The 14th edition of the Indian Premier League (IPL), one of the most awaited sports events in India, was suspended indefinitely on May 3rd after a few players and support staff tested covid positive and the secure bio bubble was breached.
The Board of Control for Cricket in India (BCCI) and the IPL franchises were criticized for conducting the tournament when the nation was grappling with the second pandemic wave. With Covid 19 deaths in the country on the rise, whether the remaining IPL tournament would be resumed in the latter half of the year is not yet clarified by the organizers.
Last year, during the 13th edition of IPL, held in the UAE, the BCCI had earned Rs 4,000 crore. From every match broadcast, BCCI earns Rs 67 Crore on average. The eight IPL franchises were anticipated to share Rs 2,000 crore in revenues. With the cancellation of the tournament and lack of clarity on the tournament being resumed, the eight teams would have to give up at least Rs 1,000 crore in earnings from the central reserve pool.
IPL is also one of the most significant advertising events in the country. According to reports, The mobile manufacturer VIVO, who is the title sponsor for the tournament, pays Rs 440 crore per season. The associate sponsor brands such as Dream11, Unacademy, CRED, Upstox, and Tata Motors, pay in the range of Rs 120 crore each. There are still over half of the matches left to be played in the 2021 edition, and the BCCI could lose around half of their forecasted revenue this year.
Another cause of worry for the IPL franchises is their sponsorship contracts with various brands. Reportedly, every IPL franchise earns revenue of more than Rs 40 crore from sponsors for exhibiting their names on team jerseys. The eight franchises reportedly were to earn up to around Rs 600 crore this year. The franchises Will have to let go half that revenue if the sponsors invoke clauses in the sponsorship agreements. According to reports, The BCCI earns around Rs 800 crore every year in these sponsorships.
According to media reports, Star has charged around Rs 8 to 10 lakh for a 10-second slot in 2020. Around 18 sponsors and over 100 advertisers across multiple categories and other small businesses have invested a considerable amount of their marketing budget on IPL 2021.
A recent report by TAM Media Research stated that IPL 14 has recorded a 2% rise in average ad volumes during the first 22 matches when compared to IPL 13. The tally of categories increased by 10%, at the same time the count of advertisers and brands decreased by 3% and 9% respectively in IPL 14 compared to IPL 13.
The postponement or cancellation of the tournament has created question marks over the deals getting dropped in the halfway mark, which results in substantial unspent ad budgets. Will these unspent budgets be diverted towards other mediums like Print, News, and GEC channels, or Digital?
We reached out to experts to understand whether these unused budgets will be diverted towards other mediums. Check what they have to say:
“Over the years, we have seen that brands who advertise on IPL keep aside a part of their annual budget only for IPL. Brands use IPL as a campaign in itself. It is not just one of the channels in their media plan. So to say that the unused money would be redirected to other genres of channels may not necessarily be true. However, seasonal brands who advertise during this period of the year and present on IPL may look at deploying their budgets on other genres (may/may not be restricted to only GEC’s and News Channels). Non-seasonal brands may want to save the budget and use it on IPL when it decides to come back later this year,” said Jigar Rambhia, National Director – Sports, Wavemaker India.
“At the moment, given the state of consumer confidence, most ad spends across the board have been paused or reduced. So any unused IPL spends has not been reploughed to impact any alternative genre or medium at present significantly. The size and shape of ad-spends in the next few months will depend on how quickly we recover from the second wave and what opportunities exist at that time”, Radhika Ramani, Managing Partner, South, Motivator.
“With the suspension, over half of the IPL money is unutilized with the advertisers. In the current situation, I don’t see even 50% percent of savings coming back for reinvestment,” said Hema Malik, COO, Lodestar UM.
She continued, “When IPL kicked off, we were inching towards normalcy post a pandemic hit 2020. However, with the second wave hitting us even worse, some of the clients did want to pull back advertising in the midst of the series; however, that wasn’t an option as commitments were made. When IPL suspension was announced, a few clients decided to pull back the savings and keep it in reserve to be consumed when the situation improves. I don’t think that the Print medium is going to gain out of the IPL suspension. The print has a typical role to play. Most of the advertisers we see on TV, especially on IPL, are not big believers in the Print medium, barring a few categories like auto, finance etc.Print has a very tactical usage. At the same time, they leverage IPL to strengthen brand’s top funnel KPIs”.
“The IPL adjournment coincides with a downturn in revenues for most Brands and businesses. So while GEC and News channels will indeed get a part of the unused spending, it will be a much smaller pie. Brands are likely to conserve their spends this quarter, it’s a washout anyway, and shift the spends to the festive season, hoping the pandemic begins losing its fury by then,” observes Kaustav Das, CEO, Ralph & Das.
According to Das, Social Media, News Channels will be the biggest gainer. The print will get even more irrelevant amid a raging pandemic.
“IPL is not every Brand’s cup of tea. It works for the really big spenders. Or those that were looking to build a Brand overnight with one big spending burst. There is another, larger set of Brands and businesses that do not bet on IPL. At best, they try latching on with a topical idea. Even the ones that do have ongoing Brand building initiatives beyond IPL. I sense that a significant part of the budget saved will be allocated in those initiatives; the rest will be simply conserved,” concluded Das.