BCCI holds all the cards as advertisers await verdict on IPL 2020

Even as it remains to be seen whether Board of Control for Cricket in India (BCCI) will postpone or call off the Indian Premier League 2020 in the midst of the coronavirus scare, vigilance is being maintained by all stakeholders invested in the tournament.

In our previous report, we spoke about Star India’s ambitious goal of Rs 3,000 crore and its strategy to achieve it. Ultimately, the success or failure of the tournament will largely depend on whether the BCCI decides to call off the tournament.

Also read:

Breaking down Star India’s Rs 3,000-crore revenue strategy for IPL 2020

On ground, however, things are more complicated. The Ministry of External Affairs (MEA) and Maharashtra Health Minister have called for cancellation of all events, including sports events, where large numbers of people will gather. Ultimately, they had left the tough decision to BCCI to cancel, postpone or hold the matches in empty stadiums.

Meanwhile, the Delhi Government has announced that no IPL 2020 matches will be allowed to be held in the Capital region for a month, which adds to the growing challenges for the organisers. Already, there is a big question mark over the participation of foreign players with the Indian Government deciding to put strict visa restrictions till April 15, 2020.

The BCCI governing board is meeting tomorrow (March 14, 2020) to take the crucial decision regarding the 2020 edition of IPL. Stakeholders would definitely want to avoid a situation where the tournament is cancelled, since there is a lot riding on IPL.

Amid all this, Sudhir Kumar, Director - Offline, DCMN India, is optimistic that consumer sentiment for the tournament has still not taken a huge hit, “The craziness will not subside. As such, the audience footfalls at the stadium might dip by 10-15 per cent,” he opined.

Kumar contends that with the summer heat will check the spread of the virus epidemic. “Cold regions need to be worried about the Coronavirus, but with the extreme heat here, we needn’t be worried much.”

That’s why Japan, which is hosting the Tokyo Olympics this year, is under far greater pressure to cancel the games, even though the organisers have affirmed that there is no question of cancelling the games. However, participation of countries at the Olympics is another matter altogether and so are there doubts over audience presence at the games.

Coming back to IPL 2020, according to media reports, BCCI stands to lose Rs 4,000 crore in revenues if the tournament gets cancelled. Partners like Vivo, Star Sports, Hotstar, Tata Altroz, fbb, Dream11, Paytm and CEAT will have to be reimbursed, along with the ticketing revenue.

Perhaps the most vulnerable advertisers at this point in time are the IPL franchise sponsors for the 8 teams that are participating in the tournament. The revenues from these sponsorships total Rs 500 crore, according to a report by Financial Times.

Bhairav Shanth, Managing Director, ITW Consulting, informed Adgully that each franchise is raking in on average of Rs 80 crore, with the top three teams – Mumbai Indians, Chennai Super Kings, and Kolkata Knight Riders – making Rs 100 crore plus from jersey sponsorship and player activations.

In the scenario where BCCI cancels a few matches until the epidemic subsides, Shanth explained, “It will impact the revenues to the extent of the number of matches cancelled. Sponsors generally look at their investments to be spread across the 14 home and away matches, any reduction in the number of matches reduces their visibility, especially if they are a brand present on the jersey of the teams.”

However, if BCCI chooses to reschedule the matches, then these franchises are not expected to lose any money in terms of sponsorships.

What about the advertisers? Will fewer footfalls at the tournament decrease the value of the property for sponsors and motivate them to renegotiate their contracts with BCCI?

Not likely, believes Charu Sharma, Sports Commentator and Director of Pro Kabaddi League. He further elaborated, “If the tournament is held and people stay at home, then the broadcast and digital platforms might do very well. You might say that nobody is watching at the stadium, but remember that makes up 0.001 per cent of the audience for the game. There are 40,000 spectators at the stadium, but television has a viewership of 400 million. So, there is no contest.”

“If this tournament happened only for television, then that would be a pretty good compromise. While you might argue that there won’t be excitement or engagement on the ground but to a certain extent people want to watch the game. Few watch the sport because there is a lot of excitement around the spectators who watch the game,” Sharma added.

He further said, “The sponsors are not backing a team because there are 32,000 people on the ground. Everyone wants visibility on the larger medium, which is TV. If the sponsor is getting larger viewership and visibility on TV, they would be happier.”

At the same time, he also said that the sponsors who depend on ground who expect an audience will suffer, but it will balance out if viewership in other areas goes up.

Even as we file this report, a big press announcement by Hotstar scheduled for today (March 13, 2020) was cancelled due to the ongoing uncertainty reflected in media reports. Stakeholders wait with bated breath to see what decision BCCI takes tomorrow.