The rebid decision is hardly a setback for one of the hottest sporting properties in the world.
For, the IPL Governing Council has only tweaked some norms, while deciding to retain the minimum bid amount at $225 million, which is almost double the costliest Indian team, Mumbai Indians which was bought by Mukesh Ambani for $111.9 million three years back. "The base price was not the issue,” Modi said just after announcing the postponement of the bidding.
Modi’s detractors say he has tried to ride his luck too often and is killing the brand slowly, but the man who conceptualized the tournament in 2008 says “IPL is going to become the world's biggest brand. In any case, we are already India's most global brand”.
There are enough reasons for the confidence. IPL at 22nd position was ahead of corporate giants like Samsung and Microsoft in the list of the most innovative companies in the world compiled last month by Fast Company, a magazine that reports on innovation, digital media etc. The list was topped by Facebook.
The magazine credits IPL with creating “a new economy of cricket.” Consider this: The consensus in advertising and marketing circles is that in just three years, the cricket league has become a $2 billion brand that includes revenues from TV rights, promotion and franchises. That’s the reason why IPL has already made it to the fourth spot on the Forbes list of the world's hottest sporting properties.
The brand power is visible from the fact that Modi opted out of TV deals with Sony and World Sports Group, risking nearly $1 billion of guaranteed payments over the next nine years. The gamble paid off, to the tune of a 100 per cent annual increase from those broadcast partners, both of which deemed the IPL too valuable a property to lose.
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Sam Balsara, chairman of Madison Media says, "IPL’s credit is that it is never short of marketing ideas to keep up the hype, controversy and the excitement alive.” The tournament, which had its revenues primarily coming from stadium collections and TV broadcasting rights, today has expanded its horizon. “IPL has extended the property beyond the television screen to multiplexes and on Google, which only helps in keeping the novelty factor intact." Balsara says.
According to media buyers, the number of brands associated with IPL was 40 in the first season and 68 in the second. In the third season, it is expected to touch 80. In the first and the second seasons it was TV broadcasting rights and the sponsorship deals that contributed to the revenue pool of IPL. However, this year the league has signed innovative licensing deals with a number of companies -- like Bandelier for watches -- whereby IPL not only gets a one-time licensing fee but also royalties on the merchandise sold.
Then there are deals with Google's You Tube where people can watch matches online and with Colors for IPL-related shows which would expand the reach of the tournament. IPL will also be broadcast in its entirety in the UK in an exclusive deal with ITV4. This means that the worldwide audience of 450 million in only its second year will increase substantially for the third edition.
The biggest novelty was the marriage between cricket and entertainment, says Anand Halve, co-founder of Chlorophyll, a brand building and strategy planning organisation. This is evident from the fact that official broadcaster MAX, which raked in about Rs 500 crore last season, expects its revenues to increase by 30 to 40 per cent this season.
One can get an idea of IPL’s brand equity from the fact that the underlying assets -- the teams that constitute IPL -- have seen their value going up manifold. “The brand value of each team has increased. The teams were bought for some Rs 300 to Rs 400 crore. Now if a team wants to offload even 10 per cent stake, it would cost as much as the original price for buying the team," Halve says.
For example, according to private equity tracker firm VC Circle, actress Shilpa Shetty bought 11 per cent stake in Rajasthan Royals in 2009 in a deal that valued the brand at $140 million. That’s a 200 per cent increase from the $67 million that the owners of Rajasthan Royals paid for the team’s franchise.
All the eight teams have been quick to monetise their investments and are generating revenues from selling merchandise to setting up fan clubs. "E- commerce is an emerging area. Merchandising is another revenue earning option. So we have a total of 40 varieties in merchandising alone now," says Rakesh Singh, marketing head of Chennai Super Kings (CSK), which is the most-valued franchise by brand evaluation agencies.