IPL 2020: Franchisees may lose up to 20% in bargain to retain sponsors

The COVID-19 pandemic continues to hit the Indian Premier League franchisees financially.

The team owners are set to lose between ₹ 8 crores and ₹ 12 crores on account of the ₹ 218 crores deficit in the IPL title sponsorship. If that were no enough, teams’ personal sponsors are renegotiating their deals hard. Not just for the economic impact of the COVID-19 pandemic, but also for the commitments the franchisees won’t be able to deliver as the IPL will be staged in the UAE, behind closed doors.

All eight teams will reach the UAE by Sunday, August 23. While the stage is set for the action on ground (read practice) to begin, the franchisees’ managements have more than one issue to address off the field.

Since the league is being staged overseas with under strict operating procedures, the team sponsors will not be able to derive the desired branding mileage or ROIs on their investments.

Delhi Capitals and Kolkata Knight Riders have lost their title sponsors – Daikin Air-conditioners and Byju’s as the IPL had to be deferred from the original March-May scheduled in India to September-November in the UAE.

As other brands seek to revisit their contracts, the franchisees are faced with the challenge of retaining them at a “reasonable price”.

“Sponsors have a reasonable concern. When we are not in a position to fulfill our contractual obligations entirely, the deals will be open for renegotiations,” said an IPL team Chief Executive. “Situation is the same for all the teams. Right now, it is important to retain the brands and address their concerns.”

Can the almost 50% decline in the IPL title sponsorship decline become the benchmark for the other IPL sponsorship negotiations? “Not really,” says a leading media buyer. “We are negotiating for our clients. It will not be unreasonable to expect somewhere between 15% and 20% in the bargain. Everything is in black and white. Every deliverable has a certain value. If franchisees are not in a position to deliver, clients are not supposed to pay.

“Let us accept the fact the IPL will always be more relevant to brands than any other marketing tool. Also don’t forget, about the more prime time broadcast, Diwali season and absence high-octane live sports content for the Indian bazaar for more than five months.”

Senior managers from two more IPL teams have confirmed to SportzFront that they were in talks with the existing sponsors. “We will get some more clarity on deliverables after reaching the UAE. We are still not sure whether the entire league will be played behind the closed doors of crowds will be allowed at some stage. There are several important aspects to be ascertained to revaluate the deals,” said another franchisees CEO.

The stage for renegotiations was set by the Delhi Capitals when the team’s co-owner JSW discounted the value of add-ons like free tickets and meet and greet like deliverables to keep the principal sponsor rights of the team the co-own with GMR.

JSW has acquired the right to put their logo on the Delhi Capitals’ front jersey after Daikin air-conditioners has opted out of the deal, reportedly valued at ₹ 15 crores.

“JSW got a slight discount over what Daikin was paying because of no ticket sales, no meet and greet. But we’ll be showcasing our steel, cement and paints brands during IPL and we will be advertising also on Star and Hotstar,” JSW Group’s Parth Jindal has told Live Mint.

The IPL 2020 will be played in the UAE from September 19 to November 10. As of now, there are no plans to allow spectators for the games in the initial stages. However, it is expected that some crowd with some strict regulations may be permitted towards the second half of the tournament.

Admin Sportz Front

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