China influence in IPL far from over with Dream11 bagging title rights

Tencent a shareholder in Indian gaming venture

If Vivo’s abrupt exit as the title sponsor for the Indian Premier League (IPL) had given hope of an IPL without Chinese influence, the entry of Dream11 indicates that escaping the dragon is easier said than done. While the Mumbai-based gaming company founded by an Indian duo is at the forefront of the investment in the league, China’s influence on the country’s most coveted sports property is far from over.

Tencent Holdings — a multinational conglomerate from China — has its role behind the IPL deal. 

Dream11, which won the title sponsorship rights for the current IPL season for Rs 222 crore, has Tencent as a stakeholder, besides three other venture capital funds and its two Indian founders. According to sources, the Shenzhen, China-headquartered Tencent has invested well over Rs 500 crore into Dream11's parent company Sporta Technologies. It led a major funding round for the firm in 2018 that amounted to over Rs 750 crore ($100 million), sources add.

Dream11's management clarified to Business Standard that currently Tencent holds a minority stake in the company, which amounts to less than 10 per cent of Sporta's shares. 

The 2018 investment round that brought Dream11 under Tencent’s fold is so far the most crucial event in its 13-year-long journey. For years, Dream11 failed to attract investors and remained entangled in legal battles as virtual betting or fantasy sports was considered illegal in India.

However, with Kalaari Capital’s financial backing in 2015 and a favourable court order in 2017 that removed any legal hurdles ahead of it, it soon attracted Tencent’s attention.

Since then, the gaming platform has utilised the funds to initiate an advertisement blitzkrieg — flooding all forms of screens, from TV to smartphone, with frequent advertisements. It roped in Indian cricketer Mahendra Singh Dhoni and spent over Rs 500 crore in its promotion. Even before the title sponsorship deal, Dream11 was paying its governing body Rs 40 crore a year as an official partner for the league.

In FY19, its revenue jumped 350 per cent. Revenue, primarily earned through signup fees, stood at Rs 775 crore, while losses doubled to Rs 132 crore.

Unlike other sponsors of major sports properties like the Team India jersey sponsorship (by Byju’s) and IPL and Pro Kabaddi League (by Vivo), Tencent’s gain will remain confined to the returns Dream11 gets out of the sponsorship deal.

But Dream11’s entry at the top of the IPL masthead is not without rationale. The start-up, founded by Harsh Jain and Bhavit Seth in late 2010, was aimed at capitalising viewers’ thirst for further engagement with the league, which was launched in 2008.