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Star India may have to suffer a huge hit on IPL 2021 suspension; experts estimate around Rs 2,000 crore loss

With the BCCI suspending IPL 14 midway, Star India will not get any revenue from the ads booked for the remaining matches. The ad rates for playoffs are higher than initial matches, and Star India charges a 10-15 percent premium for the last few matches in IPL.

May 04, 2021 / 04:59 PM IST
Organisers of the 2021 edition of the Indian Premier League have announced the suspension of the League with immediate effect. This comes amidst the rise of the COVID-19 cases within the teams in just the past few days.

Organisers of the 2021 edition of the Indian Premier League have announced the suspension of the League with immediate effect. This comes amidst the rise of the COVID-19 cases within the teams in just the past few days.

The Indian Premier League Governing Council (IPL GC) and the Board of Control for Cricket in India (BCCI), in an emergency meeting, has unanimously decided to postpone IPL 2021 season, with immediate effect.

The season, being hosted in six cities, started on April 9 and would have ended on May 30.

IPL 14’s suspension will mean huge losses for Star India, the official broadcaster.

According to Sandeep Goyal, Mogae Media, a Mumbai-based marketing and communication agency, the league is halfway through. IPL 14 getting delayed now will lead to Star India suffering a 60 percent loss in advertisement revenue.

“The financial implication for Star will be huge as it was slated to get ad revenue for only those ads that were played and not for the rest of the inventory bought," he said.

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He estimates losses to the tune of Rs 2,500 crore for Star India.

According to Karan Taurani, Vice-President, Elara Capital, ad revenue for Star India for both TV and digital is around Rs 3,000 crore. So, a 50-60 percent loss would be around Rs 1,500-1,700 crore. However, he thinks that the losses may be shared between BCCI and Star India.

Last year, Star India garnered around Rs 3,000 crore in ad revenues from both TV and digital (Disney+Hotstar, the official digital partner of IPL). Compare this with IPL 12. The broadcaster clocked around Rs 2,100 crore that time -- in 2019.

However, this year, the second wave of Coronavirus is spelling bad news for the league.

Ratings for playoffs are higher’

A media expert, on condition of anonymity, said that sports tournaments getting cancelled midway is big trouble for a broadcaster.

"Ratings of your finals, qualifiers will be higher than those for matches in the beginning of a sports tournament. So, whatever the broadcaster is paying for the initial matches would not equate to its earnings. Revenue from later matches will be more," he said.

If we look at IPL, Star India charges a premium for the remaining 10-15 percent ad inventory for the last few matches. Last year, the broadcaster had increased ad rates by 15-20 percent for the playoff matches.

This year, a 15-20 percent premium for playoffs would mean Rs 16.80 lakh as Star India charged around Rs 14 lakh for 10 seconds.

What happens to the rest of the ads?

The ad inventory already booked by advertisers will have to be adjusted for some other properties. But for other properties, the ad rates cannot be the same as IPL, said Taurani.

He added that IPL 14 getting delayed will also impact the overall TV ad revenue which saw a significant drop due to the Coronavirus impact last year.

TV ad revenues fell from Rs 32,000 crore in 2019 to Rs 25,100 crore last year, according to an EY report.

"There was an expectation of a 10-11 percent growth in advertising this year, and IPL contributes almost 4-4.5 percent to ad spends. If half of the IPL is not happening, the league will contribute 2-2.5 percent, which could impact the overall growth of ad revenue," said Taurani.

While the first half of IPL was a smooth ride, crisis began when two players, Varun Chakaravarthy and Sandeep Warrier Kolkata of Knight Riders (KKR) tested positive for COVID-19. Two staff members and a bus driver at Chennai Super Kings (CSK) also tested positive, according to reports.

What the BCCI said

In a statement issued on May 4, the BCCI said it does not want to compromise on the safety of the players, support staff and the other participants involved in organising the IPL. Hence, it has decided to postpone the IPL with immediate effect.

“This decision was taken keeping the safety, health and well-being of all stakeholders in mind. The BCCI will do everything in its powers to arrange for the secure and safe passage of all the participants in IPL 2021," the statement added.
Maryam Farooqui
first published: May 4, 2021 04:59 pm

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