Why are sponsors shying away from IPL 5?

Excerpts from India Business Hour on CNBC-TV18 Watch the full show »

Sahara and BCCI have kissed and made up, but the Indian Premier League (IPL) is still on a sticky wicket. First it lost Maxx Mobile as tournament sponsor and now, broadcast partner Set Max is still struggling to lock in sponsors and spot buyers, reports CNBC-TV18's Animesh Das.

Cricket sells, throw in glamour and the first four years of IPL prove this in spades! But ask broadcast partner Set Max about IPL-5, and you'll probably get dirty looks. That's because LG India and Godrej, both broadcast sponsors for the first four years of the tournament, have decided not to renew their association.

Why?

LK Gupta chief marketing officer, LG India said, "There is a cost benefit one has to look at. While it is probably the single largest property on television, the fact of the matter is that there is only a certain level to which you can commit marketing funding."

"The return that we get, which is in terms of absolute amount of viewership or TRPs or share of voice, that does not really justify the high levels of spending now onwards. So last year, we felt the pinch. So this year it was decided that we'll stay away from it."

Last Year, the tournament rated just 3.59 TVRS, 30% lower than 2010, and the lowest in its four-year history. However, Set Max is still keen on hiking spot rates by 10% to around Rs 5 lakh for 10 seconds.

High costs aside, the dismal performance of the Indian cricket team and general cricket fatigue have advertisers skeptical. For instance, spot buyer Maruti Suzuki is interested only in the internet broadcast.

Last year's broadcast sponsors Vodafone, Hyundai, Tata Teleservices, Cadbury India and L'oreal are still negotiating with the broadcaster.

The word on the street is that Set Max has already signed on five sponsors, and is close to bagging 4 to 5 others within the next ten days. The question is: Will set max match the Rs 1,000 crore it made from 8 sponsors and 110-odd brands in IPL 4?

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