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Sports sponsorship grew 12.3% to reach Rs 5,185 cr in 2015: Report

MUMBAI: The Indian sports sponsorship market grew 12.3% to Rs 5,185.4 crore (Rs 51.85 billion) in 2015, according to the third edition of the ESP Properties and Sportzpower report ‘Sporting Nation in the Making’. Sports sponsorship accounts for 10.4% of the total advertising expenditure.

TV ad revenue

Sports broadcasting accounted for a sizeable chunk of the total pie. On-air sports sponsorship grew 6.8% to Rs 2,690 crore (Rs 2.7 billion) in 2015, the report said. 2015 also saw the growth of non-cricket events.

On-air ad revenue was up by 130% from 2008–15. The quickest year-on-year growth was in 2011 when on-air ad revenue was up by 50%. But there was decline of 25% the following year. It is worth noting that in 2011 the IPL expanded to 10 teams. In 2013 sports on-air ad revenue was flat, while 2014 was a better year with 12% growth.

League sports have a longer live duration. Wider reach and consistent performance metrics of non-cricket sports will help in garnering future spends.

The reason why the sports on-air ad revenue was up by just 6.8% in 2015 was that there was no Asia Cup or T20 World Cup. Team India also played fewer matches.

In 2015 India played 16 international matches. One also has to remember that the plug was pulled on the Champions T20 League taking out (Rs 45 crore (Rs 450 million) from the system. The ODI World Cup made up for this. There were incremental accruals from the two tennis leagues and the third season of the Hockey India League.

On-ground

On-ground sponsorship grew a whopping 30% and reached Rs 1030.5 crore (Rs10.3 billion). Out of this, as much as Rs 223 crore (Rs 2.23 billion) came from non-cricket.

Despite bad publicity and the shadow of the Supreme Court looming over the BCCI, IPL viewership and engagement were unaffected. The property grew by 13.9% to reach Rs 529.5 crore (Rs 5.29 billion) in on-ground sponsorship.

Brands that drew the cricketing upswing were Paytm, Ceat and MRF with a combined inflow of Rs 107.8 crore (Rs 1.08 billion) a year.

The big news was football, which is expected to emerge as the second most popular sport in the country. It grew by 91.6% in ground sponsorships and reached Rs 114 crore (Rs 1.14 billion) in 2015.

At Rs 18 crore (Rs 180 million), Hero as title sponsor of the ISL is the leader among the 17 sponsors, up from 10 in 2014 who collectively contributed over Rs 100 crore Rs 1 billion) as sponsorship amounts.

Tennis, meanwhile, saw a 32% rise in ground sponsorships at Rs 47 crore (Rs 470 million). The Champions Tennis League saw brands like Kotak Mahindra Bank, Gatorade and Grey Goose. Coca Cola renewed its title sponsorship for the IPTL and also became a 10% stakeholder.

The Pro Kabaddi League saw a 300% rise in on-ground sponsorship revenue to Rs 48 crore (Rs 480 million) and that, too, without a title sponsor. Distance running saw a 53.5% year-on-year growth.

There was an increase in team sponsorship of 13% across sports. Cricket team sponsorship dropped slightly due to fewer Team India matches in 2015. The endorsement industry grew by 27%. International athletes contributed 25% of the endorsement numbers in 2015.

ESP Properties business head Vinit Karnik said, “A symbiotic marketing partnership has emerged within the sporting ecosystem in India. 2015 saw sports accounting for 10.4% of the total media spend, which is a 12.3% increase from the previous calendar year. 2016 will be fantastic not only for players, federations but also for brands and spectators with a deeper engagement with sporting properties.”

Sportzpower co-founder Thomas Abraham noted that sports other than cricket have successfully established themselves in terms of revenue and fandom. “Sports like kabaddi and football massively increased sponsorship revenues in 2015 and we saw return editions of sports like tennis and hockey as well. The successful launch of the Pro Wrestling League bodes well for 2016, which will see the advent of more franchise-based leagues. We expect 2016 to be a good year for cricket as well as for other sports, generating ad spends and clocking in corporate investments at an exponential pace.”

New leagues this year are expected in table tennis, volleyball and in cue sports. PKL will have an extra season in a year going forward.

According to Karnik, 2016 will be all about the fans. Fan communities need to be developed. This will be the focus of the synergy between federations, broadcasters, sponsors and franchise owners. Once the consumer is put in the centre in a big way, revenue will take off.

Football will take off in a big way as the I-league and ISL are expected to come together and be one league. One primary league will see more sponsor and fan engagement. It will run like a traditional league. 2018–20 will be a key period.

Ticketing, licensing and merchandising lag behind

Nonetheless, the journey is not done. Gate revenues and merchandising still lag behind.

Karnik pointed to the price-sensitive character of the Indian market. Price parity needs to come in for the licensing and merchandising side of the business to grow. It is interesting that the franchise fees are expected to come down once a primary soccer league comes in. The reason for this is that the i-league clubs cannot pay the same fee as the ISL franchises. It is also worth noting that the Delhi Dynamo owners got a good valuation for selling stake in their team.

Abraham said that merchandise is taking time in the IPL as it is tough to sell products on the back of a two-month event. That is where the expected forthcoming primary soccer league has an advantage as it could run for five to six months. Constant engagement with fans over several months is needed.

From 2008 to 2015, sports sponsorship grew by 114%. On-ground sponsorship was up by 140%. Team sponsorships rose by 27% while franchise sponsorship rose by 72%. Endorsements revenue was up by 230% over the eight-year period.

Team sponsorship, franchise fees

Cricket team sponsorship saw a marginal 1.9% drop to Rs 341 crore (Rs 3.41 billion) in 2015 due to the fewer matches that Team India played.

Non-cricket sports rose by 48.8%, driving the overall market up by 13% to Rs 217 crore (Rs 2.17) billion. Football rose by 67% year on year and closed at Rs 60.3 crore (Rs 603 million). The PKL was the principal driver for revenue increase in non-cricket sports. The PWL closed at Rs 24 crore (Rs 240 million) and made up for its chaotic debut by claiming the hearts of fans.

Endorsements

In 2015, the biggest endorsement deal was Tata Motors singing on Lionel Messi for Rs 60 crore (Rs 600 million) a year.

Virat Kohli stepped into the Rs 100-crore (Rs 1000 million) endorsement club that Tendulkar and Dhoni already belong to.

Non-cricket sports endorsements rose by 90% in 2015 to Rs 42 crore (Rs 420 million). Saina Nehwal, Sania Mirza and Mary Kom accounted for 40% of endorsements for non-cricket sports in 2015.