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New Delhi, March 10 (IANS): The brand value of the Indian Premier League (IPL) went down for the first time in six years - by 3.6 per cent over one year. From INR 47,500 crore in 2019, it fell to INR 45,800 crore in 2020, the first decline since 2014, a report said on Wednesday.
And in terms of US dollars, IPL ecosystem valuation in 2019 was $6,780 million while in 2020 it was $6,190 million -- a change of 8.7 per cent, from Duff & Phelps, a Kroll Business, which specialises in brand valuation, said in its report.
"Year 2020 was a challenging one with economic distress and uncertainty due to the Covid-19 pandemic. The sports economy was not immune to this crisis, and the pandemic disrupted the sporting calendar for the year, with a string of tournaments being postponed or cancelled."
IPL was relocated to the United Arab Emirates (UAE) as the Indian government had paused sporting activities due to Covid-19. But the Indian cricket board was keen to organise the IPL, and that's why the tournament was shifted, like it did in 2009, when it was played in South Africa.
"The IPL also felt the heat of the pandemic, and the findings of the seventh edition of this annual IPL study suggest that the IPL ecosystem value has decreased by 3.6 per cent in constant currency terms to INR 45,800 crore from INR 47,500 crore last year," said the report.
Duff & Phelps undertook a study during the initial lockdown period (April 2020) to analyse the initial impact of Covid-19 on the value of the IPL ecosystem, which was estimated in the IPL Brand Valuation Report 2019. Based on the scenarios it considered, the IPL ecosystem value was estimated to be impacted by nearly $1 billion only due to cancellation and without capturing the impact of the economic slowdown that might follow.
"In our impact study, we had mentioned that depending on the extent of the post Covid-19 slowdown, most sponsorship contracts may get renegotiated next year, as the spending power of the advertisers and sponsors is likely to be impacted by the economic slowdown," Duff & Phelps said.
This does appear to have played out when Vivo decided to pull out of the title sponsorship at the last moment, and IPL had to scramble to get a new sponsor at the eleventh hour. The new sponsor entered at a steep discount, and the IPL had to take a hit of INR 218 crore in sponsorship revenues.
In 2020, the IPL had lower sponsorship revenues as compared to previous years. Much of this is attributed to Vivo pulling out of the title sponsorship deal and being replaced by Dream11. Dream11 paid INR 222 crore for the season, as against Vivo's cancelled contract of INR 440 crore/season for the IPL title sponsorship.
The individual franchisees have also witnessed a reduction in their brand values over the last year, mainly due to reduced franchisee-related sponsorship revenue, loss of gate receipts, reduced food and beverage (F&B) revenue and certain teams' on-field performances.
The report further stated that champions Mumbai Indians remained the most valuable franchise with a brand value of INR 761 crore. However, this is down by 5.9 per cent from INR 809 crore in 2019.
The highest drop in brand value was suffered by three-time champions Chennai Super Kings, who were evaluated at INR 611 crore which is down 16.5 per cent from INR 732 crore after IPL 2019. Kolkata Knight Riders have seen the second highest brand reduction at 13.7 per cent from INR 629 crore after IPL 2019 to INR 543 crore last year.
"Similar to the impact on other businesses and the overall economy, the pandemic led to a decline in the IPL ecosystem value. However, with people forced to spend time at home, there was an increase in IPL television viewership. The 2020 edition was a huge success for broadcasters as it broke viewership and advertising revenue records. Television ratings skyrocketed and advertisers tapped into this opportunity to scale up their brand image. Despite the challenging year, this momentum is indicative of how strong the IPL brand has become," said Santosh N., External Advisor, Duff & Phelps India Pvt Ltd.
However, IPL's impact on its sponsors and partners continues to be remarkable, said the report. Following the announcement of central sponsorships by the Board of Control for Cricket in India (BCCI), the title sponsor Dream11 secured USD 225 million in funding, one of the official sponsors Unacademy joined in with a funding of USD 150 million, and another official sponsor, Cred, secured USD 80 million.
"With the economy opening and Covid-19 cases decreasing in India, we expect sponsorship deals to be back to their pre-covid-19 levels. We have now entered a more stable phase in terms of the IPL ecosystem's value; the value appreciation is not expected at the rate of previous years. However, an increase in the number of teams in 2022 and the renewal of media rights in 2023 could enhance the IPL ecosystem value in the future," Santosh said.