NEW DELHI (TIP): With the Supreme Court proposing the suspension of Chennai Super Kings and Rajasthan Royals from IPL 7 over the spot-fixing and betting scandal, India’s biggest and hottest sports property and BCCI’s most sumptuous cricket tournament faces a potentially unprecedented crisis.
If the IPL 7 is fully scrapped, the total loss of business could amount to Rs 20,000 crore, according to consultancy firm KPMG in India, which has estimated that a season of IPL generates combined revenues of around $3.2 billion for various sectors. However, if only CSK and RR are made to stay away from this year’s edition, the loss would be around Rs 9,000 crore.
If CSK and RR are forced to quit this edition, reducing to a six-team, home-andaway league, the number of games will drop from 60 to 34; almost 45% fewer games. “It would negatively impact viewership, ad inventory, jersey sponsorships, licensing and merchandising deals and channel partnerships. This would also have a cascading impact on hospitality, travel, security and associated sectors. Considering IPL teams generate Rs 1.5-Rs 3 crore per match, the total value lost just on account of gate revenues alone would be around Rs 40-78 crore,” says Jaideep Ghosh, head, sports advisory services at KPMG in India.
There could be other issues emerging as well. For instance, players’ payments for the year are scheduled to begin shortly. “Not paying them could create legal complications,” an IPL business insider said. Most teams have already invested in promotional material worth crore of rupees, he added. Industry insiders also mention that PepsiCo, IPL’s title sponsor, might try to renegotiate its deal with the BCCI depending on the final judgment. In 2012, PepsiCo had beaten telecom major Bharti Airtel to become the league’s title sponsor, with a bid of Rs 396.8 crore for five seasons starting 2013.
Interestingly, CSK’s skipper MS Dhoni is also a brand ambassador for the New York-based food and beverage giant. PepsiCo, however, refused to speculate on what could be at this stage. “The matter is sub-judice. We would not like to offer any comment,” said a PepsiCo India spokesperson. Another major sponsor, Vodafone, also declined to comment. Moving the first half of IPL 7 to UAE has also galled companies. “Sponsors are noticeably worried about their investments in the IPL this time. Stadiums in UAE are smaller than the ones here. For starters, instadia sales will be lower,” says Ghosh.
Advertising revenues will also be hit significantly if the IPL gets stalled. According to Navin Khemka, managing partner of ZenithOptimedia, a media-buying firm that represents consumer goods major Reckitt Benckiser among others, Rs 700 crore to Rs 1,000 crore of advertising revenues will be affected. “A 10-second spot is being sold for Rs 4.5-5 lakh. If the two teams don’t play, with a lesser number of matches, broadcasters will be forced to bring the ad rates down and we could see smaller advertisers coming in,” he says.
Prasana Krishnan, business head of Multi Screen Media’s (MSM) sports entertainment channel Sony Six, which has the television broadcasting rights of the IPL, sounds wary as he says, “Give us a few more days. We are also watching the space.” IPL teams such as, Delhi Daredevils, Kolkata Knight Riders (KKR) and Rajasthan Royals shied away from sharing their views on the impending scenario. While CEO and MD of KKR Venky Mysore and CEO of Delhi Daredevils Hemant Dua were not available for comment, a spokesperson for Rajasthan Royals preferred not to comment when contacted by TOI. “We would prefer to wait and watch before airing our views.”