MUMBAI: The Indian Premier League in its tenth edition posted overall business value up by 26 per cent to $5.3 billion from $4.2 billion last year, boosted by the renewed VIVO IPL title sponsorship deal at Rs22 billion.
The findings of the fourth edition of Duff & Phelps’ annual study of the IPL franchisee brand values indicate that the increased value of the world’s richest annual cricket property as a business represent a three-year compound annual growth rate (CAGR) of 13.9 per cent.
In its 2017 report, “IPL: The Decade Edition: A Concise Report on Brand Values in the Indian Premier League”, the global valuation and corporate finance advisory’s annual study of the IPL franchisee brand values, Mumbai Indians retain top position in the rankings and become the first IPL franchisee with over $100 million in brand value.
Brand values of all the franchisees increased on average by 34 per cent compared to last year
Mumbai Indians sustained the top position with a brand value of $106 million, followed by Kolkata Knight Riders at $99 million and Royal Challengers Bangalore in third place at $88 million. Factors contributing to the rise in brand values of individual franchisees include increasingly lucrative advertising, broadcasting and sponsorship deals; reduction in franchise fees beginning with the next season; increased viewership across India; and increased fan engagement, evidenced by the rise in social media activity.
IPL franchise values were obtained using the “Relief from Royalty” method, which is premised on the royalty that a company would have to pay to a third party for the use of the brand/trademark if they had to license it. The teams’ brand values are derived from a host of factors: on field performance, size of the support base, governance, social media engagement, celebrity influence and marquee players and marketing strategy.
“Our valuation analysis reflected a notable increase in brand values in the IPL,” said Varun Gupta, Duff & Phelps managing director and leader of the firm’s operations in India, South Asia and Japan. “This IPL season has garnered attention for all the right reasons. Namely, a relatively controversy-free tournament, increase in social media engagement, strategic and highly successful marketing initiatives, and compelling on-field performances – all of which affirmed IPL’s standing as the most valuable cricketing league in the world.”
Digital content is becoming a very strong medium of social media engagement for the sports viewers. The following statistics from the report reveal the growing significance of content in today’s sports context:
• The number of tweets pertaining to the IPL has crossed 8.5 million and continues to grow.
• As per Maxus, a total of approximately 6 million mentions on social media were registered in the 10th season, more than twice those of the last season (approximately 3.1 million mentions).
• Mumbai Indians had an incredibly successful digital media strategy, attracting over 83 million engagements across Facebook (50 million), Instagram (29 million) and Twitter (3.95 million).
Broadcaster Sony Pictures Network India’s IPL ad revenues grew by 10-12 per cent to clock Rs13 billion in 2017, while OTT service Hotstar’s ad revenues from the tournament doubled over the previous year’s to touch Rs1.2 billion.
The IPL’s cumulative reach in the tenth year is estimated at 400 million unique viewers, with nearly 45 per cent contributed by rural households.
Trevor Birch, managing director at Duff & Phelps and former CEO of Chelsea Football Club, noted, ‘’I’ve been intrigued to watch how the IPL has marketed and protected its own brand value separate from the clubs. Having worked with some of the biggest clubs in the English Premier League (EPL), the one thing the IPL has done very well is the marketing and protecting of its own brand. Most of the EPL clubs are bigger brands than the EPL brand itself, whereas in the IPL, it seems to be Brand IPL which is more powerful than the individual franchisees.”
IPL media rights value
On the big question of what the IPL media rights for the India territory could fetch, Santosh N, managing director, Bengaluru, had this to say: “The new broadcasting rights auction will be one of the keenly watched developments over the next couple of months. The BCCI is clearly set for a huge windfall. We could be looking at a television broadcasting deal of record proportions in India. This deal may follow the precedent set by some of the big-ticket broadcasting deals across the world.
“As mentioned by us last year, this deal may follow the precedent set by some of the big-ticket broadcasting deals across the world (EPL, NBA and MLB). These other leagues have seen a consistent multi-fold growth in their broadcasting rights.
As far as offering specific numbers were concerned, Santosh stated: “In our analysis, we have assumed the renewed television rights to be around $1.8 billion for a five-year period and the renewed internet and mobile broadcasting rights to be around $210 million.
“Given the popularity of the tournament as well as the increase in the number of bidders, it would not be a surprise if the broadcasting rights are renewed at a much higher rate than what we have estimated.”
