IPL media rights auction: What to expect

With the curtains coming down on the 15th edition of the Indian Premier League, all eyes are on the multi-crore media rights auction on June 12.

Bidding war: The question is will the next battle of IPL which will be played off the field — the auction for media rights — also throw similar surprises? A lot rides on these auctions, touted to be worth nearly Rs. 50,000 crore, for the 10-odd players, who have picked up the bid documents   -  Sportzpics / IPL

The underdogs had a field day in season 15 of the Indian Premier League, which garnered a record sponsorship of over Rs. 1,000 crore, and a new title sponsor in the Tatas. New franchises — Hardik Pandya-led Gujarat Titans and his buddy K. L. Rahul-led Lucknow Super Giants — put up scintillating performances in the T20 cricket league, even as popular franchises Mumbai Indians and Chennai Super Kings shocked fans with their poor run. Who would have imagined Gujarat Titans winning the trophy in its very first outing?

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The question is will the next battle of IPL that will be played off the field — the auction for media rights — also throw similar surprises? A lot rides on these auctions, touted to be worth nearly Rs. 50,000 crore, for the 10-odd players, who have picked up the bid documents. It must be especially important for incumbent Disney Star. Though the asking price is high, expectations are we will see a bitter fight.

 

Media consultants reckon the combined rights (global TV rights plus digital) could go for anywhere between Rs. 40,000 crore and Rs. 50,000 crore — a whopping rise compared to the Rs. 16,347.50 crore that Star had paid in 2018. Over the last month, many naysayers have flagged the declining viewership of the Tata IPL — a 33 per cent dip according to reports — and discounted advertisement rates to question the high price of media rights, but the expert view is that the price hike is justified, and will have no impact though there is room for innovation in the format of the tournament.

LISTEN | Amol Karhadkar and Meenakshi Verma Ambwani take you through what to expect in the IPL Media Rights Auction

The asking price

A senior media analyst justifies the increase in media rights by pointing out that the previous winning bid five years ago was for 60 matches. Now there are 74 matches plus the year-on-year inflationary increase. Also he says digital viewership rights have been under-indexed.

Advertising firm Rediffusion’s chief Sandeep Goyal, an ardent commentator on the business of IPL, feels that though the asking price may be steep, the bidders will fight furiously for it. “For media companies, sports rights are always considered to be the engine while everything else is like bogies of the train. The ascendancy of the media companies and groups is in many ways dictated by whether they have the IPL rights. For instance, for the years that Star India had the rights, it outdistanced all competitors by many more miles. Similar was the case with Sony,” he says.

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The same thought is echoed by Shailesh Kapoor, founder and CEO of Ormax Media, who says the TINA (There Is No Alternative) syndrome will ensure that bidders will fork out whatever the BCCI (Board of Control for Cricket in India) is asking. There is simply no other content with the kind of eyeballs that IPL gets — back in the day you still had a Saas Bahu or a KBC (Kaun Banega Crorepati). IPL is also the engine that drives digital subscriptions. For Hotstar, India reportedly contributes as much as 30 per cent of its global revenues. By contrast for Amazon and Netflix, India yields barely five to 10 percent of their revenues. IPL is the differentiating factor.

 

For the franchise owners too, a lot rides on the IPL media rights as a large chunk of their revenues hinge on this. With ticketing revenues reduced to nothing now, and merchandise and other revenues still to take off, media rights and sponsorships are all the more important. Dabur’s Mohit Burman, who is co-owner of the Punjab Kings franchise, describes how it took the team seven years to break even, and how challenging the last two years have been. Given the steep amounts that owners of the new Lucknow and Gujarat teams forked out to purchase these franchises, (Rs. 7090 crore and Rs. 5625 crore), they must have factored in the upcoming media rights when they made their bids.

Interestingly, Burman sounds a cautionary note, saying BCCI should not overprice the media rights given how tough it is to get advertising. “I think there has to be some sort of sanity as advertising rates today (on IPL) are quite high. There are comparisons with the Super Bowl but we don’t have the eyeballs like that sport. It should not be that media rights are bought by companies at such huge values that it becomes unaffordable for advertisers and that it becomes difficult for media companies to recoup their money.”

While IPL 15 may have broken all records in terms of sponsorships, recessionary trends have impacted advertising. Start-ups that have contributed the bulk of advertising are seeing their valuations dip amidst a funding squeeze, even as FMCG firms face inflationary and margin pressures. Although the next IPL is a year away, media planners feel it would be hard to attract advertising. Industry estimates suggest that Star may have just about managed to recover its investment on IPL.

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The viewership dip in IPL 15 will not help either. Although a fraction of viewership has moved to digital, there are concerns that the 10-team format is causing fatigue.

“The addition of two teams has elongated the season. Also, 15 years down the line if I have to judge, only two teams MI and CSK were able to create fandom and these two teams have not done very well. So that factor has also contributed to dip in the viewership,” says Goyal.

Vinit Karnik, head Sports, Esports and Entertainment, GroupM South Asia, agrees that lack of team loyalties have played a part in dip. “We had a mega auction and hence key players have moved teams and hence it will take a season to build team loyalties, especially for the two new teams.” Also, he says, “Viewing patterns have changed. Due to Covid, digital viewership is growing faster than expected. Hence these numbers will have to be looked from a very different lens.”

Goyal feels IPL needs a serious rethink in terms of format, talent and innovations. “Most of the better players around the world no longer play in the IPL,” he points out.

Asked for suggestions on improving the team, Burman says, “Ideally, this is BCCI’s prerogative. But I think one innovation is to take this league global to expand it audience base. Maybe a shorter caravan version in countries like the UK and South Africa will help.”

To Goyal’s criticism about franchises not investing in consistent engagement with fans off season, he says Punjab Kings will be ramping up social media play. “Plans are afoot and much of the stock footage with players have already been shot. We are in the process of using more engaging content and reels to keep it rolling all through the year.”

Who could get the rights?

Finally, according to experts, the rights will go to those who are most desperate. And these seem to be Star and the new Uday Shanker-Viacom Sports 18 combine. Also, pure play digital players may yet not be favoured.

Says Sandeep Goyal, “I feel the serious bidders will be Star India, Zee-Sony combine and the Viacom18-Uday Shankar-Murdoch campaign. It will be consolidated play not digital pure play. No one knows cricket like Shankar and he knows the art of monetisation far better than anyone else.”

For Star and the Zee-Sony combine, feels Goyal, if they could get the cricket rights, it would have far reaching impact across their network of channels including GECs (General Entertainment Channels). “There is cross pollination of advantage across the network that is priceless.”

Kapoor of Ormax agrees, “Cricket is an investment that has intangible benefits.” He feels Star would be the most desperate to retain the rights as if it loses it the global cascading impact on revenues will be high.

However, this year, BCCI has thrown many curve balls in its bid documents — such as a controversial special non-exclusive package (Bundle C) which allows those who may not win the media rights access to certain matches digitally. This could open a window for pure digital players like Amazon and Apple.

It is game on!

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