IPL – Winners and Losers

27 05 2008
While we have to wait till June 1 to know who will win the inaugural Indian Premier League Final, we have put together a set of winners and losers on the business side of IPL.
 
Winners
 
The biggest winner in the IPL business is undoubtedly the UK based World Sports Group (WSG). By bagging the 10 year television rights for US $ 918 Million, this company will profit the most from the success of IPL. WSG has sold the television rights in India to Sony Entertianment Television (Sony) for an undisclosed sum for a period of 5 years. WSG has sold TV rights to various channels in the US, UK.,Asia and Middle East for $ 100 million. As per WSG , 8 million viewers are watching IPL outside India.
 
Sony after suffering huge losses in the World Cup 2007, took a big risk by putting its bets on IPL. Fortune favours the brave. IPL has turned out to be a huge television success. In the first two weeks of IPL, Mindshare, a media buying agency has reported that 131 million viewers had watched IPL. After the high initial TRPs of  8, the matches are still getting average TRPs of 4. This has automatically resulted in the increase of spot rates. From an initial rates of Rs 2,00,000- Rs 250,000 per 10 second spot, Sony is reportedly selling 10 second spots for Rs. 1 million for the finals and semi-finals.
 
All the IPL franchisees are winners. ( Please look at our other story on the profitability of an franchise.)   Some more so than the other. Rajasthan Royals, whether they win the IPL Cup or not on June 1 are certainly a big winner. Emerging Media, owners of IPL, bought the franchise at the lowest price in the IPL auctions, spent intelligently on players, tied up a slew of sponsors and now have a successful team whose valuations all other franchisees would be envious of. Kolkata Knight Riders ( KKR) is also expected to be a big winner on the business front, largely attributable to the sponsorships.
 
Reebok, the offical apparel for four IPL teams will be a winner. Reebok has already reported over Rs 50 million sales of KKR merchandise.
TV companies who normally have a sluggish April and May have reported 10 % higher sales, courtesy IPL. LG and Onida have launched new LCD models coinciding with IPL.
 
IPL and T20 are ideal for betting. The cricket betting market has once again come alive.  Ahmedabad and Jaipur are the big centres for betting. Daily bets of Rs 1.5-Rs 2.0 billion have been reported in the media.The overall IPL betting transactions are slated to be over Rs 1000 billion.
 
Losers
 
Indian Cricket League (ICL) and Zee Sports, both part of the Essel Group, will be the biggest loser in the success of IPL. It will be interesting to see, how ICL reinvents itself to counter IPL next year.
Nimbus too may lose out as bet its bottom dollar on BCCI’s test and one day matches which may see much lower eyeballs hence drop in advertising revenue. Big ad spenders have already allocated a large part of their  ad budget on IPL.
 
The companies who lost their bids for IPL franchises like the Future Group, Reliance ADAG and ICICI Ventures must be brooding over their loss. ITC, Britannia, MRF and other companies who sponsor sports must be ruing over their lost opportunity. Expect some of these companies to buy off some franchisees , at a higher valuation in the future.
 
The success of IPL as mass entertainment has taken away viewers from other TV  channelsKya Aap Paanchvi Paas Se Tez Hain – a TV game show with Shah Rukh Khan as the host, has been declared a  miserable flop, thanks to IPL.
Movies released during IPL viz. Tashan, Krazzy 4, Bhootnath have come croppers at the box office.
Multiplexes too are suffering due to IPL. 
 
Shopping malls have reported 20 % drop in footfalls, in this holiday season, the reason cited is once again IPL. 
 
One thing has become clear. Just like the marketers  plan and prepare for  major festivals like  Diwali, Durga Puja or Christmas, they will have include to IPL in their annual calender.
There is no telling though whether  the runaway  train called IPL  will stay on course the next year or the year after. 
 
 
– G. Mohan.  
 
  
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