Franchise, broadcasters may be affected with IPL shifting out

[Basil]

Franchise, broadcasters may be affected with IPL shifting out​

The BCCI’s decision to shift a leg of the Indian Premier league (IPL) to South Africa due to Lok Sabha elections, is likely to affect the franchises and the broadcasters alike, with the cost of logistics likely to shoot up and time difference between the countries affect broadcasting time slots and advertising revenues.

While Multi Screen Media, the broadcasters of the event have said that the matches will be telecast as per Indian time slots, advertisers could be vigil in spending their money as the viewership is likely to be hit with the event not being held in India. “Our viewers are used to tuning in at 4pm and 8pm for IPL matches. The BCCI has assured us that the matches will happen at these times and the weekend matches will take place at prime time” Rohit Gupta, Chief Sales Officer of MSM said.

Franchises, meanwhile, are likely to be affected the maximum since they will not be able to collect in-stadia fee or the ticket collection revenue since the turnout may not be as large as when held in India. According to sources, franchises collected Rs 15 –20 crore last year through ticket sales. The nine franchises, many of whose bottom lines are in the red, meanwhile had to dole out around Rs 600 crore to BCCI as annual fees for hosting teams. Sources have confirmed that the BCCI is now likely to refund the franchises for the logistic costs.

“We hope BCCI will be able to find a solution which is in the best interest of all stakeholders.” A spokesperson for PepsiCo India said. Pepsi is the title sponsor for the event and sources have confirmed that the company does not have a large presence with a relatively low market share in South Africa.

IPL has one of the highest ratings for a television program and with advertisers and sponsors being cautious about spend this year, revenues could be hit hard. “Advertisers have been cautious in spending this year. There is a factor of local connect as far as IPL is concerned and that helps to build the buzz around matches. When the matches are held outside, then that connect does not happen. Also, time slot is very important”, said Abneesh Roy, Associate Director at Edelweiss Capital.

Key advertisers such as Godrej, which was an associate sponsor last year, Panasonic and Voltas say that they are yet to firm up their plans IPL 7. Sunil Kataria, chief operating officer, Godrej Consumer, says, "Certainly, there is less attraction for IPL this year versus last year as far as we are concerned. The fact that at least one leg will move out of India is not a very exciting proposition. While we are yet to finalise our budgets for next year, at a broader level I do see an impact on advertising with the venue change. Besides the change in match timings, which impacts viewership, there is also an on-ground impact because the matches will not be played here. That is a big dampener for many brands. IPL is about city-based franchises battling each other. If I am the fan of a certain franchise and I don't get to see their matches, obviously it hits the performance of the overall show."

The withdrawal of Pune Warriors India, owned by Sahara Group could meanwhile help improve advertisement rates during the current year. “This has more to do with the fact that there is one team playing less this year and the number of matches will be less,” says Madison Media COO Kartik Lakhsminarayan. Gupta says that the ad rates for the IPL matches will be 20 per cent higher than last year to make up for the reduction in the number of matches. A 10 second spot on-air during the IPL is expected to sell at Rs 4.75 to 5 lakh, barring the final, which will be significantly higher.

Pradeep Bakshi, president & COO, unitary products business group, Voltas, says, "I see a drop in advertising with the venue moving out of India. We have been big spenders on IPL in the last few years. Last year, we spent nearly 20 per cent of our total advertising budget on IPL. We are yet to finalise our plan for the property this year, but I so see an impact."

Media planners believe that IPL 2014 may not cross the coveted Rs 1000 crore mark this time. In 2009, when the event was shifted to South Africa abruptly, the average ratings saw a dip from 4.81 television rating points (TVR) to 4.17 TVR. The ad revenues for IPL 2009 stood at around Rs 500 crore according to various estimates. According to the ratings available for last year, in the first six weeks (59 matches), the average all-India TVR slipped to 2.9, down 14 per cent from that in the previous season. Mona Jain, CEO, Vivaki Exchange says, “The IPL is a big property for advertisers and they will spend. Once the dates and venues are fixed, the advertisers will start lining up. The ad revenues are expected to be in line with last year.”

"We are likely to spend less on IPL this year. In the last couple of years, we did not find the return on investment very substantial on IPL. But given that it was a big property, we put in the money behind the tournament. This year, with the elections, the venue change, we are likely to invest less behind the property."Suresh Kumar Bandi, divisional deputy MD, Panasonic India, said.

Last year,Set Max had lowered its ad rates by 15-20 per cent (bringing it to around Rs 4.5 lakh for a 10-second slot) and managed to rope in a larger number of advertisers. Instead of five presenting sponsors last year who paid a premium for the association, the channel brought in 11 companies which helped them rake in Rs 850 crore, compared with Rs 650-700 crore in 2012.

Franchise, broadcasters may be affected with IPL shifting out | Business Standard​