SPORTS: Major promoters of sporting events till last year, oil marketing PSUs — IOC, BPCL and HPCL — cut their sponsorship budgets
For long, state-owned oil marketing companies were benevolent patrons of sports and sportsmen. Several championships and tournaments survived year after year on their sponsorship alone. Things have undergone a sea change now, thanks to the surge in crude oil prices in the last year or so.
Cash-strapped oil marketing companies have cut their sports sponsorship investments by up to 87 per cent this year as they grapple to raise money for financing their daily working needs.
This financial year, Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL)and Hindustan Petroleum Corporation Ltd (HPCL) plan to spend between Rs 5 crore and Rs 10 crore each on sponsorship of sporting events. The same companies had spent close to Rs 80 crore each on sponsorships till last year.
The oil companies are losing crores of rupees every day as they sell petrol and diesel at subsidised prices. High oil prices mean the losses mount putting further pressure on the finances of these companies. Ironically, this comes when India has bagged its biggest Olympics medal haul and there is a growing demand for corporate sponsorship of sports.
“The first operation that gets affected when you do not have cash is sponsorship and branding. This year, we are sharply cutting down on these investments,” said a spokesperson with IndianOil, the country’s largest oil marketing company.
IndianOil used to spend over Rs 15 crore every year on cricket sponsorship alone. The company was the title sponsor of the India-Pakistan cricket series in November-December last year.
It was one of the main sponsors of the ATP Tennis tournament held every year in Chennai and the national badminton championships, besides some local hockey tournaments. “We have not sponsored a single event this year, though, we hope we will get back to sponsoring such sporting events in the future,” said the spokesperson.
A Bharat Petroleum official said that even the reduced budget the company has for this year would be spent very cautiously. “How can we sponsor events when we are struggling to even pay salaries?” said the official.
The situation for India’s largest government-owned company, oil producer Oil and Natural Gas Corporation, is however different. The company has gained from high crude oil prices and has reported record profits. It is thus increasing its spending on sponsorships of sporting and cultural events.
ONGC is sponsoring the current IBSF billiards championship in Bangalore. It also sponsors the premier Indian Football League along with the second division football league. It was the title sponsor of the Nehru Cup football tournament last year. It also sponsored the Asian Athletic Grand Prix in Guwahati last year.
Besides sporting events, ONGC also sponsors other events in the recent past such as the CNBC Indian of the Year, the Delhi Festival of Art & Culture.
“The money we are spending on sponsorships is increasing every year. The company has huge cash reserves and is interested in developing sports as part of our corporate social responsibility initiatives,” said an official in the sports division of the company, which recorded profits of over Rs 16,000 crore in 2007-08. The company spent around Rs 25 crore on sports sponsorships last year.
The marketing companies on the other hand are hoping that with lower oil prices their financial woes will ease, and they will be able to get back to sponsorship which in turn helps them build their brand image. “Branding is a continuous process. It is an investment and not an expense,” the IndianOil spokesperson said, adding: “We hope we can get back to what we were.”
