Experts laud the decision of IPL suspension as they discuss the league’s brand value, the potential impact on advertisers, and the way forward.
In the last few days, IPL 14 had been teetering over the edge of appropriateness as many questioned the sensitivity of the content given the current situation in India. The questions became louder as Australian players landed in a fix due to the travel restrictions placed on individuals returning from India. The metaphoric nail in the coffin arrived with the news of several players testing positive for COVID-19.
Since its announcement, several parties related to the sports league have demonstrated their support for the decision.
“Star India supports BCCI’s decision to postpone IPL 2021. The health and safety of players, staff and everyone involved in the IPL are of paramount importance. We thank the BCCI, IPL Governing Council, players, franchisees and sponsors for their support. We are also indebted to our employees, on-air talent, production, and broadcast crews for trying their best to spread positivity by delivering the broadcast of IPL 2021 to millions of homes in the face of challenging circumstances,” the broadcaster shared in an official statement to the press.
Further, various global sports personalities and official Cricket Boards came forward on Twitter.
The Right Decision?
Keeping the current situation at the core the decision has been unequivocally deemed as sensible and much needed, this however doesn’t dilute the commercial impact that all involved parties will face.
According to Varun Gupta, Managing Director and Head Valuation Advisory- APAC, Duff & Phelps, A Kroll Business, “If the tournament had merely been suspended and restarted within a week or two, it might not have much of a difference to the revenues of the IPL or that of the franchisees. Yes, there would have been some logistical problems and some additional costs may need to have been incurred. However, given the overall size of the IPL juggernaut, those costs and inconveniences would not have been material.”
He estimates that IPL would suffer significant revenue losses for the current season. There will be loss of sponsorship and broadcasting revenues for BCCI. The league was already coping with loss of revenues from ticket sales and in-stadia F&B, besides the loss of revenue last year due to VIVO pulling out for the 2020 season. The teams will also suffer revenue losses on account of reduced revenue from the central pool and loss of team sponsorship revenues.
According to a media report, IPL is looking at a loss of INR 2000 Crores on the AdSpends front. Commenting on the impact of the suspension on advertisers, Ashish Khazanchi, Managing Partner, Enormous Brands says “Suspension of IPL will certainly have a near term adverse impact. Both in terms of business objectives of advertisers and even more importantly on the market sentiment. Heavy investments may be held back because there’s going to be unpredictability on how the returns on investments may turn out to be.”
Khazanchi explains that first time advertisers are going to be the least daunted. For a few important reasons. “Their businesses are heavily digital enabled. That part of the world will roughly continue unfazed and may actually gain shares at the expense of the traditional business models.”
“The cancellation is somewhat likely to cast a little shadow of uncertainty even on the world cup. But only the next few months will tell us the way for sure,” Khazanchi says.
Advertisers had hoped for a great IPL season in 2021 after the 2020 lockdown. There was pent-up demand and the expectation was that consumerism would thrive aided by big-ticket events like IPL. “So, agencies were briefed. Commercials made in all grandiose and ad spots booked despite insanely expensive ad rates. There was collective hope of revival and so everyone was happy to pay. Now with this mess being bigger than ever, advertisers will be scrambling for alternatives to stimulate demand,” comments Vani Gupta Dandia, Independent Marketing Consultant.
Dandia explains that there’s been a lot of talk about advertisers selling their wares while being tone-deaf to the crying chaos. But not everything can be viewed similarly. Advertising serves a purpose – to inform and educate so consumers can make the best choices. “While I understand advertising carpets or cars might seem out of place given the current context, categories like EdTech, mobiles, medical infra, insurance, financial instruments, and more are much relevant,” she concludes.
Echoing the sentiment, Ramya Ramachandran, Founder & CEO, Whoppl, said, “With the recent news of IPL getting suspended, the marketing segment has clearly seen a sharp blow as ad spends have been hit really hard with mounting losses. With the suspension of IPL received in the wake of the shocking second Covid wave, there is definitely more clarity for the brands as well as the agencies to plan their campaigns accordingly.”
IPL Continues to Stand Tall
This however, does not determine the future of the league, as experts believe that IPL’s commercial stance shall remain strong as ever, if and when the league is revived.
“The value of any enterprise is based on its future cash earning capacity. To our mind, while there will be some revenue loss this year, the future revenue generation ability of the IPL is undiminished,” Gupta adds.
Echoing the thought of IPL’s reach remaining unchallenged, Ashish Bhasin, CEO APAC and Chairman India, dentsu, shares that IPL’s unparalleled reach has always proven to be an excellent vehicle for brands and will continue to be so.
“Given the prevailing pandemic situation, I think it is the right decision to postpone IPL for now. The health and safety of all the players and everyone involved is paramount and keeping in mind the situation in the country and the prevailing mood in the nation, in my view it is the right decision,” he adds.
“Given the fact that several parts of the country are going into lockdown, there are emergency measures been taken in different cities and towns to curb the pandemic, the severe shortages and difficulties being experienced, lives being lost to the pandemic, I think it is more appropriate to focus on that then on commercial issues for now. I’m sure the commercial issues will get discussed and resolved in an appropriate manner.” Bhasin says.
Not All is Lost…
The last year has been tumultuous worldwide owing to the pandemic and IPL too felt its heat. According to an IPL Brand Valuation Report by Duff & Phelps, the IPL Ecosystem witnessed a dip in valuation in 2020. A 3.6% dip in 2020 (as compared to 2019) was seen on the back of the tournament being postponed due to the lockdown and the overall Sourthward trend of AdSpends seen through the better part of the year.
However, not all is lost with the suspension of the league this year. Lloyd Mathias, Business Strategist and former Marketing Head of PepsiCo, Motorola & HP APAC shares that “insurance may help cover part of the damages suffered by the teams, the sponsors and the broadcaster.”
“BCCI has made the right decision in suspending the IPL. The breach in the bio bubbles is just one factor, but given the magnitude of the overall covid crisis in India, it is simply insensitive to continue with the IPL. Remember the BCCI is a very rich body, and this financial loss is an insignificant price to pay in comparison to the larger catastrophe all around,” he explains.
Mathias thinks that brands and businesses should welcome this move in the larger interests of society and their consumers. “The best thing to do in the present circumstance is to help with relief in any way possible – from financial, procuring much-needed medical supplies, to using their media assets to amplify SOS and help messages,” he concludes.