India: Keep Calm and Cover Up

6th May, 2014

Pepsi; the Indian Premier League’s title sponsor, chose ‘Keep Calm’ as its tag line for the 2014 tournament. Thanks to the column inches dedicated to the IPL’s murkier side, it could be challenging for any IPL investor to keep totally calm about associations with the tournament.

The title rights were won with a bid of $71.77 million, naming the tournament  the “Pepsi-IPL” until 2017. This is almost double the title rights paid by Indian Real Estate company, DLF for the period 2008 to 2012. These figures certainly pay tribute to comments made by Lalit Modi, the IPL’s former board head, that the IPL is ‘recession-proof’.

Cumulative audience figures during the tournament can reach anywhere in the region of 120 million households. The incentives to be part of the IPL grow when one considers that the majority of the eyes on the screen belong to India’s younger-middle class (read: disposable income). So, why would any sponsor shy away?

The reasons are twofold. First, the clash with India’s epic six-week election process. Security logistics forced the tournament to relocate to UAE, and in doing so spooked some sponsors and advertisers, due to unfamiliarity with this market. For some companies, much of their planned advertising for this period was election-focused rather than IPL-focused as it may have been in previous years.

Secondly, advertisers shied away from the IPL this year due to the negative claims surrounding cricket’s authority figures, notably the Board of Control for Cricket in India (BCCI) which is powerful both politically and financially (it both owns the tournament and earns about $200m a year from broadcast rights and other assets).

Allegations about its independence have been circulating from its very beginning in 2008, and this year India’s Supreme Court ordered a replacement of the Board head. Controversies surrounding the tournament and its leadership also come in the shape of match-fixing, and gambling, a claim given added gravitas due to the illegal status of gambling in India.

There was a reduction in the amount of money invested in the IPL in 2014; some teams struggled to find sponsors until the very last minute before tournament kick-off. Many contracts were not renewed due to the move to UAE, examples being Panasonic and Samsung.

And yet there was not overwhelming desire to renege on association with this tournament due to claims of foul play. Big sponsors reluctance to follow to UAE allowed some smaller companies to make tracks into the market, and in fact, the cost of a 10-second slot on television during the IPL increased since 2012, not exactly indicating it as a broadcasting pariah.

India must do more to clean up the nation’s favorite sport, although it is not clear what the incentive for the BCCI and the Indian Government to do so is, as the exodus of advertisers expected from such negative claims failed to show, and the BCCI’s balance sheets continue to look healthy. It is imperative that India’s corruption is seen as the corrosive and contagious problem it is, rather than as a quirky feature of dealings within this nation.

An  indicator may be football’s Indian Super League launched this year by Rupert Murdoch’s Star India television network. If this tournament proves to avoid the potholes the IPL hasn’t, sponsors may see the benefit in joining this bandwagon instead.