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Business News/ Opinion / Views/  Big IPL bids are bets on our consumption story
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Big IPL bids are bets on our consumption story

Advertising outlays on India’s premier generator of live audiences are expected to surge as Indian consumption goes up over this decade. But as the stakes rise, so should risk savviness

Photo: PTIPremium
Photo: PTI

The winning bids for two new cricket team franchises of the Indian Premier League (IPL), declared on Monday, were eye-poppers indeed. At 7,090 crore, the RP-Sanjiv Goenka Group’s bid smashed records and landed it the franchise for a Lucknow team, while 5,625 crore bagged for CVC Capital Partners’ Irelia Company the rights to an Ahmedabad squad. Both over-leapt the Indian cricket board’s base price of 2,000 crore per team—payable over 10 years—in an auction that redefined what a ‘mega-bid’ is. For perspective, consider the sums that once made jaws drop. In 2008, Reliance had won a Mumbai ticket for about 450 crore. Some two years later, Sahara got Pune’s for roughly 1,700 crore. That was more than a decade ago, and the money in this business of converging eyeballs upon a field for advertisers to aim pitches at has multiplied manifold since, it would seem. While a whiff of IPL inflation may hang in the air, what the latest bids arguably capture are expectations of India’s consumption story.

The IPL’s T20 format is a proven success, with an enlarged total of 10 teams padding up to pack in even more action from next year on. Viewership has been shifting to online platforms, expanding the extravaganza’s reach along with the internet’s. The size of IPL audiences has varied from one season to another, but analysts expect fierce bidding for web/telecast rights likely to be up for grabs once the Star network’s deal runs out next year. By some estimates, a broadcaster would need to pay more than twice the annual 3,270 crore that Star has been paying. Together with cash from other sources, the board’s media revenues go into a central pool that it splits equally with franchise owners, which have their own ways to make money as well. In a post-win interview, industrialist Sanjiv Goenka said a calculation of the gap between what his group will pay the board and what he expects back over a decade would mean “my outgo in terms of equity to the new venture is about half [the bid] amount." No matter how large the numbers, confidence levels in the future of the annual event are high. Under current deal terms, team owners are reported to have got a per-season payback of about 200 crore each, with popular names able to draw another 100-odd crore from sponsorships, merchandise deals, etc. If live web/telecast rights fetch $5 billion or more for the editions of 2023 till 2027 on the back of an advertising boom, a break-even target may not prove too steep to chase.

The Indian economy’s covid disruption could yet yield to a wave of relief spending, creating conditions for a splurge by advertisers. Some spenders have been raring to go. Notably, play breaks of the ongoing T20 World Cup have been dominated by commercials for online services that require risk cautions as tack-ons. Apart from several gaming gigs like IPL’s title sponsor Dream11, we have various crypto platforms vying for our attention. The very whack-a-ball nature of T20 makes it ideal for businesses that profit by enhanced risk- taking. Broadly speaking, as the public appetite for risk in India has historically been low, this can be interpreted as a correction of sorts. Yet, while cricket risks and returns are visible on our screens, the same cannot be said of all the fast and feverish ad pitches being made. It’s a fair bet that many online gamers and investors are acting like punters. For risk-savviness to rise, we need clearer cautionary notes.

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Published: 26 Oct 2021, 10:17 PM IST
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