Shreyas Kulkarni
Media

Will COVID-19 dampen IPL 2020?

With so much money riding on the league, what happens if the league is postponed, played behind closed doors, or cancelled?

On Wednesday (March 11), the World Health Organization (WHO) declared COVID-19 as a pandemic. It means that the virus has now spread worldwide.

As a result, several events, particularly those related to sports that attract thousands of people, have either been postponed, or cancelled. Here's a small list of such sports events:

Serie A (Italian football league): The matches will now be played behind closed doors.

La Liga (Spanish football league) has been suspended for two weeks.

National Basketball Association (NBA): The ongoing season has been suspended.

BNP Paribas Open (a tennis tournament in Indian Wells, US) has been cancelled.

More and more leagues and tournaments are either postponing their matches, or cancelling them altogether. These decisions were taken to prevent the gathering of large crowds, and keep COVID-19 at bay.

According to an Economic Times report on February 5, 2020, Star India, which holds media rights to the Indian Premier League (IPL), had signed nine sponsors for the tournament. Some of the sponsors are Vivo, PhonePe, Dream11, Coca-Cola India, Amazon, and Maruti Suzuki. Star India has an advertising target of Rs 3,000 crore for the 2020 IPL edition.

In 2017, Star India had bagged the IPL media rights (TV and digital broadcast) for Rs 16,347.5 crore for a five-year period, from 2018-2022. Cricket has always attracted the biggest sponsors and advertising money in Indian sports. The Financial Express said, in a report, that 10-second ad spots are being sold at a 15 per cent mark-up over 2019, at Rs 13-15 lakh.

ESP Properties, the entertainment and sports division of GroupM India, in its 2020 report, said that sports sponsorship in India had crossed Rs 9,000 crore in 2019. It grew by 17 per cent, with IPL and the Cricket World Cup majorly responsible for this growth.

IPL 2020 could very well be called off. The Government of Maharashtra has banned ticket sales for the league's opening match between the Mumbai Indians and Chennai Super Kings in Mumbai. The Central Government has suspended all visas, except a select few, until April 15 to halt the spread of COVID-19. This means that the IPL will miss star foreign players for its first leg.

Keeping the situation in mind, the IPL Governing Council has called a meeting on March 14. It may take a final call on the upcoming IPL season then.

It's necessary to take a decision that puts human life above everything else. But, if the IPL is postponed or cancelled or played behind closed doors, what about all the money which has been invested in it? Star India has already released ads to promote IPL 2020, and others brands were to follow suit.

 Himanka Das
Himanka Das

Himanka Das, CEO, Vizeum, says, "We can't afford to cancel the IPL because there are significant stakeholders... We are in a pandemic state that will take time to normalise. (But) I will not be surprised if it gets postponed."

S Yesudas
S Yesudas

S Yesudas, co-founder of Y&A Transformation Collective, feels the broadcaster will be protected to some extent in the event of the tournament getting cancelled because insurance clauses usually forsee such scenarios.

Doing a bit of math around the TV ad spot rates, he said, "Even at Rs 14 lakh per 10 seconds on an average, it will give them a per match revenue of (approximately) Rs 35 crore, totalling up to (approximately) Rs 10,500 crore for the contract tenure. TV airtime is easily 70 cent of the total revenue. With an additional 30 per cent from various other avenues, including digital, the total one can write on this property would be (maximum) Rs 15,000 crore."

"As for the broadcast partners, they, anyway, pay for their spots aired. So, if the event is not played at all, they lose nothing, barring the opportunity to build their share of voice from a single event. (Considering that it garnered over 450 million TV viewers; Hotstar: 250 million-plus viewers.)"

Among the options the IPL Governing Council has, one is to let the matches take place behind closed stadiums. Yesudas feels that advertisers will then have to recalibrate their offers. "From a viewership standpoint, viewership would only increase by about 40,000-50,000, which would not increase the TVR by even one per cent," he says.

If IPL is postponed, it may have different appeal for different advertisers. Says Yesudas, "The April period is (of) new budgets, and provisions for IPL have already been made by most of them. They will all look for other “eyeball” worthy investment opportunities and monies could get committed to some other interesting propositions."

He signed off by saying that the first priority will be to practice social distancing, and avoid all that can be avoided in their long-term interest.

"Conducting the event by allowing mass gathering of people will be foolish. Even an event as large as the Olympics is facing such possibilities. I’m also sure that the BCCI will look at this differently, even if it means (offering) some compensation to the broadcaster. This is to protect the nation, more than anything else," says Yesudas.