Delhi Capitals have announced that the JSW Group will be their new principal sponsor for IPL 2020 as it emerges that the challenges of retaining sponsorship value in a pandemic-hit economy have not stopped at just the BCCI. Daikin Air-Conditioning, which had been the principal sponsor for the Delhi franchise since 2015, has pulled out. The JSW Group is a conglomerate that owns JSW Sports, which is the joint-owner of Delhi Capitals.
In a release, chairman of Delhi Capitals and managing director of JSW Group, Parth Jindal said that the deal will help JSW's brand visibility and that "there are few properties that garner the viewership of the IPL."
The value of that viewership was reflected in 2017, when Vivo bought the IPL title rights at a 454% bump in value from the previous sponsor. But it had to pull out a couple of weeks ago due to political tensions between India and China and subsequently, the BCCI had to award rights of this IPL edition at nearly half of this year's INR 440 crore value to Dream11.
These discounts to sponsors are seemingly a challenge for franchises as well.
In an interview with Livemint earlier this week, Jindal had said that the JSW Group got a "slight discount" over Daikin "because of no ticket sales [and] no meet-and-greets" with the players. He said that component of sponsorship value was coming down and re-negotiations were on - anywhere between 15-20%.
"From a commercial standpoint, with Vivo going out and no fans coming into the stadium, franchisees are waiting for clarity on how much of that amount will be compensated by BCCI," Jindal said. "But it's very likely that a major chunk of each franchise's losses will get compensated by the BCCI. There will be a slight commercial impact, but I don't think more than 10% compared to last year. If the BCCI doesn't compensate, there will be a significant loss to each franchise, about a 30% drop in revenues. But we do believe the BCCI will do something for the franchisees."
The likelihood of the IPL being played behind closed doors will mean the absence of what brands call stadium activations - interactive experiences for fans at stadiums - and has already forced franchises to rethink and innovate on the digital front.
"[Playing behind closed doors means] straightaway the ticket revenues are affected, your food and beverage revenue is affected, the merchandising sales at the stadium is affected. The challenge to us is - how do you activate the sponsors? Are there ways in which you can compensate for this?" Venky Mysore, CEO of Kolkata Knight Riders, said on ESPNcricinfo's Stump Mic podcast in May.
"We are re-imagining our businesses. From that perspective, what I know is already happening is that the world is consuming more content than before. This is a fact. That's great news. How do we take some of these changes and harness it in a way that would benefit our business? And therefore can we come up with some innovative ideas? I think if we channel our energies the right way, we will. That's why I'm very optimistic."
Jindal echoed similar sentiments in his interview with Livemint, saying that he expected this year's IPL's viewership to be the highest ever and there's "only a limited amount of Netflix and Hotstar one can watch". The chief executive of Kings XI Punjab, Satish Menon, said they were being pushed to adopt technology to bring value to their sponsors as well, and told ESPNcricinfo that there was no reason to be upset about the business challenges around the tournament.
"That is the situation. You've got to live with the situation," Menon said. "We're still providing entertainment through the television. So I'm sure our spectators and our fans will love this, so I see no reason why anybody should be upset about this."
Menon's thoughts are along the lines of Royal Challengers Bangalore chairman Sanjeev Churiwala's, who suggested that the IPL happening itself was an ideal scenario for them.
"We have not paid too much attention to the revenue and sponsorship side. At the moment, the discussion is how we can enable the IPL to happen in the first place. We were facing a binary position - IPL versus no IPL. At least now an IPL is happening," Churiwala said during RCB's pre-departure conference on Thursday.
Even though BCCI has not yet taken any firm decision on whether crowds would be allowed during the IPL in the UAE, the Emirates Cricket Board is optimistic that fans could be present in the second half subject to permission from the UAE government as well as IPL.
The change in IPL title sponsorship value is likely to affect the revenue pool that is shared by the eight franchises, but the broad mood around the IPL remains that this version of the tournament is better than not having one at all. At the very least, that seems to be the board's position, with president Sourav Ganguly saying that Vivo's dropping out was merely a "blip" for the BCCI that has a strong enough legacy to not be affected.
For now, the franchises seem satisfied with that despite battling tensions on their various revenue streams.