas tours of England and the West Indies, that number might swell to Rs 2,000 crore.

In terms of viewership, too, this might be cricket's biggest year. From the time the $3-million opening ceremony of the World Cup kicks off in Dhaka on February 17, cricket is expected to attract the most eyeballs in Indian television ever within a single year. "India has the world's biggest audience for cricket," explains London-based Kevin Alavy, Director, Futures Sports, a sports media research agency. "The World Cup is also being held in India (after 15 years).

And arguably, you have the best team in the world. So a lot of people are likely to watch the World Cup and cricket, in general, this year," adds Alavy. Interestingly, ICC plans to reach out to a billion people through the live broadcast of the Cup across 180 regions. Given these numbers, it is hardly surprising that some of the ICC event sponsors such as Pepsi have also become broadcast sponsors on ESPN Star.

It's not that spots on ESPN for the World Cup are cheap. Those engaged in media buying told BT that a 10-second advertising spot during the World Cup is likely to cost Rs 3.5 lakh; despite that, the channel had sold close to 70 per cent of its inventory until early January. ESPN Star Sports Managing Director Manu Sawhney refuses to talk numbers but argues that the World Cup remains a compelling proposition for advertisers.

"We have signed on Sony and Hero Honda as our presenting sponsors and the likes of Maruti-Suzuki, Nokia, Airtel DTH as associate sponsors , " says Sawhney.

World Cup Vs IPL

Rohit Gupta, President (Network Sales) at Multi Screen Media, or MSM, the company that broadcasts the Sony bouquet of channels, is not too optimistic about the future of ODIs in their current format. Gupta would know as the last two editions of the ICC World Cup were broadcast on SET MAX, an MSM channel. During the last edition, when India exited in the first round of the tournament, advertisers asked for their money back and the issue was settled after the Adver tising Agencies Association of India intervened.

 Not quite cricket

When Kevin Alavy was working in Russia, people asked him: "How come ice hockey is not the most watched game in the world?" Alavy, who heads research at sports media consultancy, Futures Sports, uses this anecdote to explain to Indians who find it hard to believe that cricket does not figure among the most watched sports globally.

"It's because the other fivesixth of the world is watching and playing other sports," explains Alavy. Last year, the FIFA World Cup final was watched by an average live global audience of 329 million people; the Australia-Sri Lanka ICC World Cup 2007 final match was watched by just 11 million, according to Futures Sports research.

The two main reasons for cricket's poor show are that the game is played and followed in fewer countries. "The other reason is that, unlike FIFA, which aims to maximise viewership by selling telecast rights to free-toair channels across the world, ICC sells its rights to pay channels. If FIFA were to do the same thing, only a 100 million average live audience would have watched the FIFA World Cup," says Alavy.


ICC World Cup 2011
It's a point of view most media planners subscribe to. "According to our estimates, the World Cup could attract Rs 600 crore to Rs 650 crore in advertising (spend)," says GroupM's Kumar. He believes that the figure will be higher for the IPL. Media planners reckon that IPL advertising could touch Rs 900 crore - in IPL-3, advertising spend stood at Rs 750 crore.

The World Cup is hamstrung by the fact that in the first month of the tournament India plays just six matches. Even if India makes it to the finals, the Indian team would play just nine matches in a 45-day long tournament. The IPL has a total of 74 matches played over 51 days.

MSM's Gupta also says that IPL's improving reach - 143 million in 2010 from 102 million in 2008 - has helped it tap sponsors and advertisers even six months before the tournament. It even sold spots for the live auction of players at Rs 50,000 per 10 seconds. Videocon and Vodafone have coughed up an estimated Rs 50 crore each as presenting sponsors for IPL-4 while the likes of Samsung Mobile, LG, Hyundai Motors, PepsiCo, Tata Photon, Havells, Cadbury and Godrej have paid roughly Rs 36 crore each to pick up sponsorships.

 INTERVIEW

Haroon Lorgat, Chief Executive, International Cricket Council
Haroon Lorgat
'The World Cup is a multibillion dollar event'

As far as Haroon Lorgat, Chief Executive, International Cricket Council, or ICC, is concerned, the Cricket World Cup is the biggest event in the sport. Lorgat spoke to Kushan Mitra from ICC's headquarters in Dubai. Edited excerpts:

Do you feel global tournaments, such as the World Cup, face a challenge from the IPL?
There is no doubt about the passion that audiences and cricketers feel for the Cricket World Cup.

Some people think that the 50-over format faces challenges, particularly from T20? I think all three formats are viable - One-Day Internationals, Tests and T20. This is why we want to have world championships for all three formats. We are currently in the process of finalising a format for a Test championship in 2013.

How much is the 2011 World Cup worth?
We do not disclose how much we make from commercial deals with partners but, looking at the massive audience, I believe this is a multibillion dollar event.

The One-Day International World Cup will have only 10 teams from 2015, down from the current 14. Doesn't that go against ICC's philosophy of expanding the reach of the sport?
That is true, but we plan to use the T20 format to spread the reach of the sport. From the 2012 T20 World Cup onwards, we will have 16 teams taking part, and will keep increasing the number. There are 105 countries and territories where cricket is played in an organised manner today, double the number from a decade ago.

So by that logic isn't it unfair that the Test playing nations see it as their right to qualify for the ICC tournaments?
We are working on a new qualification system for our tournaments.

Is pay TV the right way to popularise the sport?
Many countries and sporting bodies are choosing pay TV as well. Cricket is the number two global sport, and while we do not compete with FIFA, we believe we have considerable reach, and will expand the popularity of the game.

What will the funds raised from the 2011 World Cup be used for?
We will plough the funds back into cricket.
L.K. Gupta, Chief Marketing Offi cer, LG India
L.K. Gupta
"Over time, ODI viewership has been dropping. In 2003, games involving India got average television viewer ratings, or TVRs, of 13 to 14. In 2007, the same viewership came down to seven to eight TVRs," explains Gupta. "Currently, ODIs have ratings of four TVRs. Non-India matches fall to about 0.6 TVR," adds Gupta indicating that the days of one-dayers are numbered, at least in the current format. "The World Cup traditionally has been the biggest cricketing property. Till 2007, the ODI was the only format of cricket. It was only later that T20 happened.

World Cup prize money: Slow but steady

The growth of World Cup prize money is synonymous with India's rising infl uence in the game.

1979
Pound 10,000 to winners, Pound 4,000 to the runners-up. Winning team in group matches took home just Pound 500 each

Kapil Dev
Kapil Dev
1983
Pound 20,000 to winners, Pound 42,000 overall

1987
Pound 30,000 to winners; winners of group matches got just Pound 1,500

Imran Khan
Imran Khan
1992
A$250,000 was what the winners took home

1999
For the fi rst time, the prize money on offer crosses $1 million

Ricky Ponting
Ricky Ponting
2003
Total prize money pool crosses $5 million, the winner takes home $2 million

2007
Prize money remains the same, but winners take $2.24 million

2011
Prize money pool doubles to $10 million; winners to take home $3 million
So advertisers would wait for the World Cup," adds MSM's Gupta. Now, with the IPL scheduled to begin six days after the World Cup ends, marketers may prefer to place their chips on the more popular 20-20 format. Even the ICC is taking a wait-and-watch stand on the future of the ODI format. "We will let market forces determine the course of the ODI format," an ICC official told BT.

"The IPL is a more proven format and the advertisers are willing to bet huge monies on it. There is better visibility for the brand as it reaches more people and the reach is consistent match after match," says Mahesh Ranka, General Manager, Relay Worldwide, which provides sponsorship consulting and is a part of Starcom MediaVest. Ranka points out that brands like Havells virtually built their visibility on the IPL. "IPL is a big platform, World Cup or no World Cup," says former cricketer Navjot Singh Sidhu. "It is a $4.1-billion brand; it is an industry here to stay," he adds. Ranka also believes that a tournament like the World Cup is too dependent on the Indian team's performance and that advertisers would prefer a safer bet such as the IPL, where interest is broad-based.

ESPN, though, believes that the World Cup continues to be a good property for advertisers. "I think people make a mistake when they say that 'only' 10 countries follow cricket. People are interested in group matches because they want to see who wins what and the permutations and combinations of contests," says ESPN's Sawhney.

Others such as Castrol believe that the international following of the World Cup makes it a better proposition than the IPL, which largely has an Indian following. "South Africa, New Zealand, Australia and the UK are all key markets for Castrol worldwide. The fact that the World Cup is followed in these countries also makes it a good sporting event to be associated with," explains Castrol's Kirpalani.

Either way, the debate about the future of the ODI format and the World Cup will be determined in fewer than three months. Another early ouster for the men in blue will mean curtains for this tournament, which derives 75-80 per cent of its revenues from the Indian subcontinent. However, if Dhoni's team makes it to the finals, Indian cricket's poster boys won't be the only ones smiling.

Additional reporting by Kushan Mitra, K.R. Balasubramanyam and N. Madhavan

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