Sponsorship revenue for Indian Premier League franchises is expected to increase 10 percent with each of the franchises earning in the range of Rs 100-120 crore this year, and some teams already reporting 50 percent growth.
For Delhi Capitals, sponsorship revenue has gone up by 50 percent from last year, said Dhiraj Malhotra, chief executive officer of the franchise. He said that they have JSW on the front of the jersey and DP World at the back and most of their sponsors have come back.
Gujarat Titans, which had 15 sponsors last year, has 26 partners this year including Ather as the principal partner and others including Jio and BKT Tires as associate sponsors. The team, which won the 2022 IPL title, earned Rs 65 crore in sponsorship last year.
Royal Challengers Bangalore expects double-digit growth in sponsorship revenue, said franchise VP & head Rajesh V Menon. RCB recently said Qatar Airways has come on board as its principal partner for three years with a deal valued at Rs 75 crore, the second-biggest in IPL history. The entry of Qatar Airways signals that new sponsors are joining the league.
However, analysts and sports marketers noted that the overall growth in sponsorship will not be significant due to a tough spending scenario as startups and tech companies rein in their marketing budgets.
"Spending from startups sector has slowed down a lot, which was at its peak during the last two years. There is a conservative outlook by brands as everyone is being watchful when it comes to spending because of the economic scenario," said Divyanshu Singh, chief operating officer of JSW Sports. He said that's why the focus is on getting new brands on board the IPL ecosystem.
Overall sponsorship revenue is expected to increase 10 percent this year, said Santosh N, managing partner of D&P Advisory. Last year, this revenue was estimated to have increased by 20-25 percent.
He said sponsorship revenue growth for the new IPL teams – Gujarat Titans and Lucknow Super Giants – will drive the overall increase in this segment.
"The two new teams will see growth this year and will be on par with teams like Punjab Kings, Rajasthan Royals. The new teams will be on par with average IPL teams of the original eight franchises,” he said. “So, this will contribute to growth in franchise sponsorship revenue. But whatever increase sponsorship revenue would have seen because of the new teams would get offset by the negotiated rates or some digital companies pulling out.”
He explained that team sponsorship revenue has ranged from Rs 50 crore to Rs 100 crore, depending on the team.
"Franchises like Mumbai Indians, Chennai Super Kings, Kolkata Knight Riders, and Royal Challengers Bangalore are over Rs 100 crore (in sponsorship earnings) and everybody else is between Rs 50-90 crore," he said.
Singh said the digital footprint that IPL will garner this year is attracting all types of brands.
"This could be driven by the increased competitiveness between the TV and digital rights holders. As the two networks battle it out for eyeballs, the overall audience for IPL could go up. The increase, though, may be balanced out by the funding slowdown and many new economy companies scrutinising their business models and focusing on profitability,” said Lloyd Mathias, a business strategist and angel investor.
Star Sports is the official broadcaster for the IPL, while JioCinema is the digital streaming partner.
Expanding revenue streams
Singh said that from a franchise perspective, growth has been strong over the past three years as teams diversified their revenue streams.
"Delhi Capitals has seen cumulative growth of 80 percent in sponsorship revenue in the last two years. We are diversifying our revenue streams from just jersey sponsorship to licensing and merchandising, content, web3, and NFT (non-fungible tokens) strategy as a revenue stream," he said.
Mumbai Indians has got on board playR, a sports and lifestyle company, as one of its official merchandise partners from season 2023. The company will make and sell Mumbai Indians merchandise such as match jerseys, training jerseys, and polo t-shirts worldwide. It will also offer cricket equipment such as bats, balls, gloves, and pads, and fitness accessories like yoga mats, bags, and bottles.
Gujarat Titans has tied up with digital collectibles platform Rario, which will offer digital player cards of the team to fans for three years.
FanCode Shop, the merchandising arm of FanCode, has announced a long-term partnership with Rajasthan Royals to launch, build, and manage the RR Mega Store, which will offer fans licensed Rajasthan Royals merchandise.
Challenges and opportunities
TCL India, the electronic appliances company that’s been a four-time sponsor of Sunrisers Hyderabad, said it continued the association to bank on the team’s popularity and showcase its products.
“Sponsoring a team during any major cricketing event is the most certain way to build better brand visibility, gain consumer confidence and widen the overall reach of the brand. With this partnership, we intend to maximise our sales and expand our consumer base. Also, Hyderabad represents a significant market for TCL, so this collaboration with SRH will reinforce its presence in the city,” said Xia Dongyue, CEO, TCL India.
On the other hand, online gaming platform WinZO, which was the principal sponsor of KKR in 2022, said this year is a missed opportunity. This was because of new guidelines that exclude real-money gaming companies from advertising or sponsorship during IPL, which the company said appears to be arbitrary.
"We were unable to continue as the sponsor in line with the revised guidelines," said Paavan Nanda, cofounder of WinZO games. "The Supreme Court’s judgments on real money skill gaming have affirmed the legality of skill-based games."
While there are some challenges for IPL sponsorship, Singh said there are also other opportunities.
"There is an opportunity to unlock corporate social responsibility (CSR) spending. Brands are looking at spending their CSR budgets on sports. The sponsorship market is about Rs 9,000 crore whereas CSR spends are Rs 17-18,000 crore and sports CSR spending is only Rs 250-300 crore. So, there is a huge delta in both markets to expand," he said.