NEW DELHI: With Indian Premier League (IPL) governing council set to review sponsorship deal with Chinese brand Vivo this week, ₹1,320 sponsorship deal money is at stake. Besides this, there could be a loss of over ₹500 crore of on-air advertising by multiple Chinese firms.
Vivo had been paying ₹440 crore annually to Board of Control for Cricket in India (BCCI) as five-year long IPL’s title sponsorship fee since 2018. It also invests heavily on television advertising and dealer engagement/offers estimated to be around ₹150 crore during the two-month long T20 tournament. The tournament, which has been postponed due to the coronavirus outbreak, is expected to be held in October-November.
Apart from Vivo, a bunch of Chinese smartphone brands also invested heavily in the tournament. Oppo, Xiaomi, Realme and OnePlus take up premium ad slots spending over ₹500 crore of advertising money throughout the tournament, according to media buyers estimates.
"The smartphone brands from China spend about ₹1,200 crore a year on IPL and other cricket tournaments. In total, Chinese exposure to cricket alone is over ₹2,000 crores at the very minimum every year including sponsorship and advertising spends which is quite substantial," said Sandeep Goyal, chairman, Mogae Media, a Mumbai- based marketing and communication agency.
In fact, the Chinese brands strategy has been centered around leveraging big Bollywood and sports celebrities, bagging title sponsorship for sports properties for peak visibility and concentration of advertising bucks on cricket which has been their winning formula, said Goyal.
While Vivo sponsorship is about ₹440 crores per year for the IPL, China's tech firm Tencent Holdings-backed online learning platform Byju replaced Oppo as official Indian cricket team’s official sponsor last year. As per the deal, Byju pays ₹4.61 crores per bilateral match and ₹1.56 crores per ICC match. Estimate of spend is about ₹300 crores a year depending on cricket calendar.
Experts believe that if Chinese brands are banned it would lead to significant loss of revenue for both BCCI and the official broadcaster Star India which earned more than ₹2,000 crore from IPL 2019.
However, annulling sponsorship contracts solely on the basis of the ongoing anti-China sentiment seems unlikely since it involves legal process, said a senior sports marketing executive on the condition of anonymity.
“BCCI will have to actively negotiate with the brands. Secondly, the board will also have to get a like to like replacement possibly an Indian firm which will take over the sponsorship deal. However, the market is in such a bad shape that it will be a challenge to get a company which is willing to pay a significant sum. Both Oppo and Vivo have paid double the amount of money that previous right holders have paid," the executive said.
The best solution would be to let this noise die down and let the economy revive in the next few months and then relook at the deals, the executive added suggesting that BCCI will also have to be careful and give precedence to Indian companies during the bidding process in the future.