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IPL franchisees may earn 4-5 times more

IPL franchisees may earn 4-5 times more
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First Published: Sat, Apr 18 2009. 04 31 AM IST

Title defenders: Members of the inaugural IPL winner Rajasthan Royals during a street parade in Cape Town on Thursday. Mike Hutchings / Reuters
Title defenders: Members of the inaugural IPL winner Rajasthan Royals during a street parade in Cape Town on Thursday. Mike Hutchings / Reuters
Updated: Sun, Apr 19 2009. 09 57 AM IST
New Delhi: Investors who paid top dollar to own a part of the Indian Premier League (IPL) opportunity are now on a good wicket.
Franchise owners expect to earn around four-five times more this year than they did during the inaugural season of the 20-over league in 2008, thanks to a deluge of sponsorships and brand associations, according to estimates put together by Mint after speaking with franchise owners and media buyers (see chart on Page 3).
Title defenders: Members of the inaugural IPL winner Rajasthan Royals during a street parade in Cape Town on Thursday. Mike Hutchings / Reuters
This comes after initial reports that sponsors and advertisers were sceptical about IPL’s success this year, when it had to be moved to South Africa after the Indian government said it could not provide security cover to the league during the election season, and that many had walked away from earlier commitments.
The team owners will also earn significantly more from the new broadcast deal the IPL management signed with sports marketing company World Sports Group (WSG) and Multi Screen Media Pvt. Ltd (MSM) this year. Last year, the deal had been signed for around Rs4,000 crore for 10 years, while this year it was renegotiated at Rs8,200 crore for nine years.
While the three partners did not share the details of the new broadcast deal officially, two executives from IPL and WSG said that the new deal has been linked with IPL’s viewership. IPL’s management may only get 33% of the contracted revenues for the first five years. Franchisees will get 80% of this 33%.
Based on this, the eight franchisees are likely to take home between Rs60 crore and Rs90 crore each. Last year, the teams earned Rs20 crore each from broadcast rights.
Also See IPL Season 2: Bigger Bucks in Offine (Graphic)
There will be no change in the income from central sponsorships, because the IPL board could not attract any new sponsor this year. Last year, each franchisee had got Rs15 crore from the sponsorships pool.
For franchisees, however, it has been raining sponsorships and brand associations this year. All franchisees but one have at least nine brand associations or sponsorships this year. The more aggressive ones, Chennai Super Kings (CSK), Mumbai Indians and Kolkata Knight Riders (KKR) have, 15, 13 and 12 “partners”, respectively, on board.
“Despite the last-minute move to South Africa, there has been a lot of interest from companies to partner with us for IPL 2,” said Rakesh Singh, chief marketing officer, CSK.
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Last year, most franchisees had managed to rope in between three and six sponsors and partners. The most prominent franchisee sponsors this year include cola rivals Coca-Cola and Pepsi, sports shoes and apparel makers Adidas and Reebok, motorcycle manufacturer Hero Honda and mobile handsets maker Nokia India.
Chewing gum maker Wrigley India Pvt. Ltd has picked up sponsorships across the eight teams. “The idea behind partnering with the eight IPL teams was to associate with each of the individual franchisee and reach out to their respective fans,” said Himanshu Khanna, director, marketing, Wrigley.
The only team that has not had such splendid run this time is Bangalore Royal Challengers. The team, which belongs to Vijay Mallya-owned UB Group, only has Wrigleys and its in-house brands sponsoring it but, according to the company, that’s how it had planned it. “We have enough of our own brands to ride on the IPL so why should we share this space with any outside brand,” said Vijay Rekhi, president, United Spirits Ltd, part of the UB Group.
Incidentally, the group’s brands such as Royal Challenger, McDowells, and Royal Stag are sponsoring at least five other teams as well.
Along with the increase in the number of brand associations, the price of the deals has also seen a steep increase this time. “The rates for franchisee sponsorships went up at least 30-40% this year,” said two senior executives of two teams. “There are teams that have signed title sponsorships at 20 times the price they charged in 2008,” one of them said. They both did not want to be named. According to estimates from media buyers and various team executives, deals for associate and title sponsors this year have varied from Rs50 lakh to Rs15 crore.
Teams such as CSK, defending champion Rajasthan Royals, and KKR are, thus, expected to have closed deals worth Rs80-100 crore. Others have also raised around Rs50-60 crore. Last year, the teams had raised around Rs15-20 crore from such associations.
“Some partnerships, such as media associations, are purely in kind terms,” one of the two executives said. The size and the duration of independent deals could not be confirmed.
Franchisees credit this success to IPL’s popularity. “IPL makes it possible for advertisers to reach out to consumers across regions, demography, age groups and gender,” said CSK’s Singh, “...which is perhaps why the move overseas has not made a difference for sponsorships at the franchisee level.”
Graphics by Paras Jain / Mint
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First Published: Sat, Apr 18 2009. 04 31 AM IST