AN ARGUMENT that seemingly crops up each time the Indian team comes up short in an international sanctioned tournament or series is that of how the advertisers and sponsors can somehow mitigate their damages and losses, especially when TRP’s drop more rapidly than Usain Bolt’s 100 meter times.
The gloomiest predictions claim that tournaments like the Champions Trophy or even the ICC World Cup are on their last legs as their slicker, shorter, and sexier sibling T20 starts to dominate the world of cricket. Others claim that the future seems to bode ill for most broadcasters and marketing representatives as the price per slot has apparently dropped rapidly even for a flashy event like the Champions League Twenty20 that has so much going in its favor.
The culprit for all this is of course allegedly the IPL as it seems to have sucked the life out of most other forms and dimensions of cricket. In a nutshell, the prevailing argument seems to be that advertisers and sponsors are wary of using international tournaments as a forum for their support regardless of whether they are 50-overs or T20, and need some sort of security and incentives.
It is this need for security and incentives that have spurred discussions about the latest and seemingly contentious clause. Spurred by the complete lack of predictability in knock-out or non-league events or even to some extent in the Champions League, some media reports are claiming the existence of the hallowed ‘compensatory clause’, where, if India as a team, or league teams of Indian origin (read: the Deccan Chargers) do not make it past the knock-out stage, the broadcaster would be obligated to recompense the advertisers (who had already purchased time slots for matches up to the finals) for the loss of TRP’s and decline in appeal of the event due to the absence of the crowd-favorite teams. Simply put, this would mean that in the event that the dream teams were unable to perform as per expectations (or hope), then the advertiser would be able to receive reimbursement for the previously purchased slots that it had hoped would showcase its product or service to an avid and global audience.
This may seem fair from an expectations standpoint: after all, the TRP’s of matches in the CT that did not feature India, or in CL T20 matches that do not feature any Indian team, doubtless drop significantly. However, from a fairness, financial, and reasonableness standpoint, the broadcaster is neither equipped, nor able to offer such reimbursements to the advertisers who have already committed to the event, and it is based on these commitments and revenues that any broadcaster would bid for rights, or be able to follow through with its business model projections.
Neither ESPN STAR Sports, Ten, Zee Sports, Neo, nor SET MAX are in the business of astrology, soothsaying, speculation, nor in the business of expectations that are tantamount to betting on outcomes. While a few stray cases of literally filling in slots that are unfilled on an incentivised basis may occur, this cannot be nor become the norm. It simply wouldn’t make sense, and is not sustainable, as every bid that a broadcaster for television rights, or a management and marketing company for in stadia signage would make, would have to then factor in the potential loss of revenue due to a favored team (India, or a large-market IPL/CL T20 team) not performing up to expectations. Therefore, if such a trend were to evolve, then there would for all intents and purposes be a bidding war for the segments where the favored team was sure to participate, driving the prices to record highs, and for the remaining matches where a gamble was to be made, the prices would depend on the appetite for risk that each advertiser or sponsor has or had.
Even then, if there was a compensatory clause in the agreement, there would be no guarantees for the broadcaster or marketing representative until the nth hour, and then if the team were not to make it to the next stage, the broadcaster would need to fill in advertising slots or procure signage sponsors hours before the match, which would be untenable.
Conditional clauses where the stakes are so high, and risk elements are a foregone conclusion, simply cannot work. A compensatory clause where the broadcaster is left hanging due to the performance (or lack thereof) of a team over which the broadcaster has no control, seems to be counter-intuitive, and over the long run, especially in sport where success and failure is a product of fickleness on the part of the team, simply is not sustainable. Simply put, the compensatory clause is unlikely to be incorporated or enforced in agreements over the long run, even in a buyer’s market such as CT or CL T20. As a matter of fact, ESPN has steadfastly denied the existence of any such clause in any of its advertising agreements.
It is a fact of life that T20 and especially league T20 is far more attractive, secure, and yields higher returns to investment than any other format of cricket, or any other event, simply because it spreads the attention, splits yet unites the fan-bases, and ensures a minimum number of matches that will be played. IPL will always be more popular than the international tournaments and events or even the CL T20 because of the quality of the competition, the duration of the matches and the length of the event itself, and the growing city loyalties. International cricket in any format or even CL T20 cannot provide an advertiser or a sponsor with that safety net. But that still doesn’t entail the sponsors and advertisers being recompensed for the Indian teams’ failures on the international platform, or Indian teams in the CL T20 not performing up to expectations.
You win some and you lose some, but just because in recent months the Indian team is losing a lot more than it wins isn’t the fault of the broadcasters or the marketing representatives, and not a risk that they can underwrite.
Compensatory clauses won’t work because gambling on revenues is a model that is untenable at best.
In what has become a telling few months for the future of cricket, the popularity, longevity, sustainability, future viability, and above all else, benefits and returns to investments from advertisers’ or sponsors’ perspectives are becoming clearer. One can only hope that the future doesn’t portend even the faintest whisper of compensatory clauses, for the sake of the sports variants that are reeling from the uppercut that the IPL has dealt them. That much is clear: in fact, Crystal (Ball) clear.
The author is a Sports Attorney with J. Sagar Associates.
