Mumbai: The small print had been read, the agreements signed and the ink was almost dry. Farhad Wadia had managed to bag tour dates for the British heavy metal band Def Leppard. But the hardest part was only just beginning.
For Wadia, veteran event organizer and chief executive of E18, the live entertainment arm of the media group Network18, the mathematics behind hosting outdoor entertainment events in Mumbai, just keeps getting knottier. While many cities grapple with a shortage of venues, organizers say the problem is especially acute in Mumbai due to an exorbitant 25% entertainment tax.
Jarring note: Pakistani band Strings performs at CP’s central park in the Capital. High entertainment tax plays spoilsport with live events. (Photo: Harikrishna Katragadda/ Mint)
“The economics of outdoor events in Mumbai is crazy,” says Wadia, reeling off a list of hurdles to be navigated before fans next month will get to see one of the year’s biggest acts.
Along with a lack of options for venues and crippling taxes, Wadia and his ilk are facing a new threat to their margins: the launch of the Indian Premier League (IPL), which is sucking corporate sponsorship from the market.
“Corporate sponsorship is essential,” he says, “but all the money has been taken out of the market by the IPL. Alcohol and telecom companies are the biggest benefactors, but their marketing budget is now being diverted away.”
Wadia estimates that in the rush to back the cricket league, the pool of sponsorship available per event has dropped from Rs1.5-2 crore, to about Rs50 lakh; a substantial hit for an industry that relies on companies to cover up to 70% of the approximate Rs8 crore cost of a concert.
The development comes as a series of brands, including Aircel, Kingfisher and Coca-Cola, throw their weight behind the tournament, seeking to be associated with the high-stakes and glamour of the event.
A senior executive at a major corporate sponsor of IPL, who declined to be named, confirmed the trend, saying: “We have shifted a significant amount of investment out of other events in order to back the IPL.” He added that the amount that had been diverted away from other events came to “several crores”.
Wadia bemoans the lack of funding, but acknowledges it represents a shift in the market, as companies and audiences are faced with an unprecedented number of entertainment options.
“People have too many options now, it’s a market reality,” he says. “We either have to increase the prices of tickets, or get cheaper bands.”
For Def Leppard, Wadia and his team received backing from only one in every five potential sponsors they approached, compared with the one in every two strike rate they enjoyed just a few years ago, when large acts were a rarity in the city.