Getting ready for a round-the-clock carnival7 min read . Updated: 17 Apr 2009, 01:36 PM IST
Getting ready for a round-the-clock carnival
Last year when the IPL was put together in just three months, Sundar Raman, chief executive of the tournament, was indeed a busy man, but this year, when the IPL fell apart three weeks before it was supposed to begin, Raman is simply inaccessible.
But with the hurdles now behind him, he is happy that sponsors and advertisers are still jostling to partner the IPL. In an interview, Raman talks about how the second season in South Africa will keep its promise with cricket fans. Edited excerpts:
How will the second season be different?
(As in the first season), in the second season we have explored similar opportunities and avenues to create excitement for the fans. We have identified areas of improvement around spectator comfort and the in-stadia experience which we will rigorously implement in season 2009 in South Africa.
We would like to assure our fans and all the sports enthusiasts in South Africa of a round-the-clock cricket carnival over 36 days, with not just cricket on the agenda, but a horde of activities built around it—for that once-in-a-lifetime experience in South Africa.
What is IPL’s internal assessment of the total value of the IPL enterprise as of April as against 2008?
It is too early to make an internal assessment of the value of IPL April 2009 or even bring into picture the total enterprise value of the tournament. But the fact remains that after all the dust has settled over monies and EVs (estimated values), people will come and see for themselves how the DLF IPL has truly transformed world cricket.
Are there any additional costs this year?
With the moving of the league there are some additional costs in terms of travel and logistics, etc., but nothing that our franchises would not have had to bear in India with the IPL being played across 11 potential centres. We had also mentioned that security costs would be high this year. So we had already budgeted for all these additional costs.
In case there is any additional expenditure on the franchises, we will look at offsetting some of that by pooling revenues from the central revenue pool and the new media rights deal signed last week (25 March).
Are there any additional revenue streams?
I think most of our teams did really well last season with team sponsors, etc., and have indicated that season 2 also seems to be headed in the same direction. Lastly, none of our franchises have tapped the very lucrative merchandising market yet and that should further boost revenues.
Are you finding it difficult to get buyers for the two vacant ground sponsorship slots?
We have filled two sponsor spots and the contracted revenues have gone up by Rs1,725 crore to Rs10,790 crore; all our official partners are closed, barring one spot which we should close shortly.
What is the ticket sales arrangement with the United Cricket Board of South Africa?
Since the IPL is meeting the costs of staging the games, all monies from ticket sales will be given to the IPL and its franchisees.
What is your marketing and advertising plan for 2009?
As we speak, the marketing and advertising plan for the DLF IPL season 2009 is continuing to evolve. We are working closely with experts in the field here in South Africa and India to arrive at an optimal media plan worthy of an event like the IPL.
After some uncertainty over whether it would retain the telecast rights for the second season or not, the ad sales team of broadcaster MSM, was back in action in no time.
At a time, when most advertisers have cut their advertising spending in a bid to cut costs, the MSM team claims to have tied in deals with at least 15 leading advertisers across categories.
In an interview, Rohit Gupta, president, network sales and revenue management, talks about the arrangements for season 2. Edited excerpts:
Have you been affected by the current slowdown in advertising spending?
IPL, as a format, has already proven its success. It’s powerful and effective. Unlike last year, advertisers this time know what they are getting into and what they can expect. We have not felt the heat of the slowdown as yet. We have already tied up all our major deals and we continue to hold talks with several others.
Unlike 2008, you are selling matches in different packages this year. You have also done away with the category exclusivity. Is this reflective of some diminished interest in IPL, or are advertisers finding the high prices you are asking for difficult?
Packages have been designed to make it easier for those who want to ride on IPL but are deterred because of the current economic environment. Sure, the idea was to lower the barrier. We are mainly selling three kinds of packages comprising 29 matches each.
Advertisers can either buy alternate matches, or the first half of the tournament or the last half of the tournament. Advertising rates are different for different packages. And of course, brands also have the option to buy all 59 matches.
Likewise, we decided to do away with category exclusivity to be able to make the platform accessible for those brands who wanted to come on board but couldn’t because of this condition.
This year, therefore, we have quite a few brands that will be advertising alongside their rivals.
How does the current advertising line-up look?
We have Vodafone and Airtel Digital as our presenting sponsors. The line-up of associate sponsors includes Hindustan Unilever, Hyundai Motor India, Coca-Cola India Pvt. Ltd, LG Electronics India, Godrej group, Havells India, Samsung Electronics.
Also, Tata Teleservices Ltd, Max New York Life Insurance, PepsiCo India Holdings and Parle-G (biscuit brand from Parle Products Pvt. Ltd), among some others, have also signed up. We will be signing some more brands soon.
What is the current status of the inventory?
We will have sold all but the last 19 matches in some time. We want to hold on (to) that much inventory for later.
It got that way because WSG bought the 10-year telecast rights for IPL last year for $1.03 billion (around Rs4,048 crore then) and commissioned the broadcast rights of IPL in India to MSM. But the fight between MSM and BCCI escalated to a request for contract renewal by BCCI and MSM went to the Bombay high court. But then, a new deal with MSM and WSG for $1.6 billion was signed and Nair, for one, was relieved.
In an interview, Nair lets us in on the details of the new deal, whether the $1.6 billion is justified and, more importantly, payable. Edited excerpts:
What explains the spike in the IPL broadcast deal with WSG and MSM?
This is the actual valuation of the property and it is a realistic one (compared) to what was paid earlier.
You see, no one expected this kind of response from advertisers and viewers of IPL when it started...the renegotiation of the contract that happened is in line with the IPL’s current value.
With this huge sum to be paid, can MSM come out profitable?
The money that Sony (now MSM) pays BCCI is on a year-on-year basis as and when the event happens, and not all at once... we have calculated this amount looking at a year-on-year increase which all adds up to $1.6 billion.
Also, we are in a recessionary market now, but it’s going to change over the next nine years...and if you see the rates, the market is ready to pay for IPL now...it makes Sony’s chances of being profitable surer. A 10-second spot is going at Rs4 lakh already and this is despite recession and everything...at the end of the day, IPL is a combination of sport and entertainment, and one can’t go wrong with that.
Also, the exchange rate will play a big role and will help us (WSG and MSM) in the long run.
Is there any difference in the structure of the new contract with IPL?
The structure is the same as last year’s—the rights are with WSG and we commission the domestic broadcast rights to Sony...but for transparency purposes we show all contracts with BCCI and it is necessary to show Sony as a part of the deal.
Also, it is important to know that the $1.6 billion amount is for the next nine years and it does not include the first year’s deal—that is over and done with. Further, Sony only has the television rights to IPL, all other media rights—be it radio, cinema, etc., lie with us. We are finalizing all IPL deals at the moment.
On the international broadcast rights front, has WSG signed any new contracts?
Our international broadcast partners of IPL remain the same as we had already signed five-year deals with the respective networks and it would not be fair to change that.
While I can’t disclose figures, we are well within our target numbers on the international rights front. We have signed mostly five-year deals, but hoarded the next five-year deals to sell as IPL picks up.