IPL teams and cricket fans welcomed the new franchises on social media. (Image credit: Photo tweeted by @KKRiders)
The Indian Premier League's (IPL's) brand value is set to soar as the Board of Control for Cricket in India (BCCI) adds two new IPL teams to the popular league, say sports marketing and advertising industry experts.
The BCCI has snagged upwards of Rs 12,000 crore in franchise fee from private equity firm CVC Capital Partners for the Ahmedabad-based IPL franchise and Sanjiv Goenka-led RPSG Group for the Lucknow IPL franchise.
Read more: RPSG Ventures share price up 5% on bid win for Lucknow IPL team
It might seem an eye-watering figure but industry experts believe that such high value investments are a testament of IPL’s commercial trajectory and faith in the Indian cricket league by big international players such as CVC Capital Partners that have presence in Formula 1 and rugby.
From IPL's debut in 2008 with eight teams when the BCCI managed to collect about Rs 3,000-odd crore, to touch the Rs 12,000-crore mark for two teams in 2021 is no mean feat.
Read more: Cricket has a new synonym — IPL
New avenue for advertisers
Rammohan Sundaram, country head and managing partner – integrated media, DDB Mudra Group, says the valuation of brand IPL is reportedly around Rs 50,000 crore, and with these two teams, it might actually be a little higher.
“With more matches being added to IPL with two new teams, viewership numbers now will be unbeatable across all platforms of distribution and brands will benefit more with newer city-centric fanbase increasing like in this case Lucknow and Ahmedabad,” he says.
Read more: Ahmedabad IPL team owner CVC Capital Partners: What is its sporting legacy?
Newer brands will feature as team sponsors and brands will have a field day with team associations too, Sundaram says. “...we have seen tremendous benefits for brands associating with IPL teams for some of our clients and that is only going to increase,” he adds.
Disney Star India managed to corner advertising revenue (both television and digital) worth Rs 2,500 crore in a pandemic year last year. The official broadcaster is looking to topple this figure by at least 15%.
The addition of two new teams opens Hindi heartland to the advertisers for local sponsorship as well as national exposure that the league promises.
Read more: Expect Lucknow IPL team to command Rs 10,000 crore valuation in 5 years: RPSG Group's Sanjiv Goenka
“The Hindi heartland is the biggest consumer market in India, and there has been no IPL team there. It’s a huge opportunity for a brand to associate with the new teams. Not only advertisers will get significant regional presence in the Hindi heartland along with national exposure, it provides high RoI (return on investment),” says a senior sports management executive.
Growth for teams and talent
RPSG Group's winning bid of Rs 7,090 crores for 10 years for the Lucknow team may cost the company Rs 700 crore a year - a sum that some might consider outlandish, given that the company is expected to spend an additional Rs 200-300 crore on players and marketing.
“…The company is looking at an outlay of Rs 1,000 crore a year. BCCI will pay the team close to Rs400 crore as central revenue while ticketing/sponsorship money can bring an additional Rs 200 crore. It will still pay Rs 400 crore as a marketing cost,” says the executive quoted above.
However, he is quick to add that the valuation of a new IPL team 15 years down the line would be much higher than what has been the cost price. “The only challenge is team owners need to have significant cash flow for 10 years and then reap huge rewards,” he adds.
With growth of the league, teams have benefitted as well, with talks of some teams going public with initial public offerings (IPOs), too. “…and though that hasn’t seen the light of day yet, some of the bigger and popular teams like Mumbai Indians and Chennai Super Kings have valuations upwards of $2 billion,” Sundaram says.
The team fee is also expected to go up as the IPL media rights will soon be up for grabs, with Star’s Rs 16,000-odd crore five-year long contract expiring in 2022.
From a talent perspective as well, two new teams will translate into opportunities for new players to participate along with talent in the IPL ecosystem, be it operations, event or sports management, says Ritesh Nath, an independent sports consultant.
“It will lead to job creation for people who are looking to work in the IPL ecosystem,” he notes.
Opportunity to flaunt
The IPL has created immense opportunities over the years and it will continue to do so with the two new teams on board. It will translate into a high scale of media money, sponsorships and brand campaigns, though it will also exasperate marketers’ challenge of standing out in the IPL clutter.
Suhail Sameer, CEO of BharatPe
, says, "It is difficult to get noticed in IPL unless you are spending upwards of Rs 50-60 crore or you have found a way to get on to the main frame while the match is playing. But then it is a vanity event where a brand has an immense opportunity to flaunt.”