TATA IPL Auction 2022: Will there be strong uptick in title sponsorship value in next round of bidding?

Sports experts point out that IPL's title sponsorship deal is likely to see low premium in the next round of bidding.

The cash-rich Indian Premier League (IPL), over the years, has seen strong growth in the value of its title sponsorship rights. However, sports experts point out that IPL's title sponsorship deal is likely to see low premium in the next round of bidding.

Manu Agrawal, CEO and Co-Founder, Bluesport Entertainment Pvt. Ltd noted that when the IPL title sponsorship is up for auction again for the 2024 season, it will have to consider sponsorship by Tata as the benchmark and not what Vivo paid. IPL saw a change of hands when Tata group came on board as title partner for Rs 670 crore for two-year deal (2022-2023), making its annual payout of Rs 335 crore.

Low premium

"Taking over Rs 300 crore as base, the next round in 2024 could be around the Rs 350-370 crore range but it will be difficult to cross this in my opinion, for the next round of auction," Agrawal told Moneycontrol.

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Lloyd Mathias, Business Strategist, Angel Investor and former Asia-Pacific marketing head of HP said that while the value of the IPL title sponsorship will go up sequentially every five years given its popularity and Indian’s never ending appetite for cricket, the value of the title sponsorship (in the next round of bidding in 2024) will go up marginally factoring the impact of the pandemic.

He expects a 15 percent increase in title sponsorship bid for anyone hoping to replace Tata as the title sponsor.

A 10-15 percent premium for title sponsorship in the next round of bidding is lower than what IPL has recorded previously.

The first title sponsor DLF from 2008-2012 bagged the rights for Rs 200 crore with an annual payment of Rs 40 crore. Pepsi that came on board as the title partner in 2013 with a deal value of Rs 397 crore and annual payment of Rs 79.4 crore, paid close to 100 percent premium (98.5 percent) for title sponsorship rights.

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However, Pepsi backed out as title partner in 2015 and Vivo came on board for two years in 2016 and 17. The Chinese firm paid Rs 200 crore for two years with an annual payout of Rs 100 crore and a premium of 25 percent for the rights. The phone company won the title sponsorship rights for Rs 2,199 crore for 2018-2022, bringing its annual payout of Rs 440 crore and a premium of 340 percent.

Drop in deal value

But due to Vivo's early exit as title partner, IPL's title sponsorship has seen de-growth in value.

Tata's deal value is 23.8 percent lower than what Vivo paid as title partner when in 2018 it won the title sponsorship rights of IPL for Rs 2,199 crore which brought its annual payment of Rs 440 crore. However, Tata will be paying more than what Dream11 paid in 2020 when it bagged the title sponsorship rights for Rs 222 crore in 2020.

"It will be very difficult for the IPL title sponsor in 2024 to pay as high a premium as Vivo was paying. No Indian company is willing to pay this high a premium as we have seen in 2020 and now again Tata has joined at a much lesser value," said Agrawal.

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In 2020, when Vivo had pulled out as title sponsor due to rising anti-China sentiment in India and was replaced by online gaming company Dream11 that paid half the amount the Chinese firm had paid, experts said that Vivo felt that the company had overpaid for the rights.

Agrawal said that the reason Vivo agreed to pay such a high premium in 2018 was because it launched products in Pakistan, Sri Lanka, Bangladesh and Nepal in 2017, and IPL is very popular in all of these countries.

"So, while it was a record setting high premium even for the IPL, it made business sense for Vivo and, as a result of the IPL title sponsorship, they have successfully propelled the growth of the company in these regions," he said.

Tata should be serious contenders, having tasted blood in 2022.

- Lloyd Mathias

Potential bidders

"The big change since 2018 is the appetite of the new age companies like CRED, BYJU’s, Dream 11, PhonePE, CARS 24, Swiggy. Many of them are freshly minted unicorns who are looking at the IPL as an opportunity to gain high awareness and expand their footprint. Buoyed by venture funds and many of them eyeing IPO’s, they will continue to chase the property," said Mathias.

He also expects Tata to be serious contenders, having tasted blood in 2022.
Agrawal thinks primary interest for the next round of IPL’s title sponsor will come majorly from app based tech companies.

"These companies are flushed with funding, a large chunk of which goes towards promotion. These companies are looking to increase their customer base aggressively and they are far away from market saturation in their segments, in fact these companies are just starting to grow. There is a huge requirement of building customer awareness for them and nothing beats IPL when it comes to creating awareness and promoting your brand," said Agrawal. ​​