IPL 2008. A Businessman's Guide

The IPL
A Few Frequently Asked Questions

By

Mr. Vinod Natesan

Mayan Consultants International

June 2008

Purpose and Scope

The “IPL” has been on the agenda and discussion summaries of most agencies, media executives and marketing heads.

Since it came into everyone’s radar early this year, it has raised many questions and a plethora of opinions, numbers, estimates, guesses, rumors have been thrown up. With the closure of the first season this month, analysis of what heights were reached and prognosis on what is to come is also being hazarded by every correspondent and cricketer worth his byline.

This article attempts to make sense of all that has been written and to collate, classify and present the ‘facts of the case’ for both the tyro and the virtuoso media buyer/planner/ investor and why not, the observer.

Q. What is the IPL all about?

Not a likely question, I admit, unless the questioner is Rip Van Winkle, or has just landed in India from the Artics, or has some similarly justifiable reason. However, like Indian feature films, we will pitch for the lowest common denominator and hope for the patience and indulgence of those who are more knowledgeable.

The Indian Premier League consists right now of 8 cricket teams who are owned by ‘franchisees’ of IPL.

They play 20 over cricket matches with each match lasting approximately 4 hours. Therefore, it is also referred to as ‘T20’.

They play twice against each other. Once at ‘home’ ground and the second, ‘away’ at the opponents home ground.

Therefore, there will be 7 matches in each of the 8 venues in the league phase. At the end of the 56 matches, the top four teams in terms of number of wins, will go into the semi-finals and finals. The IPL was scheduled over 45 days from 18th April to 1st June. The telecast was from 19.30 hrs to 23.30 hrs in most cases and on weekends when two matches were played in different venues, from 16.00 hrs to 20.00 hrs and from 20.30 to 00.30 hrs the next day.

Q. What explains the big bucks in this event and how is it viable?

The eight teams were given to investors who submitted the highest bids. The franchise fees were to be paid over a 10 year period. The franchise ‘brand’ was an asset and remained with the franchisee, without time limit. The fees paid by franchisees ranged from $111.9 mln (Rs 469.9crores) for the Mumbai Indians which was paid by Mukesh Ambani of Reliance Industries to the lowest fee of $67million (Rs281.4 crores) paid by Emerging Media which is owned by Manoj Badale and Lachlan Murdoch along with a few others. A total of $723.6 mln (Rs 3039crores) was committed as franchise fee to the BCCI over a ten year period by all the eight franchisees. It does not stop there, each franchisee had to put in a minimum of $3.3 mln (Rs13.8crores) and a maximum of $5 mln (Rs 21crores) per year on player fees. This was apart from other expenses incurred in insurance, coaching staff, training facilities, accommodation, travel etc.

In return, the franchisee’s were entitled to revenue streams which helped them recover their investments and generate handsome dividends. The IPL/BCCI passed on 72% of all central television broadcasting rights and 8% in the form of prizes to the franchisees. This share was to reduce by 10% every two years. Each franchise would get its share on the basis of TRP’s generated by it, except in the first year, when it would be equally shared.

The central television rights were sold to Sony WSG for US$ 1.026 billion. US$ 918 million was to be paid for 10 year global rights and US$108 million was to be spend in promoting the event over the same period. Sony had a 5 year deal for $316 million and a right to renew it for the next 5 years at $ 608 million. Revenues from central sponsored rights were also given to franchisees to the extent of 54% and 6% were allotted for prizes. The title sponsorship from DLF was for Rs 210 crores for 5 years and Rs 102.5 crores came from the associate sponsors which included CitiBank, Vodafone, Hero Honda, Kingfisher.

Franchisees retained 80% of all gate collections generated by it in its home ground, 87.5 % of all merchandising income, 100% of all team sponsorship and hospitality revenues. The gate collections from the 8 venues which includes the largest Eden Gardens with 100,000 seats to the smallest Wankhede with 35,000 seats, came to roughly Rs 167 crores . Sponsors were signed on by various franchisees with a fair degree of success, estimated at Rs 160 crores per anum across the 8 franchisees.

The final arithmetic indicates that revenues justified the fees paid by the franchisees with the central pool in itself generating nearly Rs 44 crores per franchisee, leaving them to generate gate collections and team sponsorships to cover their operating expenses and player fees. Some franchisees generated profits too in the first year due to astute selection of the team like the Rajasthan Royals, while Kolkotta Knight Riders marketed their strengths in celebrity owners and players to garner lucrative endorsement deals and to ensure full houses and better gate collections. For others like Chennai Super Kings, led by M.S.Dhoni, it was a mixture of all this. For details of the financial performance of each franchisee please see the table below.

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Q What explains the difference in franchise fees and how is it recovered?

The difference in franchise fees could be due to the following; history of the game and popularity, quality of player pool in the catchment area, commercial activity and business support, population of the city. The franchises were allotted on the basis of the highest bidder and the presence of business houses with an active interest in high profile sporting events would have impacted results in terms of expected sponsorship support. Ultimately the indicator of potential for the game at a local level is indicated by the attendance at the venue.

To compensate the premium paid as it where, Mumbai, which was one of the highest bidders, hosted the semi-finals and finals, while the opening was held in Bangalore, which was the next highest bidder. As the table above indicates, the gate collection is definitely a key variant. The impact of scheduling of the semifinals and finals as also the varying capacity of the stadiums that come with each franchise has been studied in detail in the table attached at the next page.

It needs to be noted that the EPL (football), where the stadiums are similar in capacity and the attendance similar, at 20,000 to 30,000, the share of gate collections comes to 35% of the total revenues of the franchise clubs, as against 15% in the case of IPL. This is because the EPL has greater number of matches at 38 matches per side vs 7 matches per side (9 if you make it to the finals) in case of the IPL. The revenue realization per match is also very much on the higher side in case of football.

Q. To what extent does the prize money play a role?

Prizes collected were almost 42 crores according to estimates from revenues generated. As per announcements made at the start of the league only Rs 12 crores were distributed. Its quite possible that the balance would be distributed in the same proportions. RR and CSK should benefit hugely as also DD and PK. However the benefit of making it to the semi finals and finals will be huge from the point of view of the share of TV rights that will accrue from the next year onwards. This should be sufficient incentive for the teams to play it with intensity and keep their employers happy!!

Q. Why is merchandising not featuring as a key revenue in the IPL?

Merchandising as a revenue stream has not provided much in India. Currently merchandising is estimated at Rs 300 crores with cartoon characters mostly aimed at kids. For the IPL, the estimate is at around Rs 8 crores at best. This is because organised retail in India is just 7% of total trade. With retail brands rolling out, it is expected to grow to 25% by 2011 and then things would be different. Globally it is $500 bln. Star Wars merchandising is estimated at US$9 billion (Rs37,800 crores). Harry Potter is at US$ 11 billion (Rs 46,200 crores).

The impact of gate collections and location of the franchise is shown in the table below:

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Q. How are these huge TV coverage amounts recovered?

World TV rights for the IPL at a $100 million per year would seem realistic when one considers the prevailing market trend;

· The total advertising through TV on cricket in India would be around $ 450 million (Rs 1,890 crores).This is out of the $1,600 million (Rs 6,720 crores) that TV as a medium gets. Cricket corners 28% of the advertising revenues generated through TV.

· BCCI collected $612 million (Rs 2,570.4crores) from Nimbus Communications for the global media rights to all international and domestic cricket owned or controlled by BCCI to be played in India from 1 March 2006 to 31 March 2010.

· ESPN Star Sports has won the audiovisual rights for ICC events from late 2007 to 2015 for $1.1 billion (Rs 4,620 crores). This includes two World Cups -- Asia (2011) and Australasia (2015).

· Global media rights for one-day internationals (ODI’s) at neutral venues (places like Abu Dhabi, Holland, the U.S. and Malaysia, where cricket is not very popular) has been given to Zee Telefilms for $220 million (Rs 924 crores). This contract runs up to March 31, 2010.

Not surprisingly therefore, the IPL generated around Rs 600 to Rs 700 crores in television advertising revenue this season, which gives it a 10% of the entire TV spends. It is television coverage rights that has made the game and the event viable and justified the huge amounts invested in it. Everything revolves around the platform and audience that it provides advertisers to promote their products.

The fortunes of Sony SET-Max which took up the rights changed dramatically after this event, given the viewer ship and the commercial rates than it commanded from advertisers. Viewer ship was driven by the almost perfect timing of the event. Evening telecast from 7pm to 11 pm in most cases and the fact that the summer vacations were on, made a huge difference.

Most households have a single TV. The ratings show that the remote was won by the men and children. The TRP ratings were between 5 and 8. The final had a TRP of close to 10 and the semi finals close to 6. The opener had almost 8+. TAM estimates that more than 99 million viewers tuned in from April 19 to 24th May. Nearly 64 million watched the 2 semi finals and finals put together. The universe of viewers in cable connected households is around 117.1 million (AMAP Data) and therefore this seems a fairly impressive number. The ratings for Sony was at the cost of the other GEC channels, naturally and the ‘saas bahu’ serials and even Paanchvi Pass showed a fall in ratings. Ratings dropped from 6 to 4.8 for some of the top ranked programs, giving Sony SET Max and IPL a 29% share of prime time during the 45 days of the IPL. The IPL ratings and the attendance at match venues also cannibalized on the footfall in malls and multiplexes as the data seems to indicate. ‘Tashan’ from the Yashraj Films, U Me aur Hum and Krazzy 4 were some that were in the casualty list of the IPL juggernaut. While the quality of the movies could be factors the comparative results in overseas markets is a good cross reference. The 3pm,6pm and 9pm shows were hit badly and U, Me aur Hum which opened at 30-35%fell to 15 to 20% occupancy in the domestic circuit (flop). Overseas it did Rs 6 crores of business in 3 days . Estimates say that the 25 crores film would bring in only 9 crores from ticket sales in the domestic market. Krazzy4 with its ‘thump’ copyright issues opened to a 70% occupancy, but fell drastically to 25% by the end of the week. The 10 crores movie is expected to make only 7 crores at the domestic box office. Its overseas collections were 3 crores in 3 days. All rules have exceptions and the movie Jannat which is based on betting and the rigging of international cricket matches did well. In fact the actors in this movie were chosen as anchors by Sony SET Max, much to the disappointment of many males who hoped to analyse Mandira’s vital statistics as she tried to make sense of the games statistics.

Unofficial estimates (it can’t be official can it?) put the betting business at Rs 20K crores for the IPL. The format of the game proving to be an ElDorado for this business!! This possibly explains the success of the movie too! Bob Woolmer’s death, the Azharuddin, Hansie Cronje controversies are still in the cricket lovers mind and this has been leveraged in the movie though in an oblique manner as a coincidence!!

Healthy Returns for SET Max the stake holder of the TV rights.

Revenues earned by Sony SETMax from this event have been quoted by many publications have been at Rs 300 crores. Revenue market share of SET Max has gone to 28.8% from 5.7% for the 1.5 mths. A detailed examination of Sony SETMax Income and Expenditure for this project throws up these highlights:

· SET and the Singapore-based World Sports Group bagged broadcasting rights for 10 years for $1.026 billion

(Rs 4,309crores).

· Of this, $108 million (Rs 453.6crores) has to be spent on marketing the game over 10 years. Per annum spend US$10.8mln (Rs 45.36crores).

· This brings down the actual cost to $ 918 million (Rs 3,855crores). Per annum spend US$ 91.8mln (Rs 385.5crores).

· Sony will have to pay $316 million (Rs1,327 crores) in equal installments over the first five years and $608 million

(Rs 2,554crores) over the next five. Can opt out after the first 5 years. Actual annual payout in the first 5 yrs: US$ 63.2mln

(Rs 265crores).

· The total payout commited by Sony SETMax when clubbing promotion cost and rights is Rs 310 crores per year.

(Rs 265 crores + Rs 45.36 crores). US $ 74 mln.

· The amount earned by Sony without deductions from domestic sale of commercial time is estimated at Rs 776 crores. Overseas figures which accrue to WSG should come to Rs 60 crores+.

· The commercial time available with Sony is of two kinds, commercial and on-screen. Commercial time includes sponsorship slots and spot buys. The average commercial time sold per match is 2162 secs during the first 56matches. The remaining 3 matches could be 2,500secs.

· On screen has been sold as pop up, pushback, action replay, scrollers and paste up. (Pop ups have been dominant taking up 72% of the share, according to Adex. This is mostly by DLF) .The others have been by sponsors of the league or the franchisees. Rates would therefore be heavily negotiated. The average time per match could be 13,764 secs for the first 56 matches and around 15,000 secs for the 2 semi’s and the final each.

· The total time sold and revenues have been worked out in the next chart. The revenue comes to Rs 776 crores from domestic sales.

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Q. To what extent are overseas rights relevant?

Going by the Yashraj and SRK success story, Indian diaspora is a cash rich segment, though numerically not very substantial.

What has not been written about very much is the revenue from sale of broadcasting rights to overseas markets. These include the following:

• Network Ten Free-to-air television in Australia for 5 years at AUD 10-15 Million. This would be AUD 2 mln per year. Rs 8 crores-12 crores per year.
• Setanta Sports for UK and Ireland (12 crores),
• ART Prime Sports for the Middle East (6 crores),
• Willow TV for West Indies(3 crores), North America(3 crores),
• Super Sports for South Africa(12 crores),
• Geo Super Sports for Pakistan (6 crores),
• ATN for Canada(6 crores).
• Estimates would be that these would also bring in Rs 60 crore per year at the least.
• Foreign rights Rs 60 crores and may go directly to WSG. Sony may keep the domestic revenues. Since the revenue split is not known its better to treat them as one unit.Total revenues of Sony and WSG combined would be Rs 836 crores per year
• Deducting the payout to IPL the gross earnings work out to (836-310=526 crores).
• From this gross earnings the cost of production for 59 matches needs to be deducted. At the highest it could be 60 crores.
• The remainder is 460 crores. Once you deduct the 60 crores , you are left with Rs 400 crores. After taxes it could be Rs 280 crores. News papers have said that MSM Sony Set Max made 300 crores and this could be the workings with share of the overseas revenue which should be tax free?
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IPL - 2008. A Businessman's Guide

Q .What is the role of BCCI and how has it contributed to the success of the IPL?

• The role of BCCI in Indian cricket needs to be understood first:

– Board of Control for Cricket in India (BCCI) is a society registered under the Tamil Nadu Societies Registration Act.

– It has set up a separate body to handle the IPL with Mr. Lalit Modi as the IPL Commissioner. Mr. Modi is an office bearer in the BCCI.

– He reports to Shri.Sharad Pawar, the Chairman of the BCCI, who is currently, the Minister for Agriculture in the Indian Government.

– Surprisingly, this society is not directly under the Government and is comprised of industrialists and politicians. But it selects and sends the national cricket team for international matches.

– It is affiliated to the International Cricket Council, which comprises of entities that manage and controls cricket in various countries such as UK, Australia, New Zealand, West Indies, South Africa, Pakistan, Sri Lanka, Bangladesh and Zimbabwe.

– BCCI has various State Cricket Associations affiliated to it which manage venues and manages cricket teams of each state.

• BCCI’s financial strength is now considerable and has proportionate clout in the international arena.

– In 1992 it had a deficit of $150,000(Rs 63lakhs).

– It has now however, increased its profits from $1.11 million (Rs 4.62 crores) in 2004-05 to $7.64 million (Rs 32 crores) in 2005-06. This 32 crores came from overall revenue of Rs 430 crores.

– Overall income for the BCCI in 2006-07 was Rs 650 crores BCCI executives say 80 per cent of that income is from broadcasting rights. The television rights as mentioned earlier include the 5 year $612 million (Rs 2,570.4crores) deal with Nimbus up to 2010 , the Zee Telefilms for $220 million (Rs 924 crores) for the same time frame.

– The BCCI has also sold the kit sponsorship to Nike for $45 million (Rs189crores) for five years through December 31, 2010.

– The team sponsorship has gone to Air Sahara for $72 million (Rs 302crores).

– Business Standard estimates that it will get another $450 million (Rs1890crores) from the sale of other rights, including hotel, travel and ground sponsorship.

– Forbes magazine attempted a valuation of the different cricket boards. According to its calculations,

– the BCCI was worth $1.5 billion, the England & Wales Cricket Board $270 million

– and Cricket Australia $225 million. The ICC was pegged much lower at $200 million. The others were Pakistan ($100 million), South Africa ($65 million), Sri Lanka ($14 million) and Bangladesh ($5 million). "There are 10 full members of ICC, but in terms of revenue India contributes more than 70% to the game," the magazine wrote. "Most sponsorships and broadcast rights come from India, and Indian tours make foreign boards rich.

– Players make or break the popularity of a game. Iconic players with superior talent drive viewer ship and the fan base. BCCI has exclusive rights to selecting and retaining the “men in blue” or the Indian cricket team. Post 1983’s World Cup success, the game and the players have been celebrities in their own right. Exclusive access to them has given it a monopoly status in one of the country’s main pastimes.

– The BCCI has several cricketers on contract. The top Indian players -- eight at last count -- get an annual retainer of $115,000. The players in Grade B (four) get an $81,000 retainer and those in Grade C (five) get $46,000. The match fee is $5,800 a test match and $3,700 for ODI matches. The contracts were revised upwards after 2006.

– Under the existing system, 26% of BCCI's gross revenues were earmarked for player payments. The Men in Blue -- the Indian team -- got 13%, domestic cricketers got 10.6%, with the remaining 2.4% going to junior cricketers.

– Indian cricket’s governing body plans to allocate Rs 55 crore (a 30 per cent increase over last year) as match fees for domestic cricketers in 2007-08, in response to the ICL threat. ( a rival league sponsored by Zee’s Subash Chandra)

– BCCI announced domestic cricketers would be paid Rs 36,000 per match day in the current financial year, from around Rs 26,000 per match day in the last fiscal. Each senior cricketer plays up to 45 match days in domestic cricket (if his team notches up a stellar performance), taking the annual match fee earnings of local players up to Rs 16.2 lakh.

– BCCI’s also runs the National Cricket Academy and such initiatives to identify talent. It has the ability to provide raw talent for the franchisees.

• The setting up of the IPL as a separate entity was one of the decisions of the BCCI. Headed by one of its office bearers, Mr Lalit Modi as its Commissioner, the IPL has a separate management team with a CEO and a Governing Council.

• The format has been prepared carefully and the rules carefully adjusted to ensure that the league is not dominated by anyone team and the matches remain exciting and unpredictable.

• Leveraging its clout and appeal it has contracted nearly 78 international and national players to form a pool for franchisees. Most of them are on “basic” contracts where the entire player fee goes to them while there are others on a “firm contract” where a minimum fee is guaranteed by IPL and any excess paid by franchisees is kept by the IPL. If more than one team is interested in the player, it is decided by an auction. Contracts are irrevocable and for 3 years and need to be paid irrespective of whether the player is in the playing 11 or on the bench. Every year there is also trading of players. While giving players a sense of security, this automatically acts as an incentive and a whip for the player in question.

• There are ‘icon’ players in each team who will be paid 15% more than the highest paid player, since they will not be auctioned. Sachin Tendulkar for Mumbai, Sehwag for Delhi, Dhoni for Chennai, Dravid for Bangalore, Ganguly for Calcutta, Yuvaraj for Punjab. For Royals and Chargers there is no icon player. This has ensured that each franchisee has a ‘star attraction’ in his team and there is an ‘anchor product’, to use a retailing term, to get in the ‘footfalls’.

• A minimum and maximum has been kept as the bandwidth for players fees. Each franchisee is expected to pay a minimum of US$3.3(Rs13.6 crores) million per annum and a maximum of US$ 5million per annum (Rs 21 crores) for the team in terms of players fees. The playing team can comprise of a maximum of 4 international players and the rest are Indian nationals. This ensures that the playing fields are level and there is no domination by anyone team which could make the match predictable and kill its main appeal which is its unpredictability.

• A rookie will pocket a minimum of 8.4 lakhs per annum, a Ranji player a minimum of Rs21 lakhs per annum and ICC ranked players from Rs 42 lakhs per annum upwards. This is sufficient incentive to bring in talent that exists in the country and create local brands that can grow into national brands. An example being Goni the fast bowler and Yousuf Pathan.

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Q. What were the key factors that contributed to the success of the IPL?

• A large part of the success of the IPL is due to the promotional efforts behind the same. Nearly Rs 190 crores was spent in promoting the event.

– BCCI and IPL spend Rs 40 crores in promoting the event this year.

– Sony WSG has committed to advertising Rs 456 crores over 10 years (Rs 45.6 crores per year). This was through its channels and some through other media.

– Franchisees are likely to put in Rs 94 crores each through their local sponsors and on their own

• Format of the game also played a role. Teams were evenly balanced and the outcome was unpredictable at all times. This was done through the upper and lower limits fixed on salaries.

• Close matches mean better viewer ship and recall. T20 has higher probability here due to the nature of the format and the fact that the teams are evenly matched.

• The mix of foreigners to nationals ensured a high caliber turnout and local relevance. The 4:7 ratio was a good mix of international and local appeal.

• The use of auctions and the exposure in the media generated hype which made it a front page event. The highlighting of the auctions and the millions invested, made for a great news story, never mind Gilchrist admitting to “feeling a bit like a cow”!

• Controversies also ensured front page coverage, be it the cheerleaders and their clothing or the lack of it, Sreeshant vs Harbhajan or SRK vs Ganguly or Warne vs Ganguly, it kept the interest alive.

• The BCCI leveraged its clout to get the current national players to participate and calendered the event to ensure that some of the key international players also joined in. The school vacations and the summer evenings ensured a captive audience at home and at the stadium.

• The total money invested was apportioned to all stake holders to ensure a win win situation, be it players, TV channels, franchisees or even the viewers. Everyone made money and it was in effect a Paisa Vasool League!!

Q. What’s in it for sponsors/advertisers given that it’s a 45 days a year brand?

• The IPL is a great platform for advertisers as it gives access to nearly the entire C&S households during the course of one season, never mind that it is only 45 days.

• The advertising opportunity is also less cluttered as against similar sporting events like football where ads tend to be in a cluster at the beginning or end since there are few breaks in play, save the half-time.

• While the Test format has hardly any takers now, the one day international is cluttered and stretched over a longer time frame. There are 6,000-7,500 secs of commercial time in ODI’s as against 2,000 -2,500 secs in T20. The proportion of the event watched by the viewer on an average is much higher for T20 as against the ODI and therefore a lesser probability of a spot being missed. In fact, AMAP data indicates that time spent watching the match was higher for IPL matches as against the recent ODI (Kitply –India Pak) 73 mins to 88 mins for IPL.

• Unlike the international ODI’s, there is no risk of the Indian team loosing out and loss of interest. Franchisee loyalty is minimal and fickle at best. The viewer is known to ‘switch loyalties’ and seems to root for specific players ( Sachin, Dhoni, etc) and is interested in contests between specific players( Shoaib vs Sachin, McGrath vs Sanath, etc). Therefore, there is less risk of a repeat of the World Cup recently, when the exit of the Indian team resulted in a loss of ratings and interest. This also means that the advertiser is well advised to go with the event itself or more than one team or player as an endorser, since the format allows this and there is no risk. Kingfisher, Reebok, Adidas have all done this with good results.

• The viewer ship in the semis and finals is at least 2 TRP’s higher on an average. This means at least 2 to 3 million more viewers and greater probability of being seen since stickiness/ time spent is much higher for the last leg (89 mins vs 40 mins). This needs to be evaluated against the rates which are naturally higher for spot buys with rates being hiked to almost 10 lakhs per 10 secs for the finals.

• Sponsorship should be clubbed with on screen advertising as it has great multiplier effect and reminder value. Sponsoring contests within the format helps ensure returns for association with the tournament.

• Exclusivity is being offered by the Channel and the ground sponsors will have the first right from the next season. Pepsi may rule over Coke given the ground rights it has. Advertisers may gain by looking at a full package with a heavy burst for the 45 days and flighting subsequently as against a minimal number of spots which does not cross the threshold or provide the minimum effective frequency and OTS (opportunity to see). It should be great for launches and to those with major innovations which require high OTS, as also those seeking to establish a national footprint quickly.

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Q .Why was the ICL not as successful as the IPL?

• The ICL is owned by Subash Chandra who owns the ZEE Network which is a media conglomerate.. Zee and IL &FS put together a corpus of Rs 100 crore for this event.

• The Indian Cricket League started in November 2007 with 6 teams playing the league in Panchkula, Chandigarh. It then had a 50 over edition in January 2008 which was played at Mayajaal ground in Chennai. The latest edition was in March 2008 which saw 8 teams playing in Hyderabd and Gurgaon. Apart from league teams there are also ‘national teams’ playing against each other. Though the format is similar and the game is the same, the ICL has not generated as much revenue and interest for a variety of reasons:

– Players make or break this game and having access to the best in the business is key to attracting viewers and fans. ICL therefore upped the ante and paid Rs 30 to Rs 60 lakhs to 60 “no –namers” or domestic players at a total cost of nearly Rs 30 crores. It then signed up “brand players” for almost Rs 3 crores per head and for almost 10 such players had to put up another Rs 30 crores. The total spend of Rs 60 crores on players, did not get them the talent they really wanted with a lot of players opting out after accepting.

– ICL is not recognized by the BCCI and ICC. Players of this league were blacklisted by the BCCI, resulting in litigation on grounds of unfair trade practices. As a result, most of the talent in the country have been out of the ICL footprint and play in the IPL which is a competitor to the ICL, as it turns out. BCCI also raised players fees by 40% to counter the ICL challenge of a fee of Rs 36,000 per match .

– The ICL has a lot of players from overseas who have not been blacklisted by their national cricket authorities and therefore continue to play in ICC matches. However, IPL has confirmed that it will not allow any ICL player from any overseas Board to compete in the Champions League which it to be held in September among the top leagues of various countries. The strength of the ICL, which has been international players of repute, will now be threatened.

– ICL is hampered by the cricket calendar. The first season of the ICL was cannibalized by the Indo- Australian series and the Harbajhan vs Symonds controversy actually generated interest in the series and drove viewer ship and coverage in media. It is likely that the next season, scheduled to be held in the UAE may be affected by the Champions League which is scheduled around the same time. While IPL had the summer school vacation, ICL has not been able to get the prime calendar spots.

– ICL has spent nearly Rs 20 crores in promoting the event but has not got the sustained hype and interest that the IPL has managed. The TRP ratings of the ICL have been around 1 to 1.5 range . While the IPL has been on the front page much before the league began and has franchisees who by themselves have raised the eye ball count and the stickiness factor, ICL has had no stars who have been able to do it for them save for Kapil Dev, who heads the League. The ICL has also not been able to capitalise on its foreign players in the media sweepstakes.

– Sponsors therefore have been low profile and include the title sponsor Edelweiss Capital, the Mumbai ICL team sponsor Dabur Glucose, Bharat Student .com which the sponsor of the Hyderabad team and Pioneer Urban which sponsors the Delhi team.

– .Gate revenues are not high in the League since the best venues were blocked by the BCCI. However, the ICL still has access to the Eden Gardens and with help from the Railways (Minister L.P. Yadav blessing the event) they have reasonably good venues. Local advertising has been limited and with the absence of local ‘brand’ players, attendance has been lukewarm.

– The ICL needs to lobby with international bodies and using the UAE as a launch pad may work out, given that the in the past the Sharjah Cup was a success. Some savvy PR ideas would help keep the brand alive and salient and generate the interest in the event. Consumer contests and cross promotions with high TRP programs in its bouquet could help ICL. Movies on cricket are awaiting releases and a collaboration cannot revenues and definitely will drive gate collections in the UAE.

Ends

CASE STUDY: WHY DID THE FIRST MOVER CAME LAST? ICL vs IPL

USING THE 5 FORCES FRAMEWORK OF MICHAEL PORTER

http://mayanmuse.blogspot.com/2008/06/icl-vs-ipl-why-first-mover-came-second.html

READER RESPONSE:

http://mayanmuse.blogspot.com/2008/06/ipl-few-frequently-asked-questions_26.html

 QUICK PROFILE

Mr. Vinod Natesan, Proprietor of Mayan Consultants International, is a post graduate of the Institute of Rural Management Anand. In the 19 years in the industry, he has been associated as a marketing consultant with the World Bank and NDDB, has serviced ITC, Procter & Gamble Unilever and Telco accounts while working for FCB, Lowe and Leo Burnett. He headed the Mumbai branch of PSL McCann Erickson, winning numerous creative awards like the Clio for work done on the Guestline Hotels and the Mahindra brands. In 2000, he joined, JWT as Assoc Vice President & Strategy Planning Director on the De Beers account and was part of the team that won the Effies and the Subash Ghoshal trophy for the Nakshatra launch. In 2002, he shifted to the Middle East and has been handling marketing assignments with retail groups like the Landmark Group, with Tourism promotion bodies in Tunisia and with tourism related authorities in Kerala. His last stint was with the Emirate of Ras al Khaimah, where he set up the Tourism Office and the Media City and left it as the Head of Operations, RAK Investment Authority. He has also been a visiting faculty in most of the management institutes in Mumbai since 1996.

Publications:

http://www.agencyfaqs.com/perl/news/index.html?sid=17427

BLOGS

http://vinodnatesansportfolio.blogspot.com

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CONTACT:

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The IPL -A Businessman's Guide -Reader Response

FEEDBACK SO FAR:

1) From: Sunil Gupta

Subject: Re: An article on IPL

Date: Fri, 27 Jun 2008 12:10:02 IST

Hi Vinod:

Very detailed and a good reference point for the future..

Cheers

Sunil

(SUNIL GUPTA)

HEAD OF APRIAS IN INDIA

Ex GM of JWT Mumbai, where he was my boss.

2) From: suman.srivastava

Date: Fri, 27 Jun 2008 06:52:40 +0530

Hi Vinod,

Went through your article. It is very informative and interesting to a cricket buff like me. Congratulations.

Cheers

Suman Srivastava

Chief Executive Officer

Euro RSCG India

3) Hiroki Takeuchi , Live Current Media Inc,

Hi Vinod,

Really interesting article. (EDITED)
Regards,

Hiroki

4)From: ratnakar v

Subject: Please send the Business Man's Guide to IPL - Full Version

Dear Vinod Sir,

I have visited the blog and i must say i was looking for this analysis of IPL since its inception. It just wonderful.Request you to kindly mail me the full version.
Thanx in advance

Ratnakar
Area Manager (Orissa)
Birla Sun Life