Franchises face ‘Corona discount’ googlyPage Visited: 24
Corona discount – this term has now become a common feature in deal making activities. For franchises in the Indian Premier League (IPL), already facing a shrinking revenue pool, it has become a major stumbling block in cracking sponsorship deals.
Rajasthan Royals, winner of the inaugural edition of the IPL in 2008, have sealed the pool of sponsors for this year’s edition but have been forced to accept the reality that the sponsorship moolah won’t be enough to warrant satisfaction.
“We are not satisfied and it is 20-25 percent less than what we would have ideally wanted. But given the circumstances and the fact that the tournament is being held outside India, we have to deal with it,” Ranjit Barthakur, Executive Chairman, Rajasthan Royals, told Moneycontrol.
According to sources, a couple of franchises are still negotiating with some of the prospective brands and trying to eke out a reasonable deal as per the current economic climate.
Delhi Capitals on August 21 announced that JSW Group has replaced Daikin Air-Conditioning as the principal sponsor. Daikan was associated with the franchise since 2015.
JSW Sports is the co-owner of the team and the fact that JSW has picked up the lead sponsorship role indicates the tough task the franchises are facing in luring brands for tie-ups.
“Every brand is asking for corona discount nowadays. It is a reality. Sentiments are down and therefore sales are down. Thus, it is having an adverse effect on the spending power of brands. As far as franchises are concerned, they should be thankful for the fact that the tournament is taking place and should not be too picky about sponsorship deals,” Sandeep Goyal, brand expert and founder of Mogae Group, told Moneycontrol.
However, according to sources, Kolkata Knight Riders (KKR), which recently announced a tie-up with Mobile Premier League as the principal sponsor, has been able to find sponsors for all the slots and managed to ink the deals without any reduction in sponsorship money. The two-time champions, who have Shah Rukh Khan as a co-owner, was one of the first teams to have all the positions on the jersey sold out.
Vivo’s exit as the IPL sponsor for this year has come as a sucker punch for the franchises. The Chinese handset manufacturer was slated to pay Rs 440 crore as sponsorship money for this year.
Dream11, its replacement, is however, going to pay Rs 222 crore for this year’s edition. Coupled with lack of ticket sales and other brand engagements, it means the franchises have a daunting task ahead with less than a month left for the tournament to start.
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