IPL-3 Case Study

IPL-3 “The Home Coming” Disclaimer: This case is prepared by Srinivas and Karan, students ITM Business School under the guidance of Prof Dr Ankush Sharma. The case is completely based on secondary research. The case is only for classroom discussion for the learning of post graduate students. Copyright of the case is with ITM Business School @ 2009.

“INDIAN PREMIER LEAGUE-3” “THE HOME COMING” Introduction: And this could be another one! Brilliant work by Adam Gilchrist behind the stumps! The two Aussies involved (Adam & Symmo) and…… Got it! Another wicket goes down for the Royal Challengers. Deccan Chargers back in the game. Last ball of DLF IPL-2 and that’s driven towards long on for a single; it’s the Chargers who will lift the trophy! They have come from number 8 to number 1 in a spectacular fashion defending a modest score of just 143 runs to lift the trophy. Yes, after entertaining the crowds in South Africa and winning millions of hearts abroad, along with enjoying overwhelming success, IPL is back to the place where it originated from. It is IPL-3 and it is back in India! The Indian Premier League (IPL) is back with its third season and its back with a bang. Like the earlier season, the Twenty20 championship had its share of controversies and troubles this year, too. There have been a lot of changes in IPL season 3 as compared to IPL season 2.To begin with there has been a change in venue as IPL is back in India, which has lead to further increase in revenue for all the franchises and advertisers, sponsors, media partners etc, the list of beneficiaries just goes on and on .In addition to change in venue, there has been a change in schedule also, as this year IPL has begun a month in advance. IPL Season 2 was held at South Africa since the tournament coincided with the general elections in India, much to the disappointment of many fans and critics, who believed that IPL belonged exclusively to India. Since IPL is back in India, SET MAX has chosen the premise of home-coming in their communication. SET Max released its first phase of communication earlier, in which all the 8 team ‘s captains spoke about how good it feels to be back in India and how much they missed India last year.

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IPL-3 “The Home Coming”

The case is being prepared by K. Srinivas Murthy & Karan Bhatia, students of ITM Business School under the guidance of Dr. Ankush Sharma, Professor ITM Business School. We would also like to thank Dr. Preeta Vyas IIM Ahmedabad for her valuable guidance in preparing the case study. The objective of the case study is to use it only for class room discussion. The copy Right of the case is exclusive with ITM Business School Navi Mumbai.

The second phase of communication was, the TV commercial which begins with a passenger in an airplane, who sees a huge roll of red carpet perched on a snow capped mountain. The red carpet is unrolled by a group of people and rolls through huge expanses of mountains and valleys to go through streets, by lanes and the other nooks and corners of India to welcome the captains and the teams to a stadium for the IPL.

Changes that have taken place from ipl2 to ipl3: Apart from change in location, there has also been a change in the strategic time out time interval during matches. The management of IPL has decided to increase the heat on it by decreasing the time interval between the innings. Last IPL, the break time was 15 minutes (7 and half minutes per innings), but IPL 3 will have only 10 minutes (two 2 and half minutes of break per innings). To make it more interesting the decision of these breaks time has been given into the hands of the players. Comparison of Strategic brakes in IPL-2 & IPL-3 IPL-3 st nd st 1 Innings 2 Innings 1 Innings 2nd Innings Bowling Side Batting Side Bowling Side Batting Side 7.5 min 7.5 min 2.5 min 2.5 min 2.5 min 2.5 min Total = 15 min for a match Total=10 min for a match IPL-2

The break of the first innings will be called by the bowling team captain between the overs 6 and 10. This idea will give good chance to the bowling side to stop the momentum of the batsmen and think of some new strategies to reduce or stop the run flow. The break of the second innings will be called by the batsmen at the crease between the overs 11 and 15. This idea will help the batsmen to decide some crucial things such as whether they shall play with boundaries or to keep wicket. Each of these break time will have 2.5 minutes.

IPL-3 “The Home Coming”

To compromise for the other 5 minutes which the sponsors are losing out this year as compared to last year, advertisements are shown between balls so as to make up for reduction in timing of strategic time this year, though the advertisers will gain all the profits, this move will play with people’s patience. Apart from the changes in the venue and the strategic time out, the most controversial incident was the non-purchase of the Pakistani players in the auction. The Pakistani players were very diplomatically kept a part of the auction, but there were no buyers for the Pakistani players as all the bidders decided to play safe and stay away from the controversy. The enraged Pakistani players made a meeting at Brisbane where they were playing the one day series with Australia and decided to get quit from the IPL; also all broadcasters in Pakistan were given strict instructions of not telecasting even a single match of IPL. The auction list contained 7 Pakistani players, 7players from Sri Lanka, 8 from South Africa, 4 from NewZealand, 8 from West Indies, 11 from Australia, 1 each from Bangladesh, Canada, Zimbabwe, Netherlands respectively. This year auction consisted of 60 new players as compared to the previous edition. There were certain other changes which were missing in the previous edition and which are adding to the excitement in the current edition such as Cricket merged with entertainment in IPL-1; and in IPL-3, cricket meets fashion as all the IPL post-parties are oomph with fashion shows this season. Another important change this year has been the inclusion of ICL players in IPL, with the likes of Shane Bond, Rohan Gavaskar, Rayadu, etc getting an opportunity to display their talents. The introduction of Mongoose bat is also making waves this IPL and with Matthew Hayden swearing by it, it is sure becoming the most talked about thing this cricket season. Also one can’t help notice innovative messages on the big screens in stadiums, which are quite hilarious and cheeky, and also quite apt at the same time, like a “Smash” for a sweeping Six or “Sloppy” for a missed catch, the crowd certainly seems to love it.

BCCI reaping rich rewards out of IPL: The Board of Control for Cricket in India was counting its chickens well before a single ball was bowled at the third season of the Indian Premier League, thanks to a scrum of brands rushing to cricket’s greatest spectacle. BCCI has overcome Manchester United in terms of net worth to become the richest sporting body which amassed a total of $1.3 billion over the last 4 years, excluding the profits made by IPL which is estimated between $50 to $70 million, not to forget that the IPL brand has a net

IPL-3 “The Home Coming”

worth of $1.8 billion which is owned by BCCI, thus taking its net worth way over $2 billion as compared to Manchester United which stands at $1.870 billion. Indian cricket very seldom makes losses and last year was a year of exception as it saw BCCI making a loss of Rs 45 crores in IPL2 which was hosted in South Africa as it was more expensive to host the tournament at an international venue. The major reason for this bewildering outcome was the collision of the general elections to be held in India with the schedule of IPL. Known for its ever growing hunger of making higher profits with every passing year BCCI is all set to make earnings in excess of 800 crore from IPL-3. According to Vice Chairman of IPL Niranjan Shah, these earnings of around Rs800 crore can be bifurcated in the following way: IPL is said to earn Rs200 crore from franchisee rights i.e.., the bid amount which is paid over 10 years; Rs 210 crore from franchisee fees which is the annual fees that all franchises have to shell out to BCCI for using the facilities at the stadia etc., which is shared with the individual cricket state associations; Apart from this Rs 400 crores generated from central media sponsorship rights from title and ground sponsors as well as telecast rights which is a part of the Rs 8,200 crore deal won by the broadcasters Multi Screen Media Pvt. Ltd and World Sport Group Pvt Ltd (WSG), a sports marketing company, to air matches till 2017.

IPL-3 “The Home Coming”

IPL Minting Money through Media: Regardless of the T20 tournament’s ability to keep the crowd’s interest going, BCCI is learnt to be richer after sewing up a raft of deals with internet giant Google and top entertainment channel Colors which are worth Rs 80 and Rs 100 crores approximately as officials from the media say. Digital Media is also reaping the fruits of the seeds sown by IPL. The rights for online screening of the IPL 3 matches were bagged by YouTube. It has roped in more than 6 sponsor’s including Airtel as the official broadband sponsor of DLF IPL Title for season 3. HSBC India, Coco Cola, HP, Samsung are among the other key sponsors of IPL on YouTube. Besides the online streaming of matches, July Systems Mobile Internet Solutions has launched IPL on mobile internet where consumers could access IPL videos and updates via its Mobile Internet service.

IPL-3 “The Home Coming”

MAJOR SPONSORSHIP DEALS OF YOUTUBE FOR IPL SEASON-3

As stated by Narasimha Jaya Kumar, Business Head Google India Google has signed over six advertisers of leading brands which are expected to reach over 40 million people across India. As seen today technology has come of age and internet and 3G services are the “In-thing” and are catching up very fast with significant number of users swearing by them and thus Google is trying to make the most out of them. To sum it up, YouTube as a video sharing platform has been explored completely. They actually took it to the next level via LIVE airing which wasn’t thought of by anyone before and now will become a trend in the future. However Facebook and Twitter – by far the best influential networks on Social Media in India (Orkut losing its sheen) haven’t been explored to core. A fan Page on Facebook can be made more interesting with endless possibilities to explore. Twitter with its LIVE updates via Tweets can garner a loyal audience and leverage from them as well. Mind you, both these networks can become great resources for a healthy two way communication which is evidently impossible anywhere else. Maybe we could expect some Social Media Fireworks in the next season of the Indian Premiere League.

IPL-3 “The Home Coming”

IPL Franchises are leaving no stone unturned in catching up with their fan base; they have roped in radio partners to reach out to their audience. Apart from the on- air campaigns, most of these FM stations are working on ground activities to promote the teams they are associated with. According to Anand Chakravarthy, Senior VP Marketing, Big FM, “IPL has a great opportunity for radio stations to engage with their listeners. Good radio stations are always aligned to the biggest consumer vibe at any point of time. Since IPL is the big vibe currently, we will use it to create exciting programming and marketing platforms for our stations. On the business front, advertisers are also looking for every possible opportunity to leverage during the IPL season. Therefore, an exciting radio property with on-air and on-ground also attracts high revenues. Overall it’s a win-win situation for both the IPL franchise, which gets a large amount of ‘free promotion’ on radio stations, and radio stations, which use IPL to engage with audiences.” With the homecoming of IPL 3, a whole array of marketing and advertising opportunities have opened up which the Franchises are actively using them to the brink.

IPL-3 “The Home Coming”

Sony makes big bucks out of IPL 3: Ad inventory of Sony Set Max for IPL-3 was selling like hotcakes. Even before the season started a full six weeks ahead of the tournament Sony Set Max has managed to sell 90% of its advertisement inventory in-spite of the advertisement rates sky-rocketing! They have almost increased by 50% when compared to IPL-2. “If you notice, most of the brands that have signed on with us this year have been present on season 1 and 2 even though there’s been a tremendous increase in advertising rates. Clearly, IPL delivers more than just good ratings for advertisers,” said Rohit Gupta, President of Network Sales Multi Screen Media Private Ltd

IPL Season

IPL 1

Cost per 10-second 1.5 Lakhs advertising spots

IPL 2

IPL 3

2.5 Lakhs

4.5 Lakhs

IPL-3 “The Home Coming”

The broadcaster is said to be holding back 10% of the inventory so as to sell it at a premium during the final and semi-final matches. “These should be substantially higher than the Rs10 lakh per 10-second level of last year,” says Rohit Gupta, president of Multi Screen Media (the parent company of SET Max). It was stated by Set Max that: the main sponsors-Videocon, Vodafone and Pepsi have bought 10-second slots for Rs 5.25 lakh and they have been allotted 180-200 second slots per match. Last year, the same 10- second slot was sold for Rs 3.5 lakh. The associate sponsors like LG, Samsung, Godrej among others have bought the slot for Rs 4.50 lakh to Rs 4.70 lakh per second and have been allotted 120-140 second per match. The increase in the advertisement rates close to 30% for season 3 as compared to last year has prompted a significant rise in the ad budgets by the companies as well.

IPL- A Launch Pad for New Companies: The popular Indian Premier League (IPL) cricket tournament is being used as a showcase for several firms backed by institutional investors that have embarked on an advertising blitz to showcase themselves and grab the attention of a nationwide audience. For ages now Companies have been investing heavily in sports to build their brands and Karbonn mobile has gone a step forward in doing so. In a move to announce itself on the big stage and inform its competitors about its arrival Karbonn Mobiles has used IPL as a catalyst for launching its mobiles. With the crowd turnover increasing with every edition of IPL, Karbonn Mobiles has very smartly acquired the branding rights for boundary boards and stadium screens as this would make the people aware of its brand and help it acquire a pie in the market share. Having roped in cricketers like Virender Sehwag, Gautam Gambhir, Virat Kohli, etc Karbonn mobile has shown its motive to thump its presence in the mobile phone market with an advertising and marketing budget of Rs 150 crore and are likely to increase the deal by 20% approximately year on year as stated by Sudhir Hasija, Chairman of Karbonn Mobiles. After successfully overtaking Sony Ericson and Motorola, Micromax Informatics Ltd became the third largest mobile phone seller in India after Nokia and Samsung in terms of volume. With Daredevil Akshay Kumar being roped in as a brand ambassador, with his frivolous laughter as a trademark Micromax is all set to establish itself in urban areas after grabbing a lion’s share in

IPL-3 “The Home Coming”

rural areas. Being one of the most prolific advertisers on television, and having a tagline which states “Nothing like Anything”, has already created a craze of ‘Gamovolotion’ and is showing the other mobile companies that it’s here to stay. “We are looking at getting the right mix of customers. It would be 70% rural and 30% urban. Now we have products for urban customers and our advertisements are in line with product strategy.” said Vikas Jain, Micromax Business Director. Whether choosing IPL as the bandwagon for promoting its product to achieve the right mix of customers i.e., 70% rural and 30% urban is yet to be seen.

IPL making money but losing viewership: IPL has made a lot of money and would continue to do so in future keeping in mind the craze cricket generates in India, but lately its TRP ratings have gone down and many rivals of SET MAX claim their Hindi soaps deliver higher viewership ratings than the quick-format cricket tournament. IPL may be having more global reach, but when it comes to loyal viewership these channels overwhelm SET MAX. The following exhibit gives the details of TRP ratings of different channels:

Program

Television Viewership Ratings (TVR)

IPL 2008

4.9

IPL 2009

4.3

IPL 2010

4.8

Star Plus (Yeh Rishta…)

6.1

Colours (Balika Vadhu)

5.8

Star Plus (Bidayi)

5.2

Zee TV (Pavitra Rishta)

4.6

IPL-3 “The Home Coming”

“There is this myth in media circles that when the IPL season comes, everyone needs to duck for cover,” said Anupam Vasudev, executive vice-president (marketing), Star. “But what we’ve found is that several of our top soaps such as Yeh Rishta Kya Kehlata Hai deliver far better (ratings) than IPL matches. We’ve looked at parameters such as reach, time spent, average television ratings, etc.,” he added. Star plus is not the only channel that SET MAX needs to worry about, other channels like ZEE TV; Colors are also adding insult to injury. Viewers spent 16.4 minutes watching serials like Balika Vadhu as compared to average viewing time for IPL 2010 which stands at 14.9 minutes, as per the latest TRP ratings. IPL’S TRP ratings are marginally up from 14.6 minutes in the last two years but still below what the Hindi soaps manage. The study calculated average IPL viewing time on the basis of six weeks each of 2008 and 2009, and nine days of 2010 in comparable time slots. Joy Chakraborthy, chief revenue officer, Zee, also said the IPL was not affecting the channel’s revenue. “Competing brands continue to advertise on general entertainment channels,” he said. Chakraborthy labeled IPL ads as “blind spots”. “The breaks are short and people are getting confused about which ad is for what brand. Besides, there’s too much inventory sold per match (on IPL) and it’s getting too intrusive,” he added. The reason, explained L.V. Krishnan, chief executive of TAM Media Research, is that IPL breaks are 30-40 seconds long, while soaps on GECs take a three-minute break, offering viewers ample time to check out what’s showing on other channels before returning to the soap. Another main reason for difference in TRP ratings is the fact that IPL attract “light television viewers” who on an average spend 110 minutes a day watching television as compared to housewives who spends more than 160 minutes a day watching television.

Ipl may fetch 200 crores as taxes: With every consecutive season of IPL the pie of government in terms of income taxes is increasing drastically except for the exception of IPL season 2 when government has earned just a few crores which is negligible. In the first season of IPL our government got to earn almost 91 crores as tax deducted at source (TDS). Leaving out IPL season 2, from the third edition of IPL, the government is expecting around 200 crores as income tax.

IPL-3 “The Home Coming”

According to the sources in the Ministry of Finance, the taxes would be accrued as Tax Deducted at Source (TDS) from the remuneration paid to players, umpires, coaches, commentators amongst others under the income tax category while advertising, marketing and consultancy services of the sporting extravaganza will be taxed under the service tax bracket.

Mrf blimps: Lalit Modi has left no stone unturned and is coming up with more and more innovative ways of generating revenue. Even the air space was not left untouched. The space on the blimps which were being used to forecast the min & max temperatures, the humidity levels etc… was sold to MRF for its advertisements. The deal is said to be worth 15 crore a year. Thus MRF became the official blimp sponsor for IPL-3 which is the first time ever these blimps were used at any sports events. This might become a trend and might even seep into other games like soccer and Baseball which are deemed to be one among the biggest games in the world.

IPL-3 “The Home Coming”

Few takers at multiplexes: With the rapid increase in the number of multiplexes like Big-Cinemas, PVR Cinemas etc… coming up in various malls, it has become the in thing for all the movie goers. IPL being the shortest format of Cricket lasting for just over three hours has made it viable to telecast it in the multiplexes. Though India is a cricket crazy nation, the multiplexes could not pull in crowds for the IPL matches despite the initial buzz among the public. To everyone’s surprise it was found out that the maximum occupancy over the weekends has been only 20 percent and the minimum has been close to six percent during certain matches.' Amit Awasthi, manager (programming and operations) of Spice Cinemas, told IANS. Some of the reasons speculated for the less turn out at multiplexes were: March being the month of exams for the 10th and 12th class going students and the other main reason was not telecasting the matches in the city in which the match was being played which certainly would have the maximum fan base for that match. “The concept is new to Indians and would take time to catch up. It’s still the initial days and the audiences' interest is waking back in IPL. There is a great word of mouth and we are hoping the footfalls will grow as the momentum of IPL picks up,' said Tusshar Dhingra, COO of Big cinemas.

Inclusion of 2 new teams for IPL 4: IPL 4 is going to be a whole different experience with the inclusion of 2 new teams, which means there will be more matches, more competition, more drama and a lot more expectations. 500 cricketers are expected to go under the hammer for the next auction in July 2010. The number of matches will increase from 60 to 94 in the next IPL, the question is will the number of injuries also increase? There was lots of drama at the beginning of IPL 3 over the purchase of 2 new IPL teams for the next season. There were lots of speculation on whos buying the new IPL teams with a lot of Bollywood stars and business tycoons expressing their desire to buy the teams, as when it comes to IPL no one minds having a small share in the big market. Lalit Modi thunder stuck everybody’s interest by placing base bidding price of these teams to $225 million, but after

IPL-3 “The Home Coming”

seeing a poor bidding response, he relaxed the rules and made way for more competition. Even then, IPL committee saw only few bidders for the IPL teams. They were 1. Sahara Group 2. Adani Group 3. Videocon Group (VC Digitial) 4. Rendezvous Sports World 5. Aman Vohra. After the bidding process, the following results were announced: • •

Sahara Group snatched the Pune IPL team franchise for around Rs. 1,700 crore. Group of Kerala based Real Estate Builders formed a team (brought together by Shasi Tharoor) named Rendevouz Sports World and won the Kochi IPL team franchise for around Rs. 1500 crore.

The IPL has surely come a long way in a short time, with the Sahara group bidding Rs 1702 crores for Pune and Rendezvous Sports shelling out Rs 1533 crores for Kochi.In fact these two bids which are worth about Rs 3235 crore add up to more than Rs 2853 crores which was the collective sum total of the existing franchises in the 1st edition, which goes on to say that as far as IPL is concerned there is no recession at all. With huge sums of money being invested in IPL every year, and with every year higher sums being invested, Lalit Modi is only focusing on Cash quotient and Critical areas like players fitness; India’s plummeting performance in major ICC Events seems to have taken a leap out of the window. In every season of IPL, Indian players get maximum exposure, play the highest number of match’s, get to interact with various legends from different countries, but still the fact remains that since the advent of IPL, India has not won Champions Trophy nor T-20 World Cup, in fact the Performance of the Indian Team in the major ICC Events has been dismal to say the least. So what exactly would be the outcome of the inclusion of these 2 teams in the next edition of IPL is the big question?

IPL-3 “The Home Coming”

IPL 3 “The Money Making Final”: Chennai Super Kings may have won the IPL 3 Finals but when it came to making profits Lalit Modi made sure there were many winners and nobody goes home disappointed. The man popularly known for converting cricket from “The Gentleman’s Game” to a “Profitable and Money-making game with Guaranteed Entertainment” left no stone unturned in terms of making money during the IPL 3 finals and in the end emerged as the real winner. SET MAX created history in IPL 3 Finals by selling the 10-second advertisement spots for the semi-final and final matches for over Rs 10 lakh making it the most expensive rate for a spot in the tournament’s three-year history. According to TAM Media which tracks audience viewership, in IPL 3 the matches are being viewed by over 20 million households, which is a 43 per cent increase over IPL 2, taking advantage of which SET MAX has sold a maximum of 2,600 seconds of advertisement time per match for the season. Another important aspect which needs to be considered is that the spot rates being offered in IPL are much higher than the Rs 2-4 lakh charged by broadcasters for one-dayers in which the Indian team played in international tournaments as well as key tournaments such as the Champions Trophy or the Champions League held last year. Last year, the benchmark for the semis and finals was Rs 8.5 lakh per 10 seconds and this year it was a function of demand and supply, in the end of which demand outplayed supply, the result of which was higher profits for anyone and everyone associated with it. Some of the major profit makers were Samsung, Pepsi, Hyundai, LG, Tata Photon, Airtel DTH, among others. Hence it can be said that Chennai Super Kings won only the trophy but the real money and profit went to each of these associate sponsors along with SET MAX and the man itself “Mr Lalit Modi”

Questions: 1) Will the introduction of new teams to IPL leading to increase in the duration of the tournament lead to an overdose of T20?

2) Do you think the constant innovations being brought in to the game so as to generate more and more revenue would help this format sustain in the long run?

IPL-3 “The Home Coming”

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