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August 28, 2012
DLF Ltd, India's largest real estate firm, has decided not to renew its title sponsorship of the IPL, ending its five-year association with the tournament. The company had the first right of refusal on a new contract, but was considered unlikely to sign up a second time given the slump in the real estate market and the decline in the IPL's television ratings over the last two years.
"Sponsoring IPL over the last five years was a strategic decision wherein we wanted to establish our brand presence across India as the leading real estate player," Rajeev Talwar, DLF Group Executive Director told PTI. "Our IPO came in 2007, a year before the IPL started. We were very aggressive pan-India then. We had good presence in all big cities." The company is now concentrating on those cities where its core strengths lie.
According to Talwar, DLF spent Rs 250 crore (US$ 44.96 million) on the IPL over the five years of its contract. While it has pulled out of the Twenty20 league, it still has plans to promote other sports, though Talwar ruled out owning a franchise or a team. He also said the amount of money the company would spend "will be less than Rs 50 crore ($9 million) a year that we spent in IPL."
The company's decision not to renew their deal with the BCCI is also another indication of the value of the IPL taking a hit over the last couple of years as TV ratings have flattened. Ratings for IPL 5 were just about in line with 2011. The overall tournament rating was 3.45, compared to 3.51 a year ago, according to Tam Sports, a division of TAM Research, the leading television ratings agency in India. In contrast, the 2010 tournament had an average TVR of 5.51.
In April, Talwar told the Business Standard that renewing the contract "depends on how do they [the BCCI] perceive the value." The BCCI had indicated any new sponsorship agreement would be for a higher value than the original agreement. DLF was obviously not willing to meet the board's asking price. In a climate where the general economic situation is worsening - revenues for Multi-Screen Media, the tournament's broadcaster, dropped this year as companies cut back on advertising - means the board could have a tough time finding a replacement sponsor at the price that they desire.
DLF is the third title sponsor to pull out of a BCCI backed tournament in the last two years. Airtel pulled out as title sponsors of the Champions League T20 in 2011 while their replacement, Nokia, pulled out earlier this year. DLF is already involved in golf and tennis. It provides prize money of about Rs 1 crore ($179,000) to the winner of the annual DLF Masters and is one of the sponsors of this year's Davis Cup, on which they will be spending Rs 2 crore, according to Talwar.
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