CESC and Intex Technologies on Tuesday emerged winners to run a team each to play in the ninth and 10th editions Indian Premier League (IPL) cricket match series for the next two years. The companies are understood to have bid a negative Rs 16 crore and Rs 10 crore per year, respectively, at the reverse auction. In other words, they have paid the Board of Control for Cricket in India (BCCI) to participate in the tournament and will not receive revenues from the BCCI’s central pool like other franchise owners do. But they will not pay a franchise fee as the others have.
This means both CESC and Intex stand to lose money — anywhere between Rs 50 crore and Rs 60 crore a year — given the hefty R65 crore they would need to shell out for players and the fact that they’re forgoing Rs 65 crore from the central pool. However, advertising professionals point out this would be in a sense a loss-leader for the companies since the tournament would give them visibility.
CESC chairman Sanjeev Goenka confirmed the IPL purchase was to build a brand for his group. “I do believe the business of sports is growing and it should do well. Buying an IPL team will of course help us enhance brand visibility,” Goenka told FE.
Intex said the IPL was a symbiotic fit with it. “Both are instrumental in connecting and uniting people. Through this association, we are confident of contributing in the growth and popularity of both the brands at the global stage,” Keshav Bansal, owner of the Rajkot IPL team and director of Intex Technologies, observed.
Indeed, with more than three months to go, broadcaster Multi Screen Media (MSM), is optimistic the upcoming edition in 2016 will be bigger and better. “We will see growth this time around too, as we have increased our ad rates by 15%,” MSM president Rohit Gupta confirmed to FE. Last year, the official broadcaster clocked an advertising revenue of about Rs 1,000 crore. IPL8 had seen a 20-25% hike in viewership as well as increase in the number of title and main sponsors. However, with IPL7 marred by a spot-fixing controversy, MSM had generated an ad revenue of Rs 600-700 crore.
Sources familiar with the tournament said typically teams made or lost anywhere between Rs 15 crore and Rs 20 crore in an edition. Tier A cities attract better advertising revenue, which could be as much as Rs 40 crore in a season, while for smaller cities it is around Rs 20 crore. Mumbai Indians, owned by IndiaWin Sports, a subsidiary of Reliance Industries, had posted a loss of Rs 3.87 crore on a total income of Rs 167.65 crore during the last season, according to its financial statements. The loss had continued from the year earlier’s loss of Rs 5.04 crore on total income of Rs 220.87 crore during the last season.
The next two editions of IPL will see a new title sponsor in smartphone manufacturers ViVo, replacing beverage giant PepsiCo which had decided to dissociate with the event, citing the game’s slipping into disrepute after the scandals leading to the Lodha committee’s decision to suspend Chennai Super Kings and Rajasthan Royals for two years.
BCCI, the organisation that oversees cricket tournaments in the country, had called for bids for at least 10 cities, including Chennai, Pune, Nagpur, Rajkot, Indore, Cuttack, Visakhapatnam, and Ahmedabad, among others. The reverse-auction was for selecting two teams to replace Chennai Super Kings and Rajasthan Royals, which were disqualified and banned for two years. Currently, there are six teams in the IPL — Delhi Daredevils, Kolkata Knight Riders, Kings XI Punjab, Mumbai Indians, Royal Challengers Bangalore and Sunrisers Hyderabad. The last date for the reverse-auction bid ended on November 30. The IPL governing council met on Tuesday to finalise and announce the winners of the two new teams, among the 21 potential suitors. The franchise owners will bid for team players next week.