IPL loses $1 bn in brand value

Mumbai: IPL felt the heat of Covid-19 last year. In March, the Government and various State governments banned public gatherings. As a result, the Board of Control for Cricket in India (BCCI) had to initially suspend the IPL till mid-April from the original start date of March 29 and then postpone the 2020 season indefinitely.

The threat of full cancellation was quite real. With the increasing infection rate in India, having matches across eight locations in the country would have been a logistical nightmare. The biggest challenge was to arrange for safe travel and stay for a mammoth group of eight teams comprising over 700 people, including players/officials/staff etc, says a report.

The IPL, the franchisees and the players, too, would have suffered financially if the 2020 season was cancelled. While safety is paramount, there definitely was speculation on the revenue losses IPL would have suffered if the 2020 edition was to be cancelled.

BCCI faced the risk of enormous losses by way of broadcasting and sponsorship revenues, which forms a major part of the revenue bucket. Players may not have received their salaries, sponsors may not have paid the franchisees, and of course, broadcasters would have faced massive advertising and subscription revenue losses.

Duff & Phelps undertook a study during the initial lockdown period (April 2020) to analyse the initial impact of Covid-19 on the value of the IPL Ecosystem, which was estimated in our IPL Brand Valuation Report 2019.

"Based on the scenarios we considered, the IPL Ecosystem value was estimated to be impacted by nearly $1 billion only due to cancellation and without capturing the impact of the economic slowdown that might follow," says Varun Gupta Managing Director and Asia Pacific Leader Valuation Advisory Services Duff & Phelps, A Kroll Business.

In our impact study, Gupta goes on, we had mentioned that, "Depending on the extent of the post Covid-19 slowdown, most sponsorship contracts may get renegotiated next year, as the spending power of the advertisers and sponsors is likely to be impacted by the economic slowdown."

This does appear to have played out when Vivo decided to pull out of the title sponsorship at the last moment, and IPL had to scramble to get a new sponsor at the eleventh hour. The new sponsor entered at a steep discount, and the IPL had to take a hit of Rs 218 crore in sponsorship revenues.

Meanwhile, the BCCI decided to organise the 2020 season of the IPL in the United Arab Emirates (UAE) to take advantage of their infrastructure, resources, compact size of the nation and the lower infection levels. The pandemic also brought several uncertainties and difficulties for the cricketers once they set foot in the secure bio-bubble.

Be it the claustrophobia due to bio-bubble restrictions, including multiple quarantines, no fan engagement or the rustiness due to the long break away from cricket, the cricketers were undoubtedly impacted by Covid-19. But once the IPL started mid-September, it was a completely different ball game.

Television ratings went through the roof, advertisers who did not have viable formats during the year to advertise their products on were seen scrambling to advertise on television; and the public who were starved of live sporting action and forced to stay at home finally had something to cheer about.