The suspension of Indian Premier League teams Chennai Super Kings and Rajasthan Royals following a betting scandal evoked mixed opinions about how the cricket tournament would be affected, although it is unlikely to financially hurt title sponsor Pepsi-Co or team sponsors such as Aircel and UltraTech.
In all probability, the Board of Control for Cricket in India will have to compensate sponsors financially for any loss of opportunity to market their brands. Agencies dealing with the scenario has revealed.
“Both teams have star players such as MS Dhoni and Shane Watson who are brands in their own right and the teams have been performing well. If BCCI chooses to go ahead without the two teams next year, then it will have to decide on how the sponsors would be compensated,” a source said.
The sponsors of CSK and Rajasthan Royals won’t take any hit, said Melroy D’Souza, chief operating officer at Professional Management Group, the sports marketing unit of Madison.
“All the team sponsorship deals are structured in a way that the sponsors are protected. So even if it is a three-year deal on paper, the payment happens annually. If the team doesn’t play next year, the sponsor won’t pay,” D’Souza said.
Media planners said suspension of two of the eight teams may be a problem for the official broadcaster of the T20 cricket league. “They will not be able to match the ad sales revenue it raked in the previous IPL season because the number of matches will reduce,” a top media planner said.
“There will be a lot of challenges for the next edition of IPL,” said Santosh Desai, MD & CEO of Futurebrands India. “The immediate issue will be adjusting the format and one would imagine that the brand value will take a knock. And advertisers will be wary at least for the next season of IPL.”
According to Ashish Bhasin, chairman & CEO South Asia, Dentsu Aegis Network, “Both CSK and RR are very big teams and their suspension will impact the tournament in a big way. But I am sure BCCI will find ways to reorient the tournament.”
Bhasin added that the tournament is unviable with six teams and “financially it will be very difficult to sustain. If the number of matches get lesser there will be less advertising time. So we need to see how BCCI restructures IPL.”
Shashi Sinha, CEO, IPG Media brands, said that IPL is bigger than the teams and “people watch it more for its entertainment value than competitive cricket. So in my opinion, advertiser interest will remain.”
Vodafone, one of the three official IPL partners and one of the biggest advertisers, declined to comment.
PepsiCo India said it expects the issues surrounding IPL to be adequately and swiftly addressed. “The faith of cricket fans is important and needs to be restored in the interest of the game. With reference the ban on the two teams, we will discuss it with Board of Control for Cricket in India and are hopeful they will be able to find a solution, which is in the best interest of all stakeholders,” a PepsiCo spokesperson said.
Mobile wallet company, Paytm, which came on board as an IPL sponsor in 2015, will “wait and watch before signing another deal with IPL.” Shankar Nath, senior vice president at Paytm, said, “We are stunned by the news. But the good news is there is still a lot of time before the next season and maybe it will prove to be resilient.”
“IPL has emerged as a robust and endearing sporting event property, which has only grown stronger with record TV viewership and in-stadium attendance. We believe that the strengthened governance structure and enhanced image of the IPL will further build the popularity of the league and benefit all its stakeholders, including sponsors,” said Anindya Datta, chief marketing officer at Yes Bank, one of the official partners of the event.
Aircel, the oldest and biggest team sponsor of CSK, went into a huddle over the question of disassociating with a team found to have links with a betting scandal.
“The verdict has just been announced and we are reviewing our position in the matter,” Aircel said in a statement to CSK.
A leading media agency is of the opinion that both CSK and RR will play in the next season of IPL, probably under new owners, and therefore the tournament format will remain unaffected.
However, the agency said a number of big advertisers may not associate with IPL because the property is marred with the betting scandal and the matter is sub judice. No one would want to come under the scanner of the new government.
The agency said cricket as a property in India has become very expensive and a number of beverage and FMCG brands might use this as an excuse to get out of IPL.