IPL is on, but no word on domestic cricket

IPL is on, but no word on domestic cricket

There is a lot of optimism around the event, which is expected to bring much-needed cheer across mediums

A L I ChouguleUpdated: Tuesday, August 25, 2020, 08:26 AM IST
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IPL is on, but no word on domestic cricket | IPLT20.com

The 13th edition of the Indian Premier League (IPL), one of the most keenly awaited cricketing events in India, was to take place between March and May. But the Board of Control for Cricket in India (BCCI) was compelled to postpone the annual cricketing carnival to a later date because of the coronavirus pandemic. There was no clear visibility of its start date and a major threat of cancellation loomed. Two scenarios were considered at the time of its postponement in March: a truncated IPL with the number of matches reduced to half, a high possibility; or the entire IPL 13 season getting cancelled, a low probability. While in the first scenario, the IPL ecosystem value would have reduced by about $200 to $300 million, the second scenario would have had a massive impact on the IPL brand value, with larger economic and financial consequences.

Now in the middle of an unrelenting pandemic, the IPL is happening: this time it will be played entirely in the UAE, starting September 19, in a ‘bio-secure environment’. Moving the venue may have solved some problems for the BCCI, but there are several challenges and concerns about everyone’s safety to pull off the eight-team tournament with matches every day for 53 days. ‘Bio-secure environment’ is a term introduced to cricket and tested successfully in England recently when the host country played a three-Test series against West Indies, followed by a three-Test series against Pakistan. The next trial for cricket in a ‘bio-secure bubble’ will be the Caribbean Premier League this month, followed by the IPL next month.

IPL 13 will be contactless, with physical distancing, regular testing, quarantine and no handshakes, no over-the-top celebrations and without spectators. Therefore, the obvious question is: what’s the point in organising a tournament in a ‘bubble’ that only serves the limited purpose of creating content for television? Is it to fulfil contractual obligations with broadcaster partners? The IPL is not just a television event, but also an on-ground experience for fans, to watch the best cricketers from across the world play against each other in an exciting contest that offers entertainment and showcases best cricketing skills. But if the IPL is to be played behind closed doors, it gets reduced to only three-and-a-half hours of prime time reality television show. But then it doesn’t make a difference to the BCCI because the IPL was primarily conceived as a reality show for television and as long as it gets viewership and generates revenue for all stakeholders, the purpose is served.

The BCCI’s keenness to hold the IPL away from India, even at the cost of increased overheads, logistics challenges and safety issues, is not surprising if one looks at the IPL’s financial model. The greater part of the BCCI’s revenue comes from television, digital rights and title sponsorship. Star, the official broadcaster, pays Rs 3,269.5 crore per season to BCCI and an additional Rs 439.80 crore comes from title sponsorship each year. The third revenue stream is the franchisee fee. The BCCI’s central pool of income mainly comprises broadcast revenue and title sponsorship revenue. Vivo has been the IPL’s title sponsor since 2018 but this year, because of the anti-China sentiment, it has pulled out of title sponsorship. After the Chinese mobile company suspended the contract, last week the BCCI found a replacement in the fantasy gaming platform, Dream 11, for a sponsorship amount of Rs 222 crore. This means that the BCCI will be getting Rs 217.80 crore less from title sponsorship this year.

Though the BCCI stands to lose little more than Rs 200 crore, it is looking at the Dream 11 deal in a positive way, because the time to find a replacement for Vivo was short and the market conditions are depressed because of the COVID-hit economy. A reduction in title sponsorship fee by almost 50 per cent will adversely affect both, the BCCI and franchises. But the bigger worry for the franchises is the loss from gate revenue and reduction in sponsorship revenue for them from their own sponsors. Thus, while in a normal season, all stakeholders make money and the BCCI gets the maximum share of the pie, this year the franchises are expected to break-even and make some profit, while the BCCI will earn a little less than it usually does. This explains the BCCI’s keenness to organise the cricket carnival despite a host of challenges, increased costs and decline in revenue for franchises.

Though the festive season celebrations are expected to be muted and low-key this year because of the pandemic, there is a lot of optimism around the IPL, which is expected to add the much-needed cheer across mediums. The festive season has always been the best time for broadcasters to increase their share of the advertising pie with big ticket shows. As much as 40 to 50 per cent of the entire year’s advertising happens in the festive period, between Ganesh festival and the New Year. The IPL is a very popular property, and it is expected to boost overall TV viewership and advertising revenue for broadcasters. Considering the dearth of action in the cricketing world since March, a marquee brand like the IPL is certain to benefit more this time. Hence for Star Network, the IPL has become more important than ever, as advertisers are expected to line-up for the prime property despite tough market conditions.

The big plus for Star obviously is the long advertising hiatus for most big brands and the pre-Diwali window. Along with the festive period, lack of sporting properties and India’s unparalleled love for cricket will see high viewership for the IPL, though it’s too early to speculate about Star’s revenue from IPL this year. In the 12th edition last year, Star India had reportedly recorded a 20 per cent jump in ad revenue, to Rs 2,200 crore across the TV and digital platforms, from around 1,750 crore in 2018. This year, the IPL ad rates are reported to be 10 per cent higher than last year. Star had also sold nearly 80 per cent of its inventory for the IPL in March and the network is said to be commanding pre-COVID rates for the league matches. But whether Star’s revenue from TV and digital platform will add up to what it pays the BCCI each season is a big question.

Cricket at the elite level is easy to roll out for the BCCI, with all the safety and medical protocols, because it generates big revenue through TV rights. But that’s not the case with domestic cricket. So far, there is not a word from the BCCI on the upcoming domestic season. There is no clue about when or whether it will start, or in what format. Currently, the BCCI has ‘suspended’ all cricket action and any change in status would require government approval. As things stand, it is quite likely that the domestic season, which starts in September, may not happen till December. Whenever it happens, most likely it will be truncated, with some tournaments either scrapped or shortened.

The author is an independent senior journalist

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