IPL: Is the brand losing its appeal?
- 29 May 2014
- From the section Business
There is a huge crowd assembled outside a small grocery shop in the suburbs of Mumbai - all concentrating on a small television kept inside.
The tension among the viewers is palpable, as the Mumbai Indians, the city's IPL cricket team, need four runs off the last ball of the match to qualify for the play-offs.
Even though the shopkeeper is attending to his customers, he cannot take his eyes off the game.
And then suddenly the crowd outside the shop erupts into celebrations as the Mumbai Indians hit the winning shot.
Such close matches may not happen every day, but similar crowds gathered round TVs in local shops are not an uncommon sight during April and May in India.
It is the period during which the six-week long Indian Premier League (IPL) is played every year - with this year's seventh season ending on Sunday with the final between Kolkata Knight Riders and either Kings XI Punjab or Chennai Super Kings.
The IPL is modelled along the lines of global sports leagues like the English Premier League (EPL) and the National Basketball Association (NBA).
The cricket is played in the shorter, Twenty20, format. In a match between two teams, each has just a single innings, batting for a maximum of 20 overs.
The tournament achieved instant success when it started in 2008 - with international and domestic cricket stars battling it out, celebrity owners including many Bollywood stars cheering on their teams, and cheerleaders celebrating every six.
All this, packed together in a single product, was the ideal recipe for a successful sports brand.
Controversies hit credibility
But after an initial smooth ride, the IPL has been hit by a string of controversies in recent seasons.
From the termination of cricket franchises to allegations of illegal betting, the tournament has encountered one scandal after another.
The biggest jolt came last year, when police arrested three cricketers including a former member of the Indian national team, some bookmakers and a top official of a franchise amid allegations of spot-fixing and illegal betting.
One of the accused was Gurunath Meiyappan, a senior official of the Chennai Super Kings franchise and son-in-law of N Srinivasan, the president of Board of Control for Cricket in India (BCCI) at the time.
A committee appointed by the Supreme Court of India is now investigating, and in March this year the court said Mr Srinivasan should step aside as president to allow a fair probe.
Both men deny any wrongdoing.
Mr Srinivasan was elected chairman of cricket's world governing body, the International Cricket Council, in February and is due to take up the role in July.
The image of the IPL has taken a massive beating, says cricket writer and commentator Ayaz Memon.
"I think the biggest issue confronting the IPL, and therefore by extension Indian cricket, is the issue of regaining credibility."
Though its cricket matches remain some of the most-watched shows on television, even the number of viewers has fallen since 2012.
Even advertisers and sponsors have either shied away or are not willing to pay the money that they were shelling out a few seasons back.
Many believe the scandals have taken a toll on the IPL's brand value, currently estimated to be worth about $3.2bn (£1.9bn).
"The last two years have been a disaster for IPL's brand image and valuations," says Shailendra Singh, joint managing director at the entertainment and media firm, Percept.
"But it has been a dream come true for sponsors, because they are getting the same product at a much better price."
Franchises losing out
Even though the IPL's organisers have been making profits ever since the league started, thanks to the bounty they get from broadcasting rights, it is the IPL franchises - the individual teams - that are losing money.
Though none of them is a public listed company and so earnings are not published, reports by national newspapers who have looked at their balance sheets show most of them are still not making a profit.
They now have to rely heavily on sponsorships and ticket sales for revenues. And their margins have been squeezed further, because for this season, the cricket board has lowered their television rights payout.
"This year has been a tough one," says Hemant Dua, chief executive of the Delhi Daredevils franchise.
"There were five franchises that were trying to sell sponsorships in the market. And a lot of corporate money also went into Indian elections."
IPL teams need to look beyond sponsorships and ticket sales to enhance their revenues, he says.
"Sponsorship money for us will stagnate after a while. The real opportunity will come from consumer engagement."
Teams like the Delhi Daredevils are now focusing on merchandising and loyalty programmes to increase revenue streams.
But despite the slump in recent years, almost all marketers and brand experts believe the IPL has the potential to bounce back if it clears up the mess created by the scandals.
"In India, 600 million people are below the age of 25, and there is only one sport we consume - the IPL isn't going anywhere," says Shailendra Singh.
Indian cricket legend and now commentator, Sunil Gavaskar, was asked by the country's Supreme Court to take interim charge of the IPL for this season.
Many believe that Indian cricket needs more people like him - with impeccable credibility to take up leadership positions in the administration to revive its image.
For now the only silver lining for the world's biggest cricket league is that the fans still have faith in the tournament - the packed cricket stadiums throughout the season are clear evidence of that.
But if the custodians of the game fail to take urgent steps to restore the credibility of the league then even that faith may start to wane in the long run.