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IPL sells title rights to PepsiCo for $71m

Nagraj Gollapudi

November 21, 2012

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Knight Riders parade the IPL trophy around Eden Gardens, Kolkata, May 29, 2012
Gautham Mukkavilli, CEO, Beverages, PepsiCo India region: "Cricket is a religion in India and IPL is now its most revered temple where the faithful flock to" © Associated Press
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Series/Tournaments: Indian Premier League
Teams: India

Global beverage giant PepsiCo has bagged the IPL title sponsorship rights for the next five years (2013-17) for Rs 396.8 crore ($71.77 million approx), almost double the original title sponsorship deal done in 2008. Along with PepsiCo, the only other contender for the title sponsorships rights was Airtel, an Indian telecommunications company, who bid Rs 316 crore ($57.27 million approx). For the next five years the tournament is to be called Pepsi-IPL.

In 2008, DLF, Indian's biggest real estate company, had paid a sum of Rs 200 crore ($36.25 million approx), to own title rights for the first five years (2008-12) of the tournament. But in August DLF decided not to renew its contract, forcing the BCCI to issue a new tender. The BCCI had set Rs 300 crore as the base price for the title sponsorship.

"So far our record of selling various properties of IPL has been very good," IPL governing council chairman Rajiv Shukla said after a meeting of BCCI's marketing committee in Mumbai. "We have doubled, tripled or quadrupled the amount while selling some of the properties," Shukla said. Gautham Mukkavilli, CEO, Beverages, PepsiCo India region, said that in a country where "cricket was a religion," the IPL had become the "most revered temple where the faithful flock to."

The news of the new title sponsorship was approved of by the IPL franchises, who believe the Pepsi deal will have a positive effect on their own businesses. Raghu Iyer, the chief financial officer at Rajasthan Royals, said the new title sponsorship will, "ignite the market" for the franchises. "It is absolutely double the value. What was expected was one-half-times what DLF paid, but these guys have paid something like 80-crore mark (per year)… IPL needed this kind of positive reinstatement from a global brand like Pepsi."

Venky Mysore, the CEO of Kolkata Knight Riders, said the title sponsorship would add "tremendous value" to both the league as well as the global beverage brand. "It is terrific news that they have come on board. Pepsi would have done their homework. They know their numbers and they would have clearly seen some value," Mysore said.

According to Mysore the value addition and the returns on Pepsi's investment would be manifold. "There are analytical models that we also use to show our brands who are associated with our franchise in terms on what their return on investment is. Leave aside the fact that it is an association with a marquee product (IPL) and the synergies that brings, if you look at just pure advertisement value and the kind of the exposure that happens leading upto the IPL, during the IPL and then the rub-off effect of it continuing on, there is a very clear way of calculating what the value of that exposure is. That is how you calculate the return on investment. Pepsi would get at least five times the exposure it would normally get," Mysore said.

After DLF let the deadline of July 28 (meant for the renewal of the title sponsorship contract) pass, speculation grew about whether the value of the IPL as a brand was shrinking. The timing of that news coincided with the controversy surrounding the Deccan Chargers franchise. According to TAM Sports, a division of TAM Research, one of the leading television ratings agencies, the overall tournament rating for the fifth IPL was 3.45, compared to 3.51 the previous year - far from the TVR of 5.51 reached in 2010. The telecommunications pair of Airtel and Nokia had decided to not renew their annual title sponsorship of the Champions League Twenty20, adding weight to the growing perception that the IPL was no longer a valuable property.

The new title sponsorship with Pepsi silenced those doubts. According to a senior official from a different franchise, who did not want to be identified, despite all the negative colours IPL had been painted in, the league has always achieved what it wanted. "People have spoken negative about IPL but in the end everybody has paid the money which we have always asked for. We have never had problems at getting sponsors at our price. I will get it even in future. People will still talk so it is best we keep quiet," the official said. "Pepsi will not put in money unless they are sure about their numbers, isn't it? They are putting hardcore cash. Pepsi operates not only in India. It is a global giant and they would have done their studies," the official pointed out.

Nagraj Gollapudi is an assistant editor at ESPNcricinfo

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Posted by CricketPissek on (November 23, 2012, 14:13 GMT)

Will the "DLF Maximum" be rebranded as a "Pepsi Max" now? :-D jokes aside, this is crazy money we're talking here! Unreal

Posted by remnant on (November 23, 2012, 11:54 GMT)

IPL is a carnival event and I for one find it to be more engaging then the T20 internationals. Somehow when I think of T20, it is IPL that comes to my mind. Eagerly looking forward to the next season. @ girdhar: mate Pakistan used to be a better team back then and its win-loss ration with India was better everywhere back then, even in India, so give due credit mate. Now its different ofcourse, India has been the better team by a distance over the last decade. I'm Indian, just for your info.

Posted by lancaster_park on (November 22, 2012, 12:49 GMT)

Without the international players the IPL is boring. They should stop messing around and have no restrictions on the number of international players in one IPL team-until then, remove the word 'premier' from the title. The 'Indian League' would be fine...The 'big bash' is the real premier comp in T20.

Posted by   on (November 22, 2012, 12:07 GMT)

@Smith Robertson It's not IPL that disrupts international cricket. The other boards are free to go on with their schedules if they like. Ricky Ponting and Michael Clarke have skipped the IPL in the past to play for Australia. If the other boards and players willingly let their schedules be changed to accommodate the IPL, why is it IPL's fault? Put the blame where it is due.

Posted by   on (November 22, 2012, 8:26 GMT)

@kk777: Yes because these people are of Indian origin. But take me for an example, why should I care about cities like Delhi or Chennai or whatever when I wasn't born there or something? it doesn't make sense for others to support a team when they have no background history common sense.

Posted by   on (November 22, 2012, 8:23 GMT)

@indicricket: Actually I don't really care about any T20 league including Australia and England as they really don't have any valuable long history or emphasis like in other sports. Just don't like the fact that they clash with International fixtures sometimes postponing it.

Posted by   on (November 22, 2012, 8:21 GMT)

Legaleagle: WOW! I'm surprised you don't seem to understand why smaller leagues in Australia, England, Sri Lanka, Bangladesh, South Africa and so on are nowhere near close to IPL. Do these countries have a mass following like India? and numerous investors? don't think so so that's why they're nowhere near close to IPL but the Cricket is the same. As long as it helps the board financially then we can't argue.

Posted by indicricket on (November 22, 2012, 7:08 GMT)

@Smith Robertson. I will say it again, 20 overs Cricket does not turn me on one bit. I don't want it to upset the normal Cricket calendar. But I know you do not like it, not because it upsets the Cricket calendar, you do not like it because it is an Indian league. If it were an English or an OZ league you would be singing a different tune. I like it precisely because the likes of you don't like it.

Posted by kk777 on (November 22, 2012, 5:06 GMT)

@Smith Robertson: Just for the record, me and atleast 100 of my friends do not live in a city(or even a state) attached to any IPL team and we are very much polarised to one or other teams. So, don't worry about us. Although the same cannot be said about International fans, but the fact that you commented twice on an article related to IPL, shows that you care too...positively or negatively...better yet, out of enthusiasm or Jealousy...that is a different story altogether.

Posted by Sakthiivel on (November 22, 2012, 4:45 GMT)

That's how BCCI works. Get bigger and better day by day.

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