Despite poor showing in IPL, RCB delivers on profitability4 min read . Updated: 04 Jun 2018, 04:22 PM IST
Nearly 95% of Royal Challengers Bangalore's sponsorship revenue comes from external partners like Eros Now, HP and Dominos
Bengaluru: Out of 11 attempts, the Royal Challengers Bangalore (RCB) have faltered six times and failed to make it to the play-off stages of the world’s premier domestic 20-over cricket tournament, the Indian Premier League (IPL). While the team has reached three finals since 2008, it hasn’t won the title even once.
That, however, hasn’t affected the growth of its coffers.
For Diageo Plc-owned United Spirits Ltd (USL), owners of the RCB franchise, the game is far from over, given that this year has been the best in terms of profitability for RCB. More importantly, it will remain a key part of USL’s business, the company said.
The biggest challenge RCB faced with its performance this year is that it fielded a new-look squad, which took its time to find the right combination, according to USL. Cricket experts also say the loss of Vijay Mallya’s star power has not had any bearing on USL’s ability to attract talent and keep the team motivated in the past two years.
“RCB is an integral part of the Diageo India (USL) business and the company remains committed to RCB. We have learnt from the last decade. This year we strengthened the profit and loss, significantly enhanced fan experiences and focused on putting together a more balanced squad that got us to within one game of the play-offs," said Amrit Thomas, USL’s marketing head and chairman of RCB.
While the central revenue kitty that benefits all teams participating in the IPL increased this year due to a media rights change, RCB itself has also managed to continue to attract sponsorship and ticketing revenue, thanks to its large fan base. Nearly 95% of the team’s sponsorship revenue comes from external partners like Eros Now, HP and Dominos.
“Such is the team’s fan following that we were sold out in many of the home games. We also have expressions of interest from corporates/fans wanting season tickets in advance for next year," USL’s Thomas said.
While nearly all the IPL teams have managed to garner huge fan bases, RCB along with Chennai Super Kings (CSK) and Kolkata Knight Riders (KKR) are generally viewed as teams that have built up the most loyal following from cricket fans. Indian cricket skipper Virat Kohli—along with other marque names such as the now-retired A.B. de Villiers—is considered a key reason behind RCB’s pull. Packed stands at Chinnaswamy Stadium in Bengaluru during RCB’s home matches are further testament to the kind of loyalty the team commands.
“RCB has the strongest face in terms of brand and market value today in Kohli. Despite RCB losing every game, their fans are such staunch supporters that so many losses have also not affected their commitment. Kohli and A.B. de Villiers are madly worshipped—they are not players for the fans, they are demi-gods. And historically victory has not really affected the commercial performance of a team," said a cricket analyst who did not want to be named.
Two of the three times RCB has made it to the finals of the tournament was under the management of Mallya, widely regarded as a fan of the game.
However, RCB’s dismal streak has nearly everything to do with the lack of a strong team performance—with the team being overly reliant on few star players such as Kohli—and little to do with the lack of Mallya’s star-power management, another cricket expert who requested anonymity said. There has been no perceptible change in the way the team has been managed since Mallya quit in 2016, the expert added.
While USL’s Thomas is now the chairman of RCB, the day-to-day operations of the team are managed by the head coach—New Zealand cricketer Daniel Vettori—and Rajesh Menon, general manager of commercial operations at Royal Challengers Sports Pvt Ltd, USL’s wholly-owned cricket franchise subsidiary. At the auctions, it is Thomas, the coaching staff and analytics teams who represent RCB, and during the two months of the IPL other key business partners within USL step in to help.
Mallya bought RCB in 2008 and ran it as a subsidiary of USL, before British distiller Diageo assumed control of the latter. He left for the UK in March 2016 and is facing a probe by various investigative agencies for defaulting on loans in excess of ₹ 9,000 crore.
RCB turned profitable for the first time last year, but this year profits have jumped significantly, according to USL.
Still, it is not the only team to rake in big bucks in the 2018 edition of the tournament. All eight teams in the IPL were expected to generate at least ₹ 200 crore in revenue and reel in tidy profits at the end of this year’s tournament, the Hindustan Times reported in April.
Some teams, like Bollywood actor Shahrukh Khan’s KKR and Rajasthan Royals (RR), have been profitable for years now. KKR turned profitable about four years after IPL began in 2011-12, while the Rajasthan team’s holding company Jaipur IPL Cricket Pvt Ltd reported profits from 2008-09 itself.