IPL 14 to welcome fans to stadiums to attract gate revenue, but is it worth the risk, ask experts

IPL 14 to welcome fans to stadiums

It will be the first time since 2019 that fans will be able to watch the league live in a stadium. But will this spell good news for the league?

“The return of spectators is good for any sport. So, the second leg of IPL 14 being played in front of live spectators is welcome. A live audience also helps make the broadcast more lively and relatable as opposed to recorded applause," Lloyd Mathias, business strategist and former marketing head of HP Asia, Motorola and PepsiCo India, told Moneycontrol.

Revenue from ticket sales

Along with making the league more lively, fans coming back to the stadiums will also mean gate revenue addition to the overall earnings of the franchises as well as the league.

Franchises earn around Rs 400 crore from the sale of tickets. For a match, it is estimated that ticket sales generate Rs 3 crore-Rs 5 crore.

“However, given that the tournament is happening in the UAE, franchisees may not be able to derive the same benefit as they would if the tournament was in India,” pointed out Mathias.

In an Indian setting, this would have been a good income source, he said.

“Given the relatively smaller stadia in Dubai, Sharjah and Abu Dhabi, each with approximately 20,000 capacity, this would not be as substantive.  Also, with COVID protocols still in place, I would expect that the stadia would not permit full capacity-seating.”

Match-day revenue a small contributor

So, does this mean IPL will not benefit much from fans coming back to the stadiums to watch the league?

“It will not have a significant impact on brand value,” noted Mathias. This is because match-day revenues account for a relatively smaller proportion of the overall IPL revenues.

On average, the IPL franchisees’ earnings from match-day revenues, including ticket prices, merchandising, food and beverages, accounts for less than 20 percent of their overall revenues.

While in the last season, when IPL was played behind closed doors, some experts had pointed out that with no spectators in the stadium, on-ground activation was not possible last season and franchises had to let go of Rs 15-20 crore.

They had said that the absence of field activations was felt by categories like beverages, snack foods and those who used IPL tickets and corporate boxes for promotions with customers.

However, Sandeep Goyal, MD of ad agency Rediffusion, in an earlier interview, had noted that ground sponsorships derive value from TV exposure.

Is it worth the risk?

On organisers letting fans back to stadiums for IPL 14, Goyal said that the BCCI should have shown more restraint.
“Revenues from ticket sales are negligible, compared to the monies on broadcast. Why take the risk,” he asked.

The move to allow fans into stadiums to watch IPL 14 is a risk, considering what happened when spectators were allowed to stadiums in India for the matches between India and England in February this year.

After allowing spectators in stadiums for test matches between India and England, Dhanraj Nathwani, Vice President of the Gujarat Cricket Association (GCA), had announced that the T20 international matches between India and England, which were played at the Narendra Modi stadium in Motera, would be played behind closed doors.

The decision to suspend the entry of spectators was taken due to the resurgence in Coronavirus cases in five states, including Gujarat.