The fifth edition of the Indian Premier League, which will begin from April 4 in Chennai, will determine in many ways the future prospects of the property. Valued at over $3-billion (or over Rs 15,000 crore), IPL is easily one of the most successful tournaments in the South Asian region. But after four years of chugging along on a generous dose of hype, and of course, moolah, media analysts are beginning to question how far the IPL juggernaut can really go.
There are reasons for this. The most obvious is the performance of the Indian cricket team on foreign soil. While the last three one-day internationals played by India have helped boost sentiment back home, there are still many who are skeptical about India’s performance in forthcoming matches. Included in this lot are advertisers too. While companies such as Coca-Cola and PepsiCo, which are regulars on IPL, say they are yet to take a call on the property, media buyers, who buy advertising time on behalf of companies, say that ad rates will have to be lowered to entice firms.
“Spot ad rates are still pegged at last year’s level of Rs 5.25 lakh per 10 seconds,” says Anita Nayyar, chief executive officer, India & South Asia, Havas Media. “Ten-second rates for sponsors is a little lower at Rs 4.9 lakh. But I don’t see these levels remaining constant. I won’t be surprised if they are lowered,” she says. Nandini Dias, chief operating officer, Lodestar UM, says, “For now SET MAX, the official broadcaster of IPL, is holding on to rates. The question is: how long?.”
| FLIP-FLOP | |
| Year | Brand valuation |
| 2009 | $2.01 billion |
| 2010 | $4.13 billion |
| 2011 | $3.67 billion |
| Source: BrandFinance; year of start of IPL is 2008 | |
This anticipation of lower ad rates stems from the viewership expectation of IPL. Most media buyers don’t expect average ratings to be over 4 for the tournament this year. Last year, average viewership for the first 15 IPL matches was 4.36 only, lower by 18 per cent over the previous year. The data was for the top six metros spanning all television viewing audiences.
Nayyar says that this is expected given than excitement peaks during crucial matches only. “I think real viewership will be there during the semi-finals and finals. I don’t expect the league matches to see very strong viewership,” she says.
But this is only one part. The other is the far more visible problem for the organisers of the tournament - Board of Control for Cricket in India (BCCI) - that of fewer spectators during league matches.
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“A cricket match is still a cricket match at the end of the day. And lovers of the game will always come to view the game,” says Amin Lakhani, principle partner, Mindshare, a GroupM entity. “Yes, getting the others is a challenge because the novelty factor has worn out,” he says.
But there lies the catch: Can BCCI come up with something novel to infuse new life into the IPL?
For now the world’s richest cricketing board appears to be sorting out its issues with Sahara, the sponsor of the national squad as well as the owner of Pune Warriors, going the extra mile to accede to the latter’s two main demands of being allowed to play five foreign players and to reduce its franchise fees. But analysts say that Sahara’s moves may actually embolden other IPL team owners to come out with their own cup of woes. Is BCCI prepared for this?
Sahara had pulled out of sponsorship of the national squad as well as IPL on February 4 citing serious differences with the Board. Sahara alleged that the Board had not paid heed to its grievances concerning players and number of matches in the IPL. What’s worse? The decision to break ties with the BCCI was taken just hours before the IPL auction got underway in Bangalore overshadowing the latter.
Unni Krishnan, managing director of brand valuation firm BrandFinance says that Sahara’s decision to come out publicly with its angst has certainly not bolstered the brand image of IPL. If anything the IPL brand value has only taken a few extra knocks. “Trust flows result in cash flows. When there is an unravelling of these trust flows, it impacts cash flows,” he says.
Krishnan says he foresaw this “unravelling of trust flows” last year itself given reports of the lack of transparency between BCCI and IPL franchisees. In last year’s IPL survey, for instance, Brand Finance had chipped off $460 million (or Rs 2,300 crore) from IPL’s overall brand value of $4.13 billion (or Rs 20,650 crore) saying the latter’s sustainability depended on the BCCI’s ability to infuse governance policies into the tournament to align stakeholders (read franchisees) towards win-win relationships.
Krishnan says that he sees the situation getting no better this year. “The stake-holder ecosystem has been put to a severe stress test with the allegations levelled by Sahara,” he says.
How BCCI sorts out this mess is anybody’s guess.