The IPL Fatigue

3 05 2011

 I consider myself a typical Indian cricket fan. I stopped playing cricket almost 30 years ago. But, I am a cricket fan, because I watch cricket matches on TV. I am not even a connoisseur of cricket.  By that I mean, I don’t watch cricket on TV when say Zimbabwe is playing Bangladesh or  or some domestic match is shown on the DD Sports channel. I only watch cricket matches when our Men in Blue, Team India plays. I cheer only for India and Indian players.

To the list of Indian cricket matches, IPL got added to my TV watching list rather inadvertently. I watched most of the matches of IPL 1,2 and 3 whenever possible. I had great difficulty in choosing a side to support. I had lived a long part of my working life in Kolkata, so I chose KKR. KKR, everyone knows is the only team that never appeared in semi-finals of any of the three editions of IPL. KKR made more news for its off-field activities than its on-field victories. My next choice was Deccan Chargers, becauseHyderabadis the city I have been living for the last few years. DC did give some reason for cheer in IPL – 2 by winning it.

Having got used to the idea of watching IPL, I started watching IPL-4  though not with the same enthusiasm as earlier. The world cup victory was just beginning to sink in when IPL 4 started suddenly with little or no build-up.  Just after the World Cup victory, watching the same set of players in opposite teams or even the arch rivals in same team took a little while to adjust. With the complete makeover of all the teams and new teams getting added to the list, it became too hard to remember. With some effort and passage of time, this part of the problem has been overcome.

But now the problem is one of fatigue. Mid-way or not even mid-way through the tournament, now there is little excitement left to watch matches. Even the 20 overs look too long. Watching first 6 overs until the field restrictions are in place and then later towards the slog overs, one gets a sense of what is going on. Sixes, wickets, run-outs, none of them excite.  The very same advertisements from Vodafone ( initially I liked it) , Havells, Brrr ads of Coke have become too irritating to watch. The Extra innings sessions are so boring and comments so banal, that there is no desire to listen to them. The commentators look completely drained out. To avoid the ads or extra innings, if I switch to some other channel, rarely do I get back to IPL. After staying awake for the first few days to watch the matches till 11.30 PM, I do not feel the urge to let go of my sleep for the sake of the matches. I have subscribed to the SMS updates from my mobile operator and see the results of the matches first thing in the morning.

The fatigue and irritation from IPL ( it is still a lesser evil than the 24×7 news channels) is so much that I sometimes find myself wanting both the teams to lose, when neither KKR or DC is playing. Keeping track of the position of the teams in the points table has become such a big task, thanks to its topsy-turvy nature,  that I have decided to see it only towards the end  of the league stage.

It appears that I am not the only one who is complaining about the fatigue. News from TAM is that TV ratings have come down to record low for this year’s IPL. It is 18 % lower than last year. The overkill of cricket and little innovation or controversy in IPL-4 has made it boring. Wonder what Lalit Modi would have done, if he was still running the IPL circus!!!

– G.Mohan

Advertisements




Boycott TOI, Boycott Reebok

29 10 2010

“Run Delhi Marathon only if you have Reebok” could well have been the headline for a sports column in Times of India, Hyderabad edition today ( 29/10/2010),. Since it is not an advertisement and is published in Times of India, a newspaper with over 100 years history, the headline was just a wee bit subtler in   ”It is important to wear the right gear while running.” The author of the column is the cricketer Yuvraj Singh. The column is sponsored by Reebok Zigtech, a brand endorsed by Yuvraj Singh. The columnist goes on to write a full paragraph on the virtues of Reebok Zigtech. There is no disclaimer that Yuvraj Singh endorses Reebok Zigtech. The para is reproduced below

It is also important to wear the right gear while running. Reebok has recently launched the most technologically advanced running shoes ZigTech. The shoes help to reduce wear and tear by up to 20 percent in key leg muscles, especially shins and hamstrings. These shoes are my personal favourite and I feel they serve as the energy drink for my feet.

This is yet another instance of advertising passing of as a news item or an editorial in Times of India. TOI has often compromised on separating the advertising from its editorial. For the right price, it will sell anything, including its masthead. In today’s newspaper, the first page delivered a full page ad for a Delhi based developer with some false news about Govt approving FDI in retail. The look was exactly like the normal TOI first page, masthead and all. It is a different matter that the normal first page was also there actually in Page 3.

Advertisers like Reebok would like to use the goodwill of sport stars like Yuvraj and the reach of TOI, to make their brand a recommendation to the gullible Indian public (?). I am certain they pay a disproportionate sponsorship rate for such columns.

To stop being deceived, the public should boycott such products. This will hurt the advertiser and advertiser in turn will stop using such tricks. This will also hurt TOI.

– G. Mohan





Are IPL 3 Matches Getting Fixed?

12 04 2010

IPL 3 is now at a very interesting crossroads. One month of cricket has already been played and yet the semi-final line-up is not clear. After the matches on the 11th of April, only one team Mumbai Indians (MI) has qualified for the semi-finals. But for Kings XI Punjab, who have virtually no chance of making it to the semi-finals, rest of the six teams have a good chance of making it to the semis. A look at the points table tells us that three teams are bunched at 12 points and 3 teams at 10 points at this stage in the league when most teams have played 11 matches each and 2 teams have played 12 matches each.

There are 11 more league matches between 12th April today and the semi-finals on 21st April. Each of these matches features, at least one team who has a must-win requirement to make the semi-finals. There are several matches where both the teams have a must-win requirement for example CSK vs KKR on the 13th of April. Thus making the last few league matches, a virtual knockout stage, ensuring sky high TRPs.

These matches are virtual quarter finals. Although there are no official Q/F as per the league format, in IPL 3 this has come about. The question to ask is whether they have come about by happenstance or by design ?

Whereas, one would like to believe that these Q/Fs have come about by happenstance, there are quite a few indicators which suggest otherwise. 

The league matches in the last ten days have thrown up very surprising results. Mumbai Indians which was cruising along beautifully, suddenly started losing to much lesser teams that too , two in a row. KXP which did nothing right in the first half of the league, suddenly starting becoming the giant-killer beating KKR even when they scored 200 and further beat up MI and DD which were at the top of the table. A large number of cricket enthusiasts point out to freak dismissals through run-outs, dropped catches etc to drive home the point that the script for the IPL 3 is not being written  on the ground in which it is played. 

The commercial angle to the need for Q/Fs is pretty clear. Well into the 4th week of the league, fatigue has set in among the TV viewers. The novelty of T20 namely sixes, run-outs, wickets, cheer girls has somewhat worn out already in the third year.  News is coming out that the audience for IPL in theaters across India is very low. The summer heat this year, has been very severe, making it all the more diffcult for filling up stadia.  Many new centers like Nagpur, Dharamsala are hosting IPL matches for the first time, even though they have no home teams playing.

Much that I would like to attribute the results of the matches held in the last few weeks to ‘the glorious uncertainties of cricket’, one cannot ignore the huge commercial motive. Let’s not forget IPL is in the hands of Lalit Modi, who is a brilliant marketer/organiser but also a consummate gambler.

One can never be sure whether this emergence of virtual Q/F s is by design. If indeed that is true, one should treat IPL as no different from WWF, the wrestling competition manufactured for TV audiences.

– G. Mohan





Mobile VAS: The Music of Money

19 05 2009

Which is India’s largest music company? Clue : It’s not Saregama India or T-Series. Answer :- It is Music Bharti , the mobile value-added-services wing of Bharti Airtel. Rediff  reports:

Music Bharti has become the largest music company in India, overtaking Saregama India Ltd  in terms of revenue,” Bharti Airtel’s Deputy CEO Sanjay Kapoor said.

While Kapoor did not disclose the exact revenue earned by Music Bharti, which provides music services like hello tunes, call-back tunes and music on demand, Saregama had a annual revenue of about Rs 150 crore (Rs 1.5 billion) in the fiscal ended March 31, 2008.

A closer look into the advertising messages of major mobile services companies indicate the focus on value-added services. Aircel TVC has MS Dhoni advocating the use of Mobile phone for locating a hotel, making air bookings, cricket information and downloading music. Vodafone through its new TVCs which are being aired frequently during IPL matches is using the newly created characters Zoozoos using the various VAS provided by Vodafone. The latest Airtel TVC also has Madhavan and Vidya Balan on vacation in a tent, subscribing to the astro service, again a VAS.

With India having reached a mobile penetration of over 30% and urban centres reaching saturation level penetrations, all mobile companies, new and old are looking at VAS to differentiate as well as to enhance their ARPUs from the existing customers.

In a related news item in Deccan Chronicle, the size and growth rate of mobile VAS market in India are reported as :

“Mobile VAS industry is expected to generate sales of Rs 11,000 crore. It will achieve a compound annual growth rate (CAGR) of 44 per cent in the next few years. As of today, 60 per cent of the content of mobile VAS comes from the audio downloads.

In his blog, Rajesh Jain, an Internet entrepreneur , who has business interests in providing content and services to cell phone service providers, while giving a detailed breakdown of the market size for various services, makes a key point

” What is touted as a $1+ billion industry (what subscribers pay) is in reality only a $200 million industry from the VAS providers point of view, thanks to the skewed revenue shares between the operators and the VAS players.”

When 3G services are rolled out al over India the market for Mobile VAS would expand and  go beyond the frivolous to more useful services, for which customers would be willing to pay.

– G. Mohan





How 9xM is Winning the War of Music Channels

12 10 2008

 

Music channels in India vie for viewership in a segment characterized by very low level of product differentiation. In such a crowded and mature category, 9xM, a late entrant from INX Media, has seized the market leadership in no time. This is no mean feat! How did they do it? 

 

Well, my take on this matter is short and simple. 9xM has demonstrated boldness by completely doing away with VJs who tend get boring and jaded faster than you can utter ‘shelf  life’. Besides, 9xM’s clever content strategy has gone the whole hog in using humorous, animated characters who will remain the channel’s permanent brand properties unlike the VJs on whom the channels spend millions to build their brand equity only to see them walk out of the doors at the end of their contracts to resurface peddling sundry wares indiscrimanately on TV  including the rival channels.  

 

Mind you, the basic fare is no different at 9xM. It is the same staple diet of Bollywood hits and remixes. Just like any other music channel! But what makes 9xM’s content different is the way they use witty animated characters in their fillers. 

 

In a very popular series called Bakwas Bandh Kar, two animation characters, Chhote and Bade crack PJs targeted at kids and teenagers. Another interesting character is a cat called Bheeghi Billi who usually narrates his life as a loser musically. They have a few more of such endearing characters e,g. Tapori and Betelnuts in their stable.

 

9xM offers prizes for viewers who send jokes which keep the user-generated content pipeline well oiled and together with the exhaustive use of animation characters keep the production cost low. 

 

It will be interesting though to watch how 9xM sustains this competitive edge as their content strategy is easy to emulate. 

 

– G. Mohan





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.  
 
  




How Profitable is an IPL Franchise

17 05 2008

While coming out of the IPL franchise auction held on January 24, 2008, the winner of the Chennai franchise, the MD of  India Cements  N.Srinivasan spoke to the Hindu. “This will be a good investment. We expect to build this into a viable and vibrant franchise”, he said.

 

After agreeing to pay US $ 91 million (Rs 3.60 billion) for a ten year contract, it was hard to figure out how he would make profit. M.S.Dhoni alone is costing him for $ 1.5 million per year, in fact just for 45 days of service.

 

Now, that IPL is well under way and it has become hugely popular, it will be interesting to see the business model of an IPL franchise. Using Chennai Super Kings (CSK) as an example, we look at their revenue streams and expenditure heads.

 

The single biggest revenue stream for a franchisee in the initial years is the share of the television revenue. Not for nothing, is IPL being bandied as “Made for TV”. CSK will receive $ 10 million in the first year and this will go down to $ 6 million every year from the sixth year onwards, when the number of teams increase and the share of the IPL (read BCCI) increases from 20% initially to 40 % from the sixth year onwards. Mr. Srinivasan in an interview to the Economic Times has said “If we had bid $90 million over a ten-year period, we’ll get back $80-90 million as TV income itself.”

 

The title sponsorship is another major revenue stream. AirCel and Coromandel Super King are the title sponsors of CSK. Although no information is available, it may be around $ 5 million every year and this should go up significantly if the team performs well in the IPL. Add to that a slew of local co-sponsors and this revenue stream gets shored up even further.

 

CSK also gets a share of the $50 million each year paid by DLF as the IPL sponsor. This is estimated to be $ 3.75 million every year during the first five years. After the first five years, the title sponsorship contract comes up for renewal. If IPL turns out to be a big success, expect this to double.

 

Gate collection from the home matches in Chennai is another source of income. CSK will be hosting seven matches this season. The M A Chidambaram stadium has a capacity of 50,000 spectators. CSK has priced the tickets ranging from Rs 200 to Rs 5000 for the AC pavilion. Assuming an average occupancy of 80% and price of Rs 400, the gate collections for CSK, after paying IPL its 20% share, is likely to be around $ 2 million. CSK will also be earning from in-stadium advertising. This may generate another $ 2 million in the first year.

 

CSK sells its merchandise like T-shirts and caps through its web-site and other channels. This revenue stream can be a big money spinner if the franchisee is able to build a huge fan following and city loyalty. From a small income of $1 million in the first year, it is estimated that this can go up to $ 15 million in the tenth year.

 

 The prize money for the winner of IPL is also not an amount to sneeze at. The winner of IPL will get US $ 2 Million. The teams placed lower also get significant cash awards. Let’s assume that CSK will receive $ 1 million per year as prize money.

 

There is also a possibility of CSK making good amount of money  by judiciously trading players’ contracts in the Year Two and Three. For example, Mumbai Indians or Rajasthan Royals may be interested in buying the contract of  Parthiv Patel as they are playing local wicket keepers whereas Mr. Dhoni will always be the first choice as wicket keeper for CSK.

 

Now we look at the expenditure side.

 

Apart from the USD 91 Million paid upfront as the franchisee fee for ten years, the major item of expenditure is definitely the players’ contracts. In addition to Mr. Dhoni, CSK bought foreign players such as Mathew Hayden, Mike Hussey,Makhaya Ntini, Jacob Oram, Stephen Fleming, Muralidharan, Albie Morkel,  Kapugedera and Indian T20 stars like Suresh Raina, Joginder Sharma. These star players cost a total of $5.575 million per year. The rest of the 24 member team is made up of local Tamil Nadu players and under –19 players, these have all been signed up for US $ 30,000 each. CSK also has a team of four supporting the team with Kepler Wessels as the coach. The annual expenditure on account of players is estimated to be

$ 10.6 million. These contract fees are fixed for the first three years, after which there will be fresh round of auctions.

 

If IPL is the biggest festival this summer, certainly the hype created by the IPL organizers, media and the franchisees is responsible for it. This does not come free. The IPL franchisees would have a significant marketing and advertising spend. CSK has the Tamil actor Vijay as their ambassador and former captain  K.Srikkanth as the brand ambassador. CSK has created a video featuring all the players with music by A. R. Rahman. Sivamani, the ace drummer, is seen wearing the CSK yellows wherever CSK plays. CSK maintains a web-site for creating a community of fans and selling tickets and merchandise. Like all the IPL teams, CSK has its band of foreign cheergirls. The marketing and promotion spend could be of the order of $ 4 million per year.

 

The other expenditure would be related to paying the rentals to the local cricket association for the stadium. Running an office and organization which will work round the year, not just the 45 days of IPL season is also expensive. Add to that travel and hotel expenses. Perhaps airline and hospitality sponsors lessen the burden.

 

So will CSK make money?

 

If the initial franchising contract is treated as an investment, as per the estimates above, CSK is making an operating profit of over $ 8 million $ in the first year itself. If the $ 91 million is amortized equally in the ten years, then CSK would report a negligible loss of $ 0.7 million in the first year. Even, this could turn into a profit if CSK wins the IPL championship!

 

If not in the first year, CSK is most likely to break even in the second year. From the third year onwards, when the sponsorship, merchandising and gate collection revenues go up, CSK may start generating net profits of $ 2.5 million (Rs. 100 million) on a revenue of  $ 30 million  (Rs 1200 million) from the third year. If the IPL gains in even more popularity the revenues and profits will go up further.

 

Lalit Modi, the IPL Commissioner said “Each IPL franchise could be worth $ 5 billion.” It is expected that many IPL franchisees will go public after the third year. I’ll not be surprised if CSK has a market capitalization of $ 500 million (Rs 20 billion), five years from now.

 

When Mr. Srinivasan, who incidentally is also the treasurer of BCCI, said IPL franchise is a ‘good investment’, he certainly knew what he was talking about

 

 – G. Mohan  








%d bloggers like this: