IPL 13: Who will Gain & Who will Lose?

07 Sep,2020

 

By Indrani Sen

 

Ever since BCCI announced that IPl 13 will be held this year in the UAE from September 19 to November 10, there has been a lot of speculation in the media about how much revenue BCCI, the eight franchisees and Star India would be able to earn through this high value cricket tournament held away from home turf.

 

It is still a matter of speculation, but one aspect is clear that BCCI’s scheduling of IPL 13 matches scheduled during evening primetime will deprive many GEC channels from the revenue which they have been expecting to get from the festive seeson advertising. As per various industry estimates, 40 to 45% of total annual advertising revenue is generated during the festive season spreading from September to December with bulk of it spent by Diwali every year.

 

Revival of mega programmes like KBC, Big Boss, Indian Idol and Dance India Dance is expected to give IPL some competition and to help the big players Sony, Colors and Zee to get a good share of the TV advertising budget of festive season, but many other channels will not be that lucky. BCCI has also planned for maximising its revenues during the festive season as after October 25, 2020 there will be no afternoon match and all matches will be scheduled at 7.30 pm IST. With the final scheduled on November 10, only a small window of  four days before Diwali is left for other channels to encash on their share of festive spends. Had BCCI scheduled the IPL 13 a month later from October 2020, then probably the picture could have been different.

 

Let us now look at the three main interested parties who have serious revenue tagets to be realised from IPL 13. The first is BCCI who earns the lion’s share of its annual budget every year from IPL. Apart from Rs 3270 crore which Star pays to BCCI every year for the TV and digital media rights, they were supposed to get Rs 440 crore from Vivo for title sponsorship, Rs 250 to Rs 300 crore for other associate sponsorships and another Rs 17 to Rs 20 crore from other sponsorships. After Vivo pulled out from the title sponsorship, BCCI got Dream 11 as a title sponsor for Rs 220 crores, at 50% discounted price of the earlier deal. BCCI shares 50% of the title sponsorship money with the eight franchisees by distributing the same among them and the revenue of the fanchisees has also been reduced as a result of this discounted deal. As per the experts’ views, BCCI’s revenue target from associate sponsorsips etc. are also expected to see a downward revision. BCCI will have to give a hefty fees to Emirates Cricket Board for holding the matches at UAE and their other logistical cost will also go up. A combination of all these factors will lead to a lower realisation of BCCI’s earlier revenue target from IPL 13.

 

As far as the eight franchisees are concerned, each of them will lose out revenues from three sources. The first will be the loss from their share of title sponsorship which BCCI has sold at 50% lower value than expected earlier. The second will be the loss from gate revenue which used to be between Rs 22 to Rs. 28 crore per team from cricket grounds. The third will be from expected lower revenue of title sponsorship of each team under the current situation. Each team now anticipates to earn at least 15% to 20% less on the estimated the team title sponrship value of Rs. 50 to Rs. 75 crore (except Mumbai Indians which was looking at Rs 100 crore-plus) from title sponsorship before the pandemic struck.

 

In addition, all of the franchisees will have to spend extra for the travel and accomodation cost of the players as well as creating arrangements for the bio-bubble and net practice at UAE. The combined effect of all the above is expected to result in a loss of Rs 80 to Rs 90 crore per franchisee. BCCI has already rejected the appeal for concessions in IPL 13 due to the pandemic made by the franchisees. (https://www.insidesport.co/ipl-2020-bccis-stern-no-to-ipl-franchises-demand-for-compensation/)

 

The last but not the least of the three interested paries is Star India, the broadcaster holding the media rights of IPL for TV and Digital media. In Star India’s original plan for revenues to be earned over the contract period with BCCI, 2020 was supposed to be a crucial year when they had expected to replace earlier losses with profit. However, the pandemic changed their plans. An article published on July 4, 2020 by www.sportstar.thehndu.co referred to a statement made by Uday Shankar, the Star & Disney India Chairman to ET Now: “If there is one tournament where advertisers will put money, that is IPL but only if they have to put monies. The market has gone through massive shock. Whether it would recover enough to put thousand of crores worth of advertising in next 6-8 weeks is the real issue and we doubt that… I am not sure the market is ready to support the IPL with the same fervour…” (https://sportstar.thehindu.com/cricket/ipl-2020-postponed-future-star-india-uday-shankar-advertisers/article31986991.ece). He has obviously changed his mind since then as in a recent article in  https://www.timesnownews.com/sports/cricket/, he has been quoted as saying: “Our viewership of IPL on TV, as well as OTT platform, has grown year-on-year, and that will continue even this year…Also, for any company, which is looking at advertising, IPL provides the best and most-effective platform.”

 

As per industry sources, Star is targeting at a revenue of Rs 3000 crore plus from IPL 13. There is difference in estimates on how much they earned from IPL 12. According to ET Prime, the revenue was Rs 2,100 crore in 2019, but some other sources peg the earnings around Rs 2500 crore.

 

 

Star India has already declared that there will be no reduction on the advertising tarif declared earlier which had a built in 20% hike over IPL 12. As per industry sources going rate for 10 second advertising is 12.5lakhs. Based on estimate of ET Prime, with a revenue target of Rs 3000 crores in IPL 13 Star is aiming for a growth of 43% over IPL 12, which semms to be highly ambitious. Based on the estimate that revenue from IPL 13 was around Rs 2500 crores, a 20% to 22% growth over last year will enable Star to achieve the revenue target of Rs. 3000 crores, which seems to be more realistic. There is already a prediction that viewership of IPL 13 will increase by 25% from IPL 12 which will help Star in marketing IPL.

 

To sum up, the broadcaster seem to be on a good wicket as riding on the promise of 25% higher reach, they have a good chance of realising the target revenue for IPL 13. On the other hand, BCCI and the 8 franchisees will have to be contented with reducing their losses from IPL 13 held in UAE than a total loss of cancelling IPL 13 in 2020. The smaller TV channels across genres may be complete losers as many marketers suffering from the loss in sales and revenue over the first two quarters of 2020 and the slow rate of recovery in the third quarter, may not be able to extend their advertising budgets  for festive seasons beyond investing in IPL 13.

 

 

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