With two new franchises being sold-off at world-record beating rates, Lalit Modi’s utterly raucous IPL takes leaps towards becoming the world’s largest sporting behemoth. Illogical? Yes, talk to his hand...
Whether it is the well-known Amby Valley knight or some unknown Special Purpose Vehicles, the real rub lies in the outflows that are bound to follow. Whatever the parties have spent so far is only for the purchase of the respective franchises. Now they have to invest on the players, staff, logistics and infrastructure. Starting September, the players’ auctions will restart, and Sahara and Rendezvous will be forced to shell-out some precious coins for purchasing players – whose values with each passing IPL are only going upwards. At the end of the day, building your team as a dominant brand poses the biggest challenge. While money might not be an issue in the case of Sahara, as far as Rendezvous goes, it sure has a rough uphill ride ahead.
Three years back, when IPL was born, Mukesh Ambani and Vijay Mallya paid Rs.441 and Rs.440 crores respectively to purchase Mumbai Indians and Bangalore Royal Challenger franchises. Many pundits had then questioned their vision, calling it nothing more than a mirage. On current terms, those figures look like Downing Street pennies. Although the first year was evidently a damp squib, both in terms of stadium spectators and television viewership, IPL turned into a trusted and successful sporting brand, turning profitable during the second year itself for both the BCCI and the franchise owners. Despite general elections forcing the entire tournament out of the country, brand IPL did not lose its glitter, thanks to some great advertising. According to market experts, IPL 3 will generate Rs.1000 crores in ad-revenues. Even in terms of viewership, IPL no longer looks a three-year-old infant. TAM reports prove how viewership has increased by 6% this season, as compared to IPL 2, with more than 67 million viewers watching the first three matches of IPL 3 in India alone. Yes, national viewership has fallen as the tourney has progressed. But with IPL matches being broadcasted live on YouTube for the first time, viewers in UK, US and Australia are showing keen interest in IPL.
Conclusively, one has to remember that finally, IPL is not just a sporting event, but a venture where investors like Shahrukh, the Wadias, Sahara et al are attempting to maximize their investments. One method to do that is to sell off the franchises to third party buyers, when the going rates are good. Another is to earn from their share in advertisement earnings of the IPL, which are pretty decent currently. But there is a danger of these ad-rates hitting the ceiling, which would therefore divert advertisers to other formats, as Sam Balsara, CMD of Madison World says, “IPL may turn into a Golden Goose. Due to overhype, the ad-rates of IPL slots are too much now. This may suddenly divert advertisers from IPL to other cricketing events. But at this moment, IPL is rocking!” As per a London-based brand valuation consultancy Brand Finance, the value of IPL 3 (at $4.13 billion) is twice that of IPL 2 ($2.01 billion). But is this growth a sustainable one? Brand Finance claims it is. And standing true to our sub-heading, Lalit Modi says, “IPL will become the world’s biggest sporting brand!” Yes, keep talk to his hand. Right now, it rocks!
Whether it is the well-known Amby Valley knight or some unknown Special Purpose Vehicles, the real rub lies in the outflows that are bound to follow. Whatever the parties have spent so far is only for the purchase of the respective franchises. Now they have to invest on the players, staff, logistics and infrastructure. Starting September, the players’ auctions will restart, and Sahara and Rendezvous will be forced to shell-out some precious coins for purchasing players – whose values with each passing IPL are only going upwards. At the end of the day, building your team as a dominant brand poses the biggest challenge. While money might not be an issue in the case of Sahara, as far as Rendezvous goes, it sure has a rough uphill ride ahead.
Three years back, when IPL was born, Mukesh Ambani and Vijay Mallya paid Rs.441 and Rs.440 crores respectively to purchase Mumbai Indians and Bangalore Royal Challenger franchises. Many pundits had then questioned their vision, calling it nothing more than a mirage. On current terms, those figures look like Downing Street pennies. Although the first year was evidently a damp squib, both in terms of stadium spectators and television viewership, IPL turned into a trusted and successful sporting brand, turning profitable during the second year itself for both the BCCI and the franchise owners. Despite general elections forcing the entire tournament out of the country, brand IPL did not lose its glitter, thanks to some great advertising. According to market experts, IPL 3 will generate Rs.1000 crores in ad-revenues. Even in terms of viewership, IPL no longer looks a three-year-old infant. TAM reports prove how viewership has increased by 6% this season, as compared to IPL 2, with more than 67 million viewers watching the first three matches of IPL 3 in India alone. Yes, national viewership has fallen as the tourney has progressed. But with IPL matches being broadcasted live on YouTube for the first time, viewers in UK, US and Australia are showing keen interest in IPL.
Conclusively, one has to remember that finally, IPL is not just a sporting event, but a venture where investors like Shahrukh, the Wadias, Sahara et al are attempting to maximize their investments. One method to do that is to sell off the franchises to third party buyers, when the going rates are good. Another is to earn from their share in advertisement earnings of the IPL, which are pretty decent currently. But there is a danger of these ad-rates hitting the ceiling, which would therefore divert advertisers to other formats, as Sam Balsara, CMD of Madison World says, “IPL may turn into a Golden Goose. Due to overhype, the ad-rates of IPL slots are too much now. This may suddenly divert advertisers from IPL to other cricketing events. But at this moment, IPL is rocking!” As per a London-based brand valuation consultancy Brand Finance, the value of IPL 3 (at $4.13 billion) is twice that of IPL 2 ($2.01 billion). But is this growth a sustainable one? Brand Finance claims it is. And standing true to our sub-heading, Lalit Modi says, “IPL will become the world’s biggest sporting brand!” Yes, keep talk to his hand. Right now, it rocks!
Satish Chapparike
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Source : IIPM Editorial, 2010.
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
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