Galwan clash: Amid pressure, Vivo may go for negotiated exit from IPL

PepsiCo India's midway exit in 2015 had set a precedent, say experts

The Indian Premier League (IPL) governing council will meet this week to review all sponsorships of the T20 tournament, counted among the world’s most-valuable sporting properties. The move comes as pressure to boycott Chinese goods increases following the last week’s stand-off between Indian and Chinese soldiers in Ladakh.
 

On Sunday, the Confederation of All India Traders (CAIT), which has launched a nationwide campaign against Chinese goods, urged the Board of Control for Cricket in India (BCCI) and the Indian Olympic Association (IOA), to cancel sponsorships of Chinese companies. “They should immediately cancel sponsorships of Chinese firms, if any, in the interest of the nation,” said Praveen Khandelwal, secretary general, CAIT.
 

A 2019 study by consultancy firm Duff & Phelps had valued the IPL at $6.8 billion, up from 7 per cent the previous year. The BCCI, which owns and runs the league, is looking to organise the tournament somewhere in September-October this year after it was forced to cancel its springtime schedule because of the Covid-19 pandemic.
 

IOA Treasurer Anandeshwar Pandey has called a meeting of its executives this week to decide on suspending an agreement with Chinese firm, Li-Ning, as sponsor of player kits.
 

IPL, on the other hand, has a deeper Chinese connect, with popular brands such as Vivo, Dream11 and Paytm associated with it. Vivo, which is the country’s second-largest smartphone player, is the title sponsor of IPL, which it bagged in 2018 for nearly Rs 2,200-crore.
 

Dream11 and Paytm, backed by Chinese investors, are official partners of the tournament, while Swiggy, which also has Chinese investment, is an associate sponsor. While Vivo declined comment on the issue when contacted, persons in the know said it was closely tracking developments since it forks out an annual amount of Rs 440 crore towards its title sponsorship. The contract ends in 2022.
 

BCCI Treasurer Arun Dhumal said the body was open to reviewing its sponsorship policy of the league and would abide by government guidelines.

Legal and media experts told Business Standard that PepsiCo India’s midway exit in 2015 from the IPL title sponsorship had set a precedent. “Vivo had replaced PepsiCo in October of 2015,” said a legal expert, who was privy to discussions then. “It was a negotiated exit. If they (Vivo) can find an Indian partner, who would be ready to take up the financial obligation for the remaining period that would give Vivo an exit out of a tricky situation and BCCI may not lose face with sponsors,” he said.

The other option available to Vivo would be to press for damages in court if its IPL sponsorship is called off by BCCI, said experts, though the company would exercise this choice carefully as the anti-China wave is currently very strong in India.

“Every contract has an exit clause, but the question is in what circumstances it is being used,” said another Mumbai-based media lawyer. “Vivo is not keen to exit, but BCCI has been forced to consider it because of the all-round pressure that is mounting on it following the border dispute between India and China. The geopolitical issues apart, BCCI will have to tread cautiously and will have to work out an amicable split if the pressure from the government increases,” the lawyer said. 
 

Vivo’s sister concern Oppo had exited the sponsorship of Team India in 2019, just two years after bagging the rights for an estimated Rs 1,079 crore, to make way for online tutorial major Bjyu’s. Vivo had replaced PepsiCo India as the title sponsor for two years for an estimated Rs 200 crore, before bagging the title sponsorship rights in the next cycle (2018-22), paying 11 times (Rs 2,200 crore) the previous amount.