Coronavirus Impact: IPL franchises stand to lose nearly 40% of sponsorship revenue

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Updated: Mar 12, 2020 5:24 PM

The eight franchises in total are expected to earn sponsorship revenue worth Rs 450 crore - Rs 500 crore

As per the industry estimates, the eight franchises together will earn approximately Rs 250 crore from the sales of ticket, also known as gate revenue.As per the industry estimates, the eight franchises together will earn approximately Rs 250 crore from the sales of ticket, also known as gate revenue.

Even as The Board of Control for Cricket (BCCI) has declared that the Indian Premier League (IPL) will begin as per schedule, the increase in the number of cases of Coronavirus has cast doubt on its future. Add to that the Healthy Ministry imposing restrictions on international travel. Any change in the schedule will also have an adverse impact on the sponsorship revenue earned by the eight franchises besides ticket revenue. According to industry estimates, the eight franchises in total are expected to earn sponsorship revenue worth Rs 450 crore – Rs 500 crore, in addition to generating gate revenue of Rs 250 crore. Industry analysts believe that in case the T20 tourney is postponed then franchises may end up incurring losses in the range of 15% – 20% in case of both sponsorship and ticket revenue. “If IPL does get postponed, the situation will be one of force majeure. The franchises will incur a loss and it’s a risk every company has to take in business,” Navin Khemka, CEO, MediaCom, South Asia, said while believing that it’s unlikely at this stage for IPL to be postponed.

An email sent to the BCCI remained unanswered till the time of publishing the story.

As per industry estimates, Mumbai Indians (MI) and Chennai Super Kings (CSK) is expected to earn the most at about Rs 80 crore from sponsorships, followed by Delhi Capitals (DC) between Rs 65 crore – Rs 70 crore. Shah Rukh Khan’s co-owned team Kolkata Knight Riders (KKR) is expected to rake in anywhere between Rs 55 crore – Rs 60 crore this year. The remaining teams are estimated to make between Rs 45 crore – Rs 50 crore.

The IPL is scheduled to begin from March 29, with the first match being played between Mumbai Indians and Chennai Super Kings at Wankhede Stadium, Mumbai. Interestingly, this year, all IPL matches have been scheduled to be played in the evening with one match per day. Industry analysts believe if the event is postponed and the number of days is brought down by 20 or 15 – it would have an adverse impact on the sponsorship revenue due to a reduction in exposure of screen time. For Jehil Thakkar, partner, Deloitte, sponsor brands will not be able to recuperate the loss of screen time while the teams will incur a potential loss from gate revenue. “There is no way for brands to recuperate the screen time in case IPL gets postponed however the loss will be mitigated if all the matches are played, even if it is two in a day. Similarly, if two matches are played, the franchise will incur gate revenue loss with minimal broadcast revenue loss,” he added.

If the IPL gets postponed by 15 days with only 50 matches being played, the teams will incur 15% loss of revenue. However, franchise teams will incur nearly 40% loss of revenue if only 30 matches are played out of the 60 scheduled. It is estimated that this year, franchises managed to rake in an increase of 20%-25% this year. This year, on average advertisers, have paid anywhere in the range of Rs 18 crore – Rs 20 crore for a slot in the front of the team jersey, and Rs 5 crore – Rs 7 crore, for a space behind the jersey. Meanwhile, ad space infront of the helmet has been sold for Rs 1.5 crore, while ad position on shoulders of team jerseys have gone between Rs 2.5 crore – Rs 3 crore.

Read Also: Coronavirus impact: IPL and Star India’s fate hangs by a thread

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