Sandeep Goyal
Aug 04, 2020

Blog: What Vivo's exit from the IPL actually means

The author discusses what are the implications of Vivo pulling out of the IPL

Picture courtesy: IPL's Instagram profile
Picture courtesy: IPL's Instagram profile
At the time of writing this piece, confirmation is still awaited on whether or not Vivo will stay as the title sponsor of the IPL this year. But all indications are that the anti-China sentiment is most likely going to force an exit of the Chinese mobile brand, at least for this year. Reports from informed sources indicate that the BCCI and Vivo have both agreed to at least a one-year time-out. So what are the implications for all concerned?
 
BCCI 
 
- The Vivo title sponsorship was worth Rs. 440 crores annually to BCCI. Given the adverse economic situation because of the Covid pandemic, replacing a title sponsor for an event that starts in 45 days is not going to be easy. 
- And if Vivo is not acceptable, it only stands to logic that other Chinese brands too will keep away from bidding too. Which means that the number of potential bidders is likely to be much smaller. And the sponsorship amount, much lower.
- Considering that the event is in Dubai, and the sponsorship window may only be for one year only, sponsor interest will be further limited.
- Most likely, the title sponsorship will fetch no more than 50-60 per cent of what Vivo was paying. Even if that is achieved, I would deem it to be an excellent job done.
- The Nike deal is already under re-tender. Additionally, Byju’s, another Chinese invested company that is the sponsor of the India team could also have to move out. After all if Vivo is Chinese, so is Byju’s. India go to Australia right after the IPL. So the Sword of Damocles hangs as much over Byju’s for tomorrow as it is dangling over Vivo today. 
- Dream11, the fantasy game partner of BCCI is also Chinese funded. An exit for them is equally possible. 
- PayTM, another Chinese funded company, is also a premier sponsor of BCCI national and international fixtures. An exit for them is also therefore imminent. 
 
Star TV + Hotstar 
- Vivo was a big on-air sponsor too. If it decides not to advertise or reduce visibility, Star could be hit by Rs. 200-250 crores.
- If Vivo is on the Chinese negative list as far as public sentiment is concerned, then would the other Chinese mobile brands advertise? Honestly, no. They would all prefer to lie-low too rather than risk negativity and trolling. Between them Oppo, Real Me, One Plus, Redmi/Xiaomi, Huawei, ZTE, Lenovo, Meizu, Coolpad, Zopo, Tecno and more, spend at least Rs. 600-700 crores on IPL. So these spends stand endangered.
- PayTM, Dream 11, Swiggy, Zomato … all tainted by their Chinese relationships could decide to play it low-key: hit to Star TV as the broadcast and digital partner could well be Rs. 500 crores from the absence of these brands, if they abstain. 
- Overall, between 40-50% of Star’s potential revenues of Rs. 3000 crores are right now in trouble because of China. Covid woes, could as it is keep fashion, car manufacturers, banks, travel and tourism and other affected sectors on a low ebb.
- Star’s financial year runs July to June. So this financial year it will have two IPLs to pay for … in September/October and then again in April next year. That is a lot of financial out-go to provide for.
 
Franchisees
- Franchisees were already in angst on the 100 per cent loss of gate monies on account of the shift of venue to UAE. The Chinese hit is going to impact them even more.
- UAE Cricket Board has said that they will fill up 33% of the stadiums. How much of gate revenue will be shared with the team owners? No one knows. 
- The shift to Dubai has also taken away franchisee revenues from ground sponsorships. On an average, every franchisee takes in about Rs. 50 crores from perimeter advertising boards and other outdoors at their stadium. This year that entire revenue is still being negotiated with the BCCI as all of it will accrue to the UAE Board now.
- The jersey sponsorships of the team players bring in Rs. 80 to 150 crores a year to each franchisee. With all Chinese brands likely to be absent, choice set for each franchisee stands massively depleted. 
 
UAE Cricket Board
They are really the only gainers from the entire scenario. It is indeed laughable that Dubai itself postponed its Expo 2020 to 2021 but successfully sold the BCCI the idea of hosting IPL 13 in Dubai! So what wasn’t safe enough for holding of the Expo is safe enough for the IPL?!
The whole Chinese crisis could be a further double whammy, especially for Star TV. With a visible decline in the number of advertisers, even those who do want to spend during IPL will most likely look to bargain harder, and try to negotiate lower rates. Given the situation that Star is in, they may most likely succeed too. The IPL is getting hit by the dragon in many more ways than one. It will take captain Saurav Ganguly to step up to a much more demanding role as BCCI president to combat all the head-winds this IPL is facing.
 
Dr. Sandeep Goyal is a keen watcher of the game of cricket, and an astute analyst of the game’s financials. 
 
Source:
Campaign India