Big hitters all out for the Indian Premier League 2013

Despite a raft of scandals, sponsors are still happy to toss in billions of rupees to have their names associated with the IPL.

Kolkata Knight Riders celebrate after winning the IPL last year. Manjunath Kiran / AFP
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The Indian Premier League (IPL) cricket tournament is still proving to be a crucial fixture in the business world, as sponsors and team owners continue to plough investments into the event.

Despite controversies surrounding the tournament, including an alleged spot-fixing case last year and television viewing figures that have waned, sponsors are prepared to pitch in billions of rupees to have their name associated with the event.

With an average player earning £2.5 million (Dh13.9m) a season, IPL is second only to the National Basketball Association (NBA) in terms of sports salaries.

The tournament starts on Wednesday and runs to May 26, during which time a total of 76 matches are to be played by nine teams.

PepsiCo in November bought the title sponsorship rights to IPL for the next five years for US$71m (Dh260.7m) - almost double the amount the Indian property giant DLF paid for the title rights for the first five years of the tournament.

"IPL has matured," says Said T Gangadhar, the managing director of MEC India, a media agency that carries out an annual survey on viewing trends for IPL.

"With Pepsi activating their title sponsorship in a big way, the BCCI [Board of Control for Cricket in India] launching the IPL Fantasy League and India's strong performance against Australia [winning all four tests in the latest series], the first stage of the league could get further momentum. Ratings in the first phase - the first 18 games - impacts the fate of the entire league."

Pepsi, which has brands including Mountain Dew, 7UP and Tropicana, has also tied up with eight IPL teams as their official drinks partner for the event.

"Walk into a stadium during an IPL match or watch it on television, and you'll see ads everywhere. Every conceivable property - from billboards to the stumps - has been monetised," according to a report by MSLGroup India.

"Call it overkill or innovation, advertisers know that IPL delivers eyeballs."

IPL, loosely based on the United Kingdom's Premier League football championship and the NBA, launched in 2008.

"The IPL, a mega success from the word go, was an inflection point in cricketing history," says MSLGroup.

"As India sat glued to the lusty hitting, quick-fire games and glamour, the cricketing firmament understood that the game had changed forever.

"Commercialisation and a marriage with entertainment would now be inseparable from the once-serene game," it says.

"The IPL lured advertisers, broadcasters, brands and even film stars, who bought teams or turned franchise ambassadors."

Vodafone also renewed its partnership with the tournament and India's Yes Bank last Monday announced it had signed up to sponsor IPL.

"IPL is the foremost event property in India, which through its vibrant and innovative platform brings together the entire country, irrespective of regional or demographic diversity," says Rana Kapoor, the managing director and chief executive of Yes Bank.

"We are confident that Yes Bank's association with IPL for five years will facilitate our brand recognition, and further propel our pan India retail banking franchise."

However, Hero Motocorp, the motorbike manufacturer that was associated with the tournament for five years, decided to end its partnership.

India's conglomerates were quick to spot the commercial opportunity of IPL, with owners of teams including UB Group, best known for its Kingfisher brand, which bought the Royal Challengers Bangalore in 2008 for a estimated $112m. Sahara Group paid $370m for the Pune Warriors in 2010, the highest price in IPL's history.

The advertising inventory for this year's IPL has completely sold out but reportedly this is because rates have dropped by up to 10 per cent.

"We are getting ad growth due to the 25 to 30 per cent unsold inventory of last season," says Rohit Gupta, the president of MSM, which owns Sony Max and Sony Six, the official IPL broadcasters.

"Today, we are back to what we were three to four seasons ago, with a complete sell out of the inventory," Mr Gupta told the Hindu Business Line newspaper.

"IPL has now matured to a great tournament and is growing between 5 and 10 per cent every year. With 180 million viewers, it gives enough reason for advertisers wanting to come back."

There was "a muted advertiser response to season 5 of IPL", according to analysts at KPMG.

Figures suggest the cricket tournament has taken a big hit.

The brand value of IPL fell from $3.67 billion in 2011 to $2.92bnlast year, according to a study by Brand Finance. This compared with $4.13bn in 2010. Brand Finance cited a lack of financial transparency and short-term strategies adopted by club owners that hampered sustainability as the factors behind the erosion in value, rather than various controversies that have plagued IPL.

Those include the former IPL commissioner, Lalit Modi, being fired in 2010 over charges of impropriety. Others say the scandals have had an impact.

"Brand experts believe that advertisers will start questioning whether the sky-high IPL rates are worth it and whether a 'tainted' brand should be associated with," according to MSLGroup.

"Some advertisers said that they might begin looking for alternatives if viewership drops and returns on investment fall short of expectations."

The ratings index used to show average television viewing figures is expected to increase to 3.9 from 3.8 the previous year, according to a survey by MEC and Meritus Analytics.

"Our survey shows that there is a segment of audience who will watch more than last year - say, the loyalists - and another segment who will watch less - say, the rejecters," says Sunder Muthuraman, the managing partner at Meritus Analytics.

"Given that the former segment is larger than the latter, the ratings are likely to be marginally higher than in 2012."

However, viewership figures are still off their peaks, following a 29 per cent decline in ratings in the fourth edition of IPL. The MEC/Meritus survey revealed the Mumbai Indians as the most popular team, followed by the Chennai Super Kings and the Kolkata Knight Riders.

"Despite intense competition, the sports genre has emerged as one of the most attractive opportunities for broadcasters in India," KPMG says.

"After airing IPL on its entertainment channel SET Max, MSM India launched its exclusive sports channel, Sony Six."

The launch of a fantasy league could help generate more interest in the tournament.

"We expect the IPL Fantasy League to become a key part of the live broadcast experience and as a result, social chatter around IPL could grow significantly," says Mr Gangadhar.

It seems even scandals do not hit cricket fans for six.