New Delhi: The Indian Premier League (IPL) cricket extravaganza will kick off on 12 March and this year, the revenue generated from licensing partnerships holds top priority for its chief executive, Sundar Raman. IPL has already scripted partnership deals with Swiss watchmaker Bandelier, Google Inc.’s YouTube and Viacom 18 Media Pvt. Ltd’s Hindi channel Colors. It is now in talks with companies for IPL bar and café licences. On a short visit to Delhi, Raman spoke to Mint about his plans for season 3. Edited excerpts:
Will you make more money from IPL 3 compared with the earlier two seasons?
Our revenue streams include media rights and sponsorships, and while these continue, generating additional revenue from licensing is something we are actively pursuing. In the last couple of months, we have announced some important partnerships. The deal with Viacom 18’s channel Colors is the most recent example of how we want to take the IPL brand forward. We are now in advanced stages of discussion with interested licensing partners.
Prime choice: Sundar Raman says companies will soon realize that if they miss the chance to be on-ground sponsors this year, they will have to pay more from the next season, when more teams will be added. Kaushik Chakravorty/Mint
What kind of licensing partners will these be?
There are multiple players we are looking at tying up with. It could be sourced products such as T-shirts, socks, keychains. It could be a real estate licensing or club and bar licensing. Disney is a classic case because, for people the world over, Mickey Mouse is not a cartoon, it’s a friend and more importantly, it’s a brand.
So will you launch night clubs and bars and develop IPL real estate?
I don’t mean IPL is getting into the café business—it is the licensing of our product in these avenues that we are looking at. ManU (Manchester United) has done the same thing very successfully—the ManU café and bar is scheduled to open in Mumbai on 5 February and I was fortunate to be there watching the Arsenal versus ManU match on Sunday. You should have seen the atmosphere at the café. It was fascinating to see the energy, especially in Mumbai, India, which is thousands of miles from Manchester. I don’t see why such a café or bar will not work for IPL with the following of cricket itself being so much more than any other sport.
Last year, some on-ground sponsorship slots remained vacant thanks to a 35% hike in advertising rates, up from $4.5-5 million (around Rs21-23 crore) for a year. Have you found any takers this year?
We are currently in discussions with many sponsors, but we are firm about the Rs30 crore a year rate. If the sponsors are not willing to pay this amount, we are in no hurry to sell or negotiate. They will soon realize that if they lose this chance (to be a sponsor on-ground, which means associate sponsorship titles on the field) this year, the value will only grow from next season, when more teams will be added.
When will the new teams be added?
The two new teams will be added for the 2011 season. The tender process will happen in 2010. We are working through some papers and documents and we hope to announce the teams before IPL 3.
We hear that companies and groups such as Sahara, Hero Honda and Reliance Adag are bidding.
It’s still too early to name names, but it’s safe to say that there are lots of people interested, and with only two additional franchises, we expect serious bidders to participate.
The base bidding price at $225 million is 4.5 times the $50 million base price of 2007. Does it make any business sense to own a new IPL team?
If it did not make business sense, people wouldn't bid. There are different reasons to why people choose to own a team and I can’t talk on behalf of them. But with the kind of value IPL has delivered, it won’t be difficult to break even within a year to five years, as many existing franchises have already done.
Will there be any changes in the rules, regulations and structure of IPL 3?
Last year, we introduced a seven-minute strategy ad break in each inning, but it didn’t work out as planned and we have now recrafted this strategy to a two-and-a-half minute ad break per team in each inning so that it would help speed up the game. We have also added one more match, making the tournament of 60 matches instead of the 59 earlier. This will add a new twist to the game.
On team structures, it has been made clear from the start that any changes of ownership in teams, whether they sell a stake or go public, will only be possible with the explicit approval of the IPL (board).