With the novel Corona Virus bringing all sporting activities to standstill, there was little hope for Indian Premier League (IPL) 2020 to get a green signal, especially after missing the usual spring deadline. However, consequent to the postponement of ICC Cricket T-20 World Cup, which was scheduled in September, the IPL Governing Council acted quickly to secure the September date for IPL 2020 and after getting a go ahead from the Central Government, it was finalized that IPL 2020 was to begin on the 19th of September, only this time not in India, but UAE.
The decision to host the IPL 2020 in UAE was a big financial set-back for the franchises, sponsors, broadcasters and the BCCI itself. But, not all hopes were lost. With the lucrative sponsorship and broadcasting deals from Vivo and Sony respectively, there was still scope for a good amount of profit. This hope was, however, only until the recent tension between India and China in the Galwan valley, which created a huge nationalism cry to boycott Chinese goods and as it happens, numerous Chinese products/investors contributed towards the sponsorship of IPL including the IPL title sponsors, Vivo. Vivo, the Chinese Smartphone maker, had secured the title sponsorship rights for IPL (Indian Premier League) in 2017 in a five year deal (2018-2022) with a bid of INR 2200 crore, which was touted to be more than 40% of what was expected. As per this deal, BCCI were being paid around 440 crore every year, which was divided in a 50-50 ratio between the BCCI and the combined eight franchises in the IPL.
Now, given the political tensions between India and China, and the frequent call for boycotting Chinese products, Vivo India and BCCI (Board of Control for Cricket in India) amicably decided that it was in the best interest for both parties to pause the deal for this year. This development came right after the IPL's Governing Council meeting, that had decided to stick with Vivo as the title sponsors and faced a backlash soon after. It was a tough, but necessary call for both parties since none of them would appreciate the negative publicity and face the nationalism wrath.
The financial tremors of Vivo's exit will not just be felt by the BCCI and the IPL but the franchises as well since the huge sponsorship money was also one of the primary sources of income for the franchises. The franchises, who were supposed to get around 28 crore per team per year, from the title sponsorship deal, will now have to find another way to make up for the lost amount. Any new title sponsors for the season, if any, shall not be expected to provide this amount of money, especially at a time where the economy is hugely dented by the pandemic. Moreover, the franchises are also set to lose a lot of money from gate revenues since it is speculated that the IPL would be held behind closed doors. Each Franchise normally earns around 3-4 crore from ticket sales on every home game, but under these circumstances, the losses to the franchises only from gate revenue would come approximately around 20-25 crore. Further, if the BCCI fails to get a decent title sponsor on board, the overall loss for each franchise is expected to be around 50 crore this season.
This loss in revenue might not be worrying for the big teams, since it was expected to be below par this season, but the less popular teams with the lack of enough associate sponsors and partners would face difficulty in generating profit as their steady source of income has been paused. To make things worse, the franchises shall also have to bear the additional expenses of creating a bio-bubble that would include travel, security and accommodation in the UAE, which would be around a 40-50 percent jump from a regular home season. In the light of these circumstances, it would be a great achievement for the franchises to just break even this season.
Apart from the franchises and BCCI, the broadcasters (Star India) are also expected to take a hit of around 15-20 percent in their advertisement revenues. Vivo, alongside a few other Chinese smartphone companies spend heavily on television advertisements, which is rumored to be around 500 crore. The backlash against Chinese products might make these brands call off their advertising deals with Star India during IPL 2020 that would considerably hurt Star India and see them fall well below INR 2000 crore mark, which is their normal expectation from advertisement revenue.
Other than Vivo, there are various other associate sponsors of IPL with Chinese connections as well. For example, Swiggy is backed by Chinese investment, Paytm is funded by Alibaba group which is again a Chinese investor and Dream 11, the official fantasy league app of IPL also has a majority of Chinese investement. Although less likely, a possibility of these sponsors getting the axe cannot be ruled out, especially in these circumstances.
On the legal front, there is no trouble expected since it was an amicable decision between BCCI and Vivo, in their best interest. However, it would be interesting to see if Vivo comes back for the 2021 season and if they do, then whether BCCI offers them a year's contract extension for making up this season's loss. It is fair to say that Vivo walks out as happier party from this agreement, since they are spared from the unnecessary negative publicity and most importantly, they do not have to shell out 440 crore in a year in which the economy has taken a major hit, worldwide.
All that being said, the show must go on. There are a number of reasons for this season's IPL to be as successful or more. In terms of viewership, this season might be the biggest ever with more than 500 million expected to watch the leading domestic cricket league. The audience, locked up at their homes, has been deprived of entertainment and patiently waiting for a long time for their favourite sport, or any live sport for that matter, to get going. It is the perfect opportunity for the broadcasters and viewer engagement team to come up with innovative ideas so that the audience does not miss watching and cheering for their favourite team in stadiums. Moreover, the timing couldn't have been right for this season to kick-off. With IPL being considered as India's festival, it is the perfect occasion to liven up the festive months and provide much needed entertainment, at these times of despair.
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