Vivo exit: BCCI has little time to find sponsor for IPL

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August 6, 2020 7:15 AM

Vivo India, a subsidiary of China-based handset maker Vivo, had paid a whopping Rs 2,199 crore to acquire the IPL title sponsorship rights for five years starting 2018 — a staggering 454% higher than the contract with PepsiCo.

The withdrawal of Vivo and expected muted spending by other Chinese brands also mean official broadcaster Star India will take a significant hit on advertising revenues.The withdrawal of Vivo and expected muted spending by other Chinese brands also mean official broadcaster Star India will take a significant hit on advertising revenues. (Representational image)

With barely 45 days left for the Board of Control for Cricket in India (BCCI) to find a title sponsor for the upcoming Indian Premier League (IPL) following Vivo India’s exit at least for this season, experts said deep-pocketed e-commerce companies and telecom players might find this an opportunity to step in. For companies that can afford to spend big, IPL is a lucrative window. Given the sporting event this year coinciding with the festive season and no other tournaments scheduled, viewership will get a boost.

Though for BCCI it will entail losing out on a considerable sum of money, experts reckon the new sponsor will likely pay only half of Vivo’s yearly payment of Rs 440 crore to the board.

Vivo India, a subsidiary of China-based handset maker Vivo, had paid a whopping Rs 2,199 crore to acquire the IPL title sponsorship rights for five years starting 2018 — a staggering 454% higher than the contract with PepsiCo. BCCI had been earning about Rs 440 crore from Vivo per season, 50% of which was being distributed among the franchises. The company had also bagged the IPL title sponsorship for 2016 and 2017 at a reported cost of Rs 100 crore per year, following Pepsi’s abrupt exit.

Sandeep Goyal, chairman at Mogae Media, said the new sponsor would at best pay anywhere between Rs 220 and Rs 250 crore to the BCCI. “Jio, which is already invested in IPL, may look to sponsor the tournament while Amazon could be the other possible candidate,” Goyal told FE. The withdrawal of Vivo and expected muted spending by other Chinese brands also mean official broadcaster Star India will take a significant hit on advertising revenues.

Chinese brands like Oppo, Realme, OnePlus, Xiaomi, Huawei, Lenovo and few others usually spend at least Rs 600-Rs 700 crore collectively on IPL. Star India had earlier estimated to garner Rs 2,800 crore- Rs 3,000 crore in ad revenues. Before the pandemic broke out, 10-second ad slots were being sold at Rs 13-Rs 15 lakh — a markup of 15% over 2019 rates. “Even before the entire Vivo development, Star could not clinch many ad deals at the higher price band. Their order book is not very robust and with the anticipated pull back by heavyweight advertisers, Star’s bargaining position will change dramatically,” Goyal said. Nonetheless, brands like Netflix, Facebook, Google and Flipkart are estimated to be big advertisers this season, he added.

Senior media expert Anita Nayyar said Vivo India had been renegotiating contracts with BCCI and Star India earlier and seeking lower pricing as the matches were slated to be a closed door affair. The new sponsor may be willing to pay around Rs 250-Rs 350 crore, she said. “The investment is an effective one but the flip side is that the sponsorship will be only for a year. Brands typically like to stay invested in impact properties for a longer-term. The sponsorship bids prior to Vivo’s were priced lower and there is a benchmark for that. Also, with the entire entertainment piece attached to IPL having been completely lost this time, brands are not in a position to unlock the event’s full potential and will not be making big bets,” Nayyar said.

In case the BCCI fails to get a sponsor on board, each franchise stands to lose Rs 28-Rs 30 crore. If the losses of gate receipts (considering there will be no crowd at least in the first half) are added, each team will incur losses of nearly Rs 50-Rs 60 crore, said Santosh N, managing partner at Duff & Phelps.

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