New owners likely to benefit from 'disproportionate publicity'
The "disproportionate publicity" and the "soft imagery" that an association with the IPL brings is expected to negate any financial losses the two new franchise owners, New Rising and Intex Mobiles, may suffer in the short run. Despite New Rising and Intex Mobiles having to pay Rs 16 crore and Rs 10 crore per year respectively to the BCCI after bidding in negative, brand experts feel the franchises will have multiple advantages.
"In this world of hard business you need a soft face as well. Sport gives that soft imagery to a hard company," Harish Bijoor, a brand consultant, told ESPNcricinfo. "At the end of the day, sport is also a tool to manage HR internally pretty well. It softens the companies altogether, and to an extent it tells people that 'we are not only about this, we are also sport.'"
Former Kolkata Knight Riders team director Joy Bhattacharya said the visibility generated by the tournament opened up new markets for the companies. "One thing that sport does give you is a disproportionate publicity for your brand as compared to almost any other enterprise," he said. "So, if Sanjeev Goenka is looking to be a global enterprise and Intex wants to make its mark in the world, getting involved in the IPL is a great starting move.
"I can name 500 companies which are [Rs] 1000 crore companies, [and yet] nobody knows of them. But name an IPL team and everyone knows the person. I think that's what is driving them."
According to Bijoor, there were fresh commercial possibilities for franchises following the penetration of the game in smaller centres. "A lot of people are saying that IPL is a reasonably matured game in India, because it has gone through so many seasons, so many losses," he said.
"There are numerous revenue streams [now]. It is not only what they get through the common streams, but in terms of merchandising, local activation, in terms of developing micro-cricket within the hinterland. These are all possibilities because cricket is becoming more and more micro rather than macro.
"From being a country game, it became a city game, from a city game it became a town game, now from a town game can it become a smaller town game and eventually a village game. The moment you percolate deeper you provide for media vehicles which did not exist for others." Bijoor, however, added that such gains were more pronounced in the longer run where brand involvement would be greater. "Even Mumbai Indians took more than three years to settle down, with the kind of proprietor attention that was given."
Bhattacharya said the teams would not absorb heavy losses given the absence of the franchise fee. Drawing a comparison with the Indian Super League, the professional football tournament, where every team, according to him, was making losses, he said it was worth taking a punt in the IPL. "The price is not a very big thing if you consider the price collection that happened in 2011 when Pune came in with Sahara for $332  million," he said. "[The increase in franchise fee] was a jump of about eight or nine times. They were talking about potentially losing about Rs 150 crore a year for 10 years.
"Here you will have to tackle [your expenses] without any central revenue, with just sponsorship and gate [receipts]. They will be losing about [Rs] 40 crore a year; every team in the ISL is losing about the same number. Hell, I will take a chance [with the IPL]."
Arun Venugopal is a senior sub-editor at ESPNcricinfo