The Business of Sports Brands | IPL grows fangs

At this stage after the third season of IPL got underway with capped auctions, Media rights continued to take the limelight. At the start of the first edition of the sport, GEO Super in Pakistan and Willow TV in North America had bought media rights for the extravaganza internationally, SET paying $2 b for the 10 year contract. SET MAX has already made profit in the two editions past, and new Outdoor/theater rights were awarded to ESD and MSM bought some before for DTH. The Cola wars were played in the marketing theater, Coke on Air with TV Advertising and Pepsi on ground with MSM. Another word on the sponsorships gone by, Sony SET paid $2 billion while ESD pitched in with an additional $71 million.

IPL’s rising valuation

Some of us thought that given the brand valuation riding two cliffs already, the third valuation cliff will bring direct benefice to the Franchisees. Again however, the League has stepped in, making it a rather well-managed larger cake to share. Yes it’s Google You Tube and given the fracas regarding free feed available and the growing no. of broadband users in India, the Commonwealth and across the pond in US, it is time that shared the traffic with someone like Google who can definitely manage. the total brand valuation of each team now should cross $300 million and the two teams included would have a value of $3 billion which the teams are directly partaking

Go-(ogle)-ing Online

Also we know from our marketing reviews that Online advertising has already been assigned a higher than 2-3 times of the 2007 budget in 2008 and 2009. For regular Cricket and IPL sponsors, that budget has now got a real value for money click at you tube. A streaming IPL telecast, stopped by 5 minutes over the live feed on TV has not cannibalized much in audience terms. Of the universe of 20 million Indian Households ( assuming a peak of 10% of our Market, for TRPs/GRPs/Planning) and another 5 million in other Cricket playing nations, very few would switch off the TV for watching it online. However another 5 million in the USA and maybe an equal number in the 100 odd ICC affiliates would now e able to access live IPL from work and home without resorting to educational and pleading campaigns to promote the game. The USA has obviously thought about Cricket T20 leagues domestically, and the same can be sold much better with a near live feed from the pilgrim’s home as it were.

Going Social

Given the short version’s quick knocks, it isn’t surprising everyone with its popularity on social avenues. Everyone IPL has a presence on Facebook and Twitter and we will monetize together with Facebook and Twitter as well as with the IPL teams

An IPL Brand value for your brand

That said, there were other inelegant reasons, that plagued IPL’s media presence.  Given the lesser budgets and the pressure to earn a tangible ROI, the first lot of advertisers would be a narrow set of new and committed brands. The Vodafone ZooZoos campaign took more than a year to come to IPL, Coke has designed a new campaign for the first time and Pepsi and Hero Honda were the other known brands in play earlier and would probably cross produce online ads as well. The smaller unknowns like Havells and Rajasthan Royals themselves have a unique opportunity to build something lasting, while teams would look to emulate the Royals in getting higher valuations and pawning off minor stakes in the team to build a reputation of positive brand valuation and a mean profit.

Two new teams right away

But enough of boring essays, the game deserves a quick repartee more than extremely long and broing writings and speeches right now. There would be many more chances to dice and slice the IPL’s universe of brands and media rights before we reach a stable set of teams, players and valuations.

The new teams would be more than willing to give a $300 million bid to get a team in IPL. I think the first ones were to be from Ahmedabad and probably Kanpur/Lucknow. Amar Singh would surely be around one of the teams in the latter case. The number of brand ambassadors and co-owners may be willing to lend a hand may not matter as there are only two teams this time around, with a purse that would easily reach $300 million for the franchise itself and only about $100 million from shared rights that Google would have paid coming in as defined revenues. It is a long term commitment and any serious brand missing the opportunity will not be able to come back in this short version of the game. Take out your chequebooks, gentlemen!

The few notes of caution

Some diplomacy would be hurt in each edition of the game with tangible and some larger intangible costs. NFL in its current form was worse off even after 80 years of the Sport and till the 60s. Here, the English, the Pakistani and the Aussies and the Boks would all feel like creating a turf to defend against this juggernaut. It would happen in some form or the other and has to be absorbed in the spirit of the game.

The other note of caution, the tangible returns of each such $1b in rights or $100 million in seasonal costs are not here yet. But they will come and projecting them should be very easy for the owners and the administrators. Also India is already bringing more than 85% of the money to the game of Cricket. The IPL is definitely tilting it into the nervous 90s. The new owners would need to back it with real commitment and the ability to hold themselves from wasting too much of it on the wrong thing. Enough Said.

Branding Cricketainment

Lalit Modi also declared new official entertainment partners in the new Viacom sensation “Colors’ doing it for Cricketainment. The deal would have easily fetched IPL franchisees $20m each if not another $100m. In fact, the price may be revised upward very soon

“Cricketainment has always been IPL’s nature. Today we add ‘Colors’, the number one entertainment channel, as our partner,” said IPL chief Lalit Modi to announce the three-year deal the Twenty20 league has entered into on behalf of its franchise teams.

“There will be pre-match and post-match fashion shows, rock star concerts and other events,” said Modi with Bollywood stars Preity Zinta and Shilpa Shetty, part owners of IPL teams Kings XI Punjab and Rajasthan Royals flanking him.

Modi said that the IPL was just a facilitator in the deal and all the money accruing from it would go to the franchise team owners.

The other partner following ESD in the poor brethren would be the on site ‘caterer’ or the food connoisseur who would be establishing standardised menus at all venues for Food and Drink. Probably coördinated color uniforms for the staff and some own sell out publicity . The new IPL Food and Beverage partner is “Red Partners” for just the current season ( One year) This deal would have come to $40 million or thereabouts, still adding INR 20 Crores of 200 million to each team’s kitty.

More profit

This year’s  gate revenue would likely also cross $40 million while, Sony is set to make a cool $1 billion from ad bookings. Franchisees receive $120 m from Sony


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