Coronavirus Impact: Low advertiser sentiment to impact sports sponsorships

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Published: May 25, 2020 7:29 AM

Even though viewers have been starved of live sports and may be awaiting the return of sporting events, advertising revenue is not expected to match up to pre-Covid times.

Even though organisers are strategising to resume play, the `9,000-crore sports sponsorship industry (as per ESP Properties data) is expected to be impacted severely, experts saidEven though organisers are strategising to resume play, the `9,000-crore sports sponsorship industry (as per ESP Properties data) is expected to be impacted severely, experts said

Conducting sporting events behind closed doors without a live audience seems set to become the norm for the foreseeable future. Governments, sports federations and organisers have begun applying social distancing norms for both training and matches to curb the spread of the Covid-19 pandemic, but this does not guarantee a complete revival of the sports sponsorship ecosystem.

While the Tokyo Olympics and the Wimbledon have been deferred till 2021, several European football leagues have resumed playing and training in empty stadiums with strict health safety protocols in place.

In India, BCCI is looking at the possibility of holding the homegrown cricket league — Indian Premier League (IPL) — after the end of the monsoon season. This depends on several factors such as cancellation of the T20 World Cup 2020, availability of international players and the spread of the pandemic in India. Sporting bodies are also exploring possibilities of the Pro Kabaddi League and Indian Super League to be organised later in the year.

Even though organisers are strategising to resume play, the `9,000-crore sports sponsorship industry (as per ESP Properties data) is expected to be impacted severely, experts said. “If the collateral damage of the pandemic on large advertisers is high, they may cut down on advertising spends for the rest of the year,” Duff & Phelps advisory managing partner Santosh N said. The global industry estimates peg the loss to sports sponsorships and rights fees at 37%.
Duff & Phelps estimates that the valuation of IPL, which was worth `47,500 crore in 2019, is expected to fall by `1,500-2,600 crore if a truncated version of the game is played later in the year.

JSW Sports CEO Mustafa Ghouse said the company is bracing for a 25-30% impact to its topline this year. JSW Sports has a stake in IPL team Delhi Capitals, Bengaluru Football Club and Pro Kabaddi team Haryana Steelers. He added that loss from ticket revenue from IPL will be substantial for the company’s topline. Overall, ticket revenue from a season of IPL is about `300 crore (`3-5 crore per match), as per industry estimates.

Even though viewers have been starved of live sports and may be awaiting the return of sporting events, advertising revenue is not expected to match up to pre-Covid times. Analysts expect that advertisers will renegotiate deals and contracts with broadcasters depending on the number of matches being played.

Experts are confident that viewership of sports will not be hurt and therefore advise brands to loosen purse strings when the games resume. “It would be in the interest of an advertiser to stay invested in sports events to have the first-mover advantage,” ESP Properties business head Vinit Karnik said.

Wavemaker’s national director- sports Jigar Rambhia said he expects advertisers to show keen interest as and when the economy revives, but added that the advertiser interest may not be uniform across all sporting events.

“Smaller, non-cricket sports leagues could be under pressure this year as advertisers may be less generous with ad spends,” Santosh of Duff & Phelps said.

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