IPL team owners spend big, expect bigger returns

Nifty BSE | NSE 25/05/12 Are Mutual Funds betting on Nifty?

The numbers are sinking in. All the money that's been thrown in the IPL this week is leaving people who don't play cricket, swapping fantastic facts like this one:

 

Each time newcomer Ishant Sharma bowls, he gets Rs 1 lakh. At last count, the BCCI had raised Rs 7,200 crore from the IPL. On Wednesday, 18 owners burned up Rs 152 crore in 12 hours. Dhoni was crowned the most valuable cricketer in the world, Sorav Ganguly, in a delicious twist of fate, will captain Ricky Ponting, Sachin Tendulkar will team up with Sanath Jaysuriya and Andrew Symonds will call Hyderabad home. The rules of the game are completely re-written.

 

CNBC-TV18's Ramya Ramamurthy says it's now time for marketing to get into the picture.

 

Lights, camera and auction. As IPL team owners descended for a first of its kind player auction, they were clearly spend happy. Film stars versus businessmen versus cricketers. All vying for first, the Twenty20 champions and then, the big international specialists and finally, the rank and file. 78 players gone for way more than a song.

 

Then the reality check; Collectively, they would be shelling out Rs 152 crore this year, next year and the year after that. The team owners who have already spent Rs 2880 crore to get the team rights are now spending so they can earn later.

 

N Srinivasan , Chennai IPL Team said, "All of us have gone for what we think are going to be match winning teams and combinations. Ultimately, the quality of cricket we deliver is what is going to bring in the people. We believe the stadiums will be packed, that we will get excellent crowds and that we are not looking at this as some kind of a proposition where we will loose money."

 

PK Iyer , Hyderabad IPL Team said, "We haven't gone out and paid Rs 107 million yet. The Rs 107 million that we have committed that we would pay, has already had a contra entry with the broadcasting rights. So first, remove the Rs 107 million out and the player expenditure of Rs 20 million has also been capped. For that Rs 20 million, I don't think it's going to be difficult with, like the other speakers have said, the gate collection or anything else."

 

While the team owners will get up to 10% of the media rights amount over the next 10 years, their main revenues will come from ground sponsorships, gate revenue and merchandising. But the spends are adding up, from paying the BCCI for using its grounds, to assembling backend teams to run the show and then of course, to market the teams. So now the focus is to line up these players in to a batting order that draws the crowds.

 

While the icon players, who get 15% more than the highest auctioned player in the team, will drive the team's branding, franchisees who have assembled players from across India can forget about drumming up regional support. Clearly, the challenge will be to find innovative options instead.

 

Koushik Roy , Mumbai IPL Team said, "That itself is something which is going to be the branding challenge, as to how at the end of it, you will use very diverse and distinctive kind of characteristics and yet bring them together as one single team, which connects naturally with the catchments in your neighborhood. It should go on to somewhere, break the loyalty."

 

Ness Wadia , Mohali IPL Team said, "We have red and silver as our colors and that's been given already to BCCI. On the naming, we are waiting for the name to come from the people of Punjab."

 

The team owners say all they want is a sport of cricketing glory and a chance to promote the sport. But we know that at the end of the day, it will all boil down to bottom lines. That may depend on who rides the marketing wave well in the next two months.