x Abu Dhabi, UAESaturday 22 July 2017

Red-hot IPL walks on to its stumps

The league is a hit on the cricket pitch, but it has been tripped up by allegations of mismanagement and corruption that threaten to sully one of sport's hottest new brands.

Murali Vijay of Chennai Super Kings plays a shot during the T20 group stage match against Royal Challengers.
Murali Vijay of Chennai Super Kings plays a shot during the T20 group stage match against Royal Challengers.

The Indian Premier League (IPL) has only completed its third season but is already one of the world's fastest growing global brands.

Forbes magazine recently rated the cricket league as the fourth hottest sporting property in the world. Its brand value has more than doubled to US$4.13 billion (Dh15.16bn) from $2.01bn at its outset, according to Brand Finance, a brand valuation consultancy. The meteoric growth of IPL, observers say, is symbolic of India's growing prominence on the global stage. But the league is embroiled in a controversy that last month led to the ouster of its founding commissioner, Lalit Modi, over allegations of rigging team auctions among other charges of financial irregularities. Mr Modi has denied any wrongdoing.

The move is the latest twist in what is being described as the biggest sporting scandal to hit India since allegations of match fixing in 2000. Last month, Shashi Tharoor, a junior government minister, was forced to resign after allegations that he used his political clout to favour a bid for a new IPL team. Mr Tharoor denies any wrongdoing. Such allegations have exposed a lack of transparency and poor regulatory oversight in IPL's operations that could undermine its spectacular financial success and diminish its brand value.

While the IPL brand has grown significantly in a short time, "there are significant risks in terms of brand value governance and transparency, management systems and processes, and stakeholder alignment to future proof the exponential value generation capabilities of the brand", Brand Finance said in a recent report. Shashank Manohar, the president of the Board of Control for Cricket in India (BCCI), a non-profit, non-governmental organisation that oversees the sport, says: "IPL is a great property and is loved by all across the globe. The commercial aspect is important, but ethics and transparency are equally important."

Unni Krishnan, the managing director of Brand Finance, says: "Commercial sustainability of IPL will largely depend on the development of brand value governance principles and policies, and aligning all the stakeholders towards long-term value rather than narrow, short-term gains. "If these critical factors are not swiftly addressed by the BCCI there is a significant risk to IPL's brand value-addition capabilities in the future."

IPL is the biggest earner for the BCCI, which helped to establish it, and any erosion in its brand value could send a shockwave through all stakeholders, including fans, corporates, sponsors, merchandisers, players and team owners, Mr Krishnan says. Even though the IPL is an Indian brand, it has built a strong global audience, allowing the league to cut rich deals with sponsors, advertisers and broadcasters.

The first three matches of the IPL's latest season were watched by 37.1 million people, nearly 40 per cent more than in the inaugural session in 2008, according to the Indian television ratings agency TAM Media Research. Sony Set Max, a private television broadcaster, in 2008 paid $1bn for the TV broadcast rights for the next decade. The channel's revenue market share has grown from a pre-IPL level of 5.7 per cent to 28.8 per cent, significantly higher than the market share of the top nine Hindi general entertainment channels.

Various brands have shown an interest in trying to cash in on the IPL's ability to reach India's burgeoning consumer classes. Advertisement rates for 10-second TV spots during matches, which cost 200,000 rupees (Dh16,500) when the tournament began in 2008, have jumped to 500,000 rupees and reached 1m rupees for the final match. India Cements, the owner of Chennai Super Kings who won this year's IPL championship last month, says owning the team has helped boost sales of its parent company that makes construction material in southern India.

IPL "has given us tremendous visibility; it has enhanced the value of my cement brand", says N Srinivasan, the managing director of India Cements, which paid $91 million for the team. "When we go for marketing or to meet distributors, they immediately recognise us, otherwise it's difficult to get into other markets." The Super Kings helped India Cements find new customers and augment its revenue by $2.9m in the final three months of last year.

The eight-team IPL will add two teams for its next season. Last month, Sahara Group, an Indian conglomerate, and Rendezvous Sport bought teams in Pune and Kochi for $370m and $333m, respectively. The two new franchises brought in more than all eight teams the IPL auctioned originally. The Mumbai Indians, owned by Asia's richest man Mukesh Ambani, fetched $112m for BCCI in 2008. With the two new teams, the total number of matches will increase to 94 next year from 60 this year.

At least seven of the original IPL teams recorded a profit this year on revenue from sponsorships, local events and advertising, digital initiatives and merchandise sales. The IPL team owners receive 72 per cent of match revenue, with a further 8 per cent distributed according to the team's ranking in the league. That earnings record is more impressive than the 18-year-old English Premier League, where only 11 out of 20 teams registered an operating profit in 2008, and after the downturn that dropped to seven.

But the devaluation of IPL teams is a real threat because of its poor regulation. "Will brand reputation become an [index] for further investment in the IPL?" Suhel Seth, the managing director of the brand management consultancy Counselage India, asked in a recent column in The Economic Times, a business daily. "Indians will always love cricket the game, but which corporation will want to be associated with a tournament which is now riddled with sleaze, is subject of governmental gaze and accused of almost every fiscal sin, be it money laundering, personal enrichment or for that matter the underworld?

"Today, Brand IPL is associated with everything wrong with our system. Brand IPL needs reinvention and resurgence ? an injection of transparency and diligence ? [it needs] to inspire trust and not merely entertain." Chirayu Amin, the interim IPL chief who took over from Mr Modi last month, says: "The success of the IPL was so dazzling that everyone was basking in its glory. In all of this, I have to admit that the governing council could have been more vigilant."

But the cleaning up of IPL has already begun, Mr Amin adds. The government, for its part, says it is investigating the financial dealings of the league and all its teams, but ruled out any meddling in the operations of IPL. "It [IPL] will be bigger, better and more transparent next year," Mr Amin says. "The show will go on." business@thenational.ae