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Bidding for next IPL cycle could cross $2 billion

MUMBAI: With the Indian Premier League (IPL) proving to be a profitable cash cow for Multi Screen Media (MSM), it is expected that the price for the period (2018–27) could exceed $2 billion when the TV rights come up again for grabs. The current deal with MSM expires in 2017 and is worth $1.1 billion.

A report by GroupM ESP, the sports and entertainment arm of marketing services major Group M, and SportzPower, the sports business information resource, notes that Reliance Jio could well play a disruptive role in the bidding.

The report draws a parallel to BT’s move to acquire a piece of English Premier Football rights in the UK earlier in 2013. Breaking the traditional lock that sister network Sky had on it was the big news as far as UK football rights bidding was concerned.

The battle royale that is developing in the UK market over key football rights between dominant player Sky and telecom giant BT could well be replicated in the Indian market over the next five years, but with prized cricket properties being the bone of contention.

Between the ICC rights and the IPL, it is the latter that will be the bigger draw, seeing as how MSM has garnered such massive profits from being the rights holder of the biggest property the sport has on offer. Of course, Star is also expected to chase the IPL rights and MSM will fight to retain it.

With regard to the ICC rights, it is reasonable to assume that the next cycle (2016 onwards) will go for a higher price than $1.1 billion. Then there are also the cricket rights for England and Australia, and the next tier would be football. For the three-year current cycle of English Premier League (EPL) rights, Star has committed $150 million. It can only go up after 2015.

The report adds that Mukesh Ambani’s ambitions around sport are gradually being unfolded and in terms of scale they are huge. It stands to reason, therefore, that Reliance Jio Infocom could well prove the Joker in the pack when the next round of big ticket cricket rights bidding comes into play.

Cricket in the foreseeable future will contribute 80–85 per cent to the total television sports media revenues.

Further highlighting the importance of the IPL for brands, Pepsico India executive VP Homi Battiwalla noted in the report that no large-scale association with cricket is possible in India without a sizeable IPL presence. That is why Pepsi took the IPL title sponsorship rights.

“IPL, the biggest cricket event in the subcontinent, has now become the new face of Indian cricket which combines the best of cricket with entertainment, regional club passion, and international glamour. Now, with this association we hope to catapult Brand Pepsi to an even higher orbit as the most universal, popular, trend-setting youth brand. The title association of Pepsi IPL and other benefits will allow brand Pepsi and other PepsiCo brands to gain more than conventional sponsorship benefits and generate immense universality across the country,” the report quoted Battiwalla as saying.

He is confident that Pepsi IPL will give the beverage conglomerate a multiplier higher than the investment being made. This belief, he said, is reinstated due to three reasons:

“History of cricket & IPL association: Historically, we have gained tremendously through cricket/IPL association, both in terms of cost per rating point (CPRP) and the benefits for the brands we have been able to derive from the broadcaster. Pepsi and cricket are synonymous with each other and the same echoes through consumer feedback on our campaigns over the years.

“Long-term strategic investment: We see this investment as a long-term strategic fit spread over a five-year horizon, which will get better every year as we go about activating this property in partnership with brand IPL. We realise the power of being a ‘title sponsor’ and are confident to derive 5-6 times value for the investment we have made

“Right timing: The timing of the tournament is ideal given that packaged beverage is an impulse category and nearly 50 per cent of consumption happens in these months.”

When asked about the impact of the title sponsorship on Pepsi’s battle with Coke for leadership in the Indian market, he said that Pepsi’s contract with IPL has very strong anti-ambush marketing clauses. “As title sponsor, we will also strengthen our associations across all aspects of IPL, including franchise partnerships.”

Nokia India marketing director Viral Oza, whose company has been associated with the Kolkata Knight Riders from the very beginning, said that 10–12 per cent of Nokia’s sponsorship budget is earmarked for sports-related properties. “We believe in one sport, one nation. Taking the KKR example, though it’s a Kolkata-based franchisee, our IPL-related offers have always been across the nation, be it flying the consumer from Kerala all the way to Kolkata. We have seven times returns for the last five editions of the IPL.”

Interestingly, he also clarified that the only reason that the company parted ways with the Champions Twenty20 League was because the event moved to South Africa. “Otherwise, the property delivered eleven times ROI.”