BY CAREFULLY and effectively slicing the IPL rights pie, Lalit Modi has proved once again that he is a shrewd marketer. As he said the other day, he has managed to double the central revenue pool for the franchise owners. Though Modi and the IPL are not very forthcoming on the revenues, doubling is surely good news fro the franchise owners.
Season 2 in many ways was a disaster for IPL and the franchise owners, although empirical evidence in the form of research from IIFL showed that all eight of them had made a profit. While this mystifies me, I guess one needs to pay some attention to these numbers. For one cannot disregard them completely. Each franchise owner reportedly received Rs 675 million from the central revenue pool last year and this was the bulwark of the earnings for each franchise. Team sponsorships also brought in an identical sum of money for each franchise owner – Rs 240 million. Other income varied and included gate receipts, in-stadia advertising, merchandise sales, and media tie-ups, while other expenses included stadia fees, travel, stay cost and team promotion.
Originally, the bulwark of the revenues were from the broadcasting deal with Sony which were directed to a central pool, 40% of which went to IPL itself, 54% to franchisees and 6% as prize money. The money will be distributed in these proportions until 2017, after which the share of IPL will be 50%, franchisees 45% and prize money 5%. IPL had earlier inked a deal with Kingfisher Airlines as the official umpire partner for the series in a Rs 1.06 billion deal. This deal sees the Kingfisher Airlines brand on all umpires’ uniforms and also on the giant screens during third umpire decisions.
Due to the sudden move to South Africa for season 2, IPL renegotiated its broadcast deal with Sony. IPL had agreed to subsidize the difference in operating cost between India and South Africa as it decided to move to the African nation after the security concerns raised because of its coincidence with India’s general elections. India’s biggest property developer DLF Group paid Rs 2 billion to be the title sponsor of the tournament for 5 years from 2008 to 2013. As far as the renegotiated broadcast deal with Sony was concerned, 20% of these proceeds were go to IPL, 8% as prize money and 72% would be distributed to the franchisees. The money would be distributed in these proportions until 2012, after which the IPL would go public and list its shares. That at least is the grand plan.
But this time round, Modi has carved new slices of the rights pie, milking it for every nickel and dime. Industry sources reckon that some of these monetisation deals are extremely lucrative. For instance Colors has reportedly paid $ 130 million for its 3 year licensing deal, 100 per cent of which will be split between the eight franchises. MRF has forked out Rs 160 million for the blimp at match venues while Maxx has entered into a Rs 200 million per annum deal as the strategic time out partner and Rs 320 million with Karbonn Mobiles. Further, Modi has sold the theatrical rights to UFO Moviez, opening up a spanking new frontier. UFO Moviez expects Rs 200-250 million revenues in the first year.
Further in a landmark deal, the entire IPL 2010 season will be broadcast on YouTube, following an arrangement between the league and Google, owners of the internet channel. The deal – under which all 60 games will be shown live or on a short delay on a dedicated YouTube channel – will apply across the world, except in the USA, which will have re-broadcast options. The agreement gives Google exclusive online rights for IPL content for two years, with both parties sharing revenues from sponsorships and advertising. In fact, these deals were announced with staccato regularity. ITV announced it had secured the United Kingdom television rights for the 2010 Indian Premier League. ITV will televise 59 of the 60 IPL matches on its ITV4 free to air channel. This way cricket returns to ITV after a hiatus of 30 years. No figures are available for both the youtube and ITV deals, but they will be worth a lot of money.
That is obvious from the way Google India Pvt. Ltd has announced an array of advertising partners for live streaming of the IPL matches on YouTube. Leading the line-up are sponsors such as the Royal Challengers Bangalore, HSBC India, and HP India. The other sponsors taking up the sponsorship slots include Airtel, Coca-Cola and Samsung. It is believed that the sponsorship deals on YouTube are available for between Rs 15 million and Rs 40 million. UFO Moviez, the world’s largest digital satellite cine network will screen DLF IPL 2010 Cricket matches live on gigantic screen in cinema theatres across the country. UFO has more than 1,700 digital screens across India and has tied up with Crown Infotainment who holds the distribution rights for IPL 2010 to introduce IPL matches in theatres.
Similarly, mobile phone manufacturer Karbonn Mobiles, a joint venture between Delhi-based Jaina Group and Bangalore-based UTL group inked a long-term sponsorship contract with the Indian Premier League (IPL). Karbonn Mobiles is IPL’s Official Partner Mobile Phone, as also the title sponsor of ‘IPL Nights’, a show that will be aired on MTV, part of the Colors licensing deal. The deal is valued at Rs 320 million for the year. In another innovation, IPL is also charging a premium for sponsored blimps at the match venues. Tyre brand MRF Ltd is spending Rs 160 million to sponsor the blimps. IPL has also entered into a Rs 600 million three year agreement with Maxx, a leading mobile and accessories manufacturer. Maxx will act as the Strategic Time Out (STO) partner and add spice to the final stages of the league as the official play-off partner.
Then there are deals with Bangalore-based mobile firm July Systems for the exclusive rights to the mobile Internet portal M.IPLT20.com, the official site for the third Indian Premier League on the mobile. UTV Group owned Indiagames is the official gaming partner for the Indian Premier League while the Noida based GoBindas Entertainment has landed the Interactive Voice & Video Response (IVVR) rights specifically for the United Arab Emirates region. vRock Mobile has bagged the worldwide IVR, SMS, MMS and live score rights. Then there is Sigma Ventures & DCI Mobile Studios which will develop an official IPL mobile application for iPhone, Android and other smart phones. The old adage of boondh boondh se sagar banta hai may hold good here.
What this tells you is that if there is a will, then automatically a way will present itself. In manys Modi has found his true calling only now. That of a marketer par excellence. IPL is here to stay and people are willing to bet big on it. The tournament’s return to India, captive audiences and as a corollary high ratings is what advertisers are seeking. I guess Modi would have been inventive last year as well, but his bandwidth in season 2 would have been completely clogged due to the last minute migration to South Africa. But he seems to have more than made up for it this year. In fact, he has put in a veritable sprint this time.
