Let the games begin

namya — Sat, 18 Apr 2009 04:25:00 GMT

The second season of the Indian Premier League (IPL) is being held in South Africa. The Indian government made it known that it couldn’t deal with its security needs because the scheduled IPL season coincided with the general election. The reaction of the Board of Control for Cricket in India (BCCI) and the IPL was instructive. The immediate response was aggressive, even defiant. Lalit Modi, commissioner of the league (critics of his managerial style have been known to call him its commissar), and his colleagues pushed back against the home minister’s suggestion that it be postponed.

They argued that there was no other slot available in the year’s cricketing calendar, so postponement would mean cancellation, a dire prospect for a fledgling tournament. They offered to change the match schedule to avoid conflicts with polling days. The main opposition alliance, the National Democratic Alliance (NDA), even accused the Congress-led government of giving the world the impression that India was an unsafe place the year before New Delhi was due to host the Commonwealth Games.

For a moment it seemed as if the IPL was trying to outstare the Union government; then Modi blinked. But even this brief confrontation was instructive. Traditionally, sports associations in India have been creatures of local notables and politicians. BCCI president Sharad Pawar, for example, is a veteran sports administrator: He has helped to run kho-kho, kabaddi and wrestling associations, apart from the BCCI.

In the past, the government’s word in matters of sport was law. In Indira Gandhi’s time, an English tour of India was nearly cancelled because the government was reluctant to give visas to English players who had breached the sporting boycott of apartheid South Africa. Before the establishment of the IPL it wouldn’t have occurred to an Indian cricket administrator to take issue with the government, especially when it came to matters of state, such as security.

The reason for the change in attitude was that in days gone by, cricket administrators were revenue collectors: They were parasitic on forms of cricketing competition that already existed and to which they added little value. After the liberalization of the 1990s, canny administrators such as Jagmohan Dalmiya showed the BCCI and the International Cricket Council (ICC) the ways in which they could maximize revenue. With the IPL, Modi moved the BCCI from being a rent-seeker to becoming an entrepreneur.

The IPL is nominally a domestic tournament run by the BCCI: In fact, it is a business venture in a globalized world which is only perfunctorily “Indian” and which acknowledges no territorial boundary or frontier that threatens its commercial prospects. The IPL is, on the strength of its first season, potentially a golden goose, a goose owned and underwritten by some of the biggest names in that peculiarly Indian trinity: desi business, Hindi cinema and Indian politics. It was the confidence born of having incubated a lucrative business in which the great and the good had a stake, that allowed Modi to even consider going eyeball-to-eyeball with the home minister.

The IPL isn’t just a business venture; it is a business venture with Indian characteristics. Connections that might raise conflict of interest issues in other business environments don’t seem to matter here. For example, the Chennai Super Kings franchise is owned by India Cements Ltd. N. Srinivasan who is the vice-chairman and managing director of India Cements, is the de facto owner of the team by virtue of his position within the company. He also happens to be the secretary of the BCCI. That one person should both oversee the IPL in his capacity as an honorary or unpaid official of its parent body, the BCCI, and have a commercial interest in the league shows us how businessmen have moved from being patrons of Indian cricket to becoming stakeholders in its enterprises.

The way the IPL has dealt with the question of territorial loyalty is interesting. The place names worked into the names of the franchises follow no consistent principle: Five of the teams are named after cities, two invoke provinces and one, the Deccan Chargers, gestures at either a plateau or a peninsular culture. The IPL’s other attempt to establish the terroir of each team, was its decision to nominate distinguished players from each region as “iconic”. So Sachin Tendulkar, Sourav Ganguly, Rahul Dravid and V.V.S. Laxman were chosen to anchor the Mumbai Indians, Kolkata Knight Riders, Bangalore Royal Challengers and Deccan Chargers, respectively, to the places these teams were meant to represent.

The experiment was a disaster: With the partial exception of Tendulkar, these distinguished players were too old for the Twenty20 format. Their presence was meant to establish the team’s territorial provenance; instead they proved to be liabilities, vintages past their sell-by date. Whereupon the essentially non-territorial, profit-driven nature of the league reasserted itself and team managements set about unsubtly nudging Ganguly, Dravid and Laxman to the margins.

Far from abiding by any notion of territoriality, the IPL entered a quite astonishing claim to extraterritoriality. To squash its rival, the Indian Cricket League (ICL), the IPL, through the good offices of its parent body, the BCCI, succeeded in having cricketers who signed up with ICL blacklisted from international cricket, and even made a bid to have them outlawed from the domestic tournaments of other countries.

Modi’s remarkable decision to move the tournament to South Africa is consistent with the IPL’s determination to shake off territorial or national constraints that get in the way of business. The decision to move continents might have been forced on him but the fact that he could make that call and get the cricketing world and television companies to go along suggests that the IPL’s connection to “place” is perfunctory. Modi is betting the house on the hunch that he can pull off something that even Kerry Packer didn’t attempt: namely, create a professional league that can, when it needs to, become a travelling circus, because its Indian constituency has aerial roots

This is one of the more balanced pieces written on the IPL by Mukul Kesavan. Rather than taking a position and cry sacrilege, he has tried to analyse the phenomenon called IPL. The following piece is a nice one on the economy of IPL franchisees. Again an insightful one.

Investors who paid top dollar to own a part of the Indian Premier League (IPL) opportunity are now on a good wicket.

Franchise owners expect to earn around four-five times more this year than they did during the inaugural season of the 20-over league in 2008, thanks to a deluge of sponsorships and brand associations, according to estimates put together by Mint after speaking with franchise owners and media buyers (see chart on Page 3).

This comes after initial reports that sponsors and advertisers were sceptical about IPL’s success this year, when it had to be moved to South Africa after the Indian government said it could not provide security cover to the league during the election season, and that many had walked away from earlier commitments.

The team owners will also earn significantly more from the new broadcast deal the IPL management signed with sports marketing company World Sports Group (WSG) and Multi Screen Media Pvt. Ltd (MSM) this year. Last year, the deal had been signed for around Rs4,000 crore for 10 years, while this year it was renegotiated at Rs8,200 crore for nine years.

While the three partners did not share the details of the new broadcast deal officially, two executives from IPL and WSG said that the new deal has been linked with IPL’s viewership. IPL’s management may only get 33% of the contracted revenues for the first five years. Franchisees will get 80% of this 33%.

Based on this, the eight franchisees are likely to take home between Rs60 crore and Rs90 crore each. Last year, the teams earned Rs20 crore each from broadcast rights.

There will be no change in the income from central sponsorships, because the IPL board could not attract any new sponsor this year. Last year, each franchisee had got Rs15 crore from the sponsorships pool.

For franchisees, however, it has been raining sponsorships and brand associations this year. All franchisees but one have at least nine brand associations or sponsorships this year. The more aggressive ones, Chennai Super Kings (CSK), Mumbai Indians and Kolkata Knight Riders (KKR) have, 15, 13 and 12 “partners”, respectively, on board.

“Despite the last-minute move to South Africa, there has been a lot of interest from companies to partner with us for IPL 2,” said Rakesh Singh, chief marketing officer, CSK.

Last year, most franchisees had managed to rope in between three and six sponsors and partners. The most prominent franchisee sponsors this year include cola rivals Coca-Cola and Pepsi, sports shoes and apparel makers Adidas and Reebok, motorcycle manufacturer Hero Honda and mobile handsets maker Nokia India.

Chewing gum maker Wrigley India Pvt. Ltd has picked up sponsorships across the eight teams. “The idea behind partnering with the eight IPL teams was to associate with each of the individual franchisee and reach out to their respective fans,” said Himanshu Khanna, director, marketing, Wrigley.

The only team that has not had such splendid run this time is Bangalore Royal Challengers. The team, which belongs to Vijay Mallya-owned UB Group, only has Wrigleys and its in-house brands sponsoring it but, according to the company, that’s how it had planned it. “We have enough of our own brands to ride on the IPL so why should we share this space with any outside brand,” said Vijay Rekhi, president, United Spirits Ltd, part of the UB Group.

Incidentally, the group’s brands such as Royal Challenger, McDowells, and Royal Stag are sponsoring at least five other teams as well.

Along with the increase in the number of brand associations, the price of the deals has also seen a steep increase this time. “The rates for franchisee sponsorships went up at least 30-40% this year,” said two senior executives of two teams. “There are teams that have signed title sponsorships at 20 times the price they charged in 2008,” one of them said. They both did not want to be named. According to estimates from media buyers and various team executives, deals for associate and title sponsors this year have varied from Rs50 lakh to Rs15 crore.

Teams such as CSK, defending champion Rajasthan Royals, and KKR are, thus, expected to have closed deals worth Rs80-100 crore. Others have also raised around Rs50-60 crore. Last year, the teams had raised around Rs15-20 crore from such associations.

“Some partnerships, such as media associations, are purely in kind terms,” one of the two executives said. The size and the duration of independent deals could not be confirmed.

Franchisees credit this success to IPL’s popularity. “IPL makes it possible for advertisers to reach out to consumers across regions, demography, age groups and gender,” said CSK’s Singh, “...which is perhaps why the move overseas has not made a difference for sponsorships at the franchisee level.”

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Let the games begin