Coronavirus Impact: Sponsors jittery with IPL postponement, uncertainty

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Indian Premier League sponsors are finding it difficult to honour their commitments. Growing uncertainty about the IPL schedule has hit their marketing plans and the global economic impact of COVID-19 has dented their marketing budgets. The franchisees, who have locked sponsorship deals worth of ₹ 50-70 crores, have started getting feelers from sponsors.

Start-up and mega brands ready to hit the market with their new launches had earmarked a considerable part of their marketing budgets for the IPL. The March 29-May 24 window offered them the opportunity to promote their plans for the new financial years. With the growing uncertainty around the IPL, the brand managers are becoming jittery as they see little values for their investments if the IPL is shifted to peak summers or curtailed due to shortage of time.

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At least two sponsors have confirmed to that they have written to the franchisees to reconsider the deals. A senior management professional from an IPL team from down South has also confessed that the sponsors’ discomfort is adding to their COVID-19 woes. “At least one sponsor wants to come out of the deal. Several others want to renegotiate. This is not an abnormal scenario. It’s time for all associates to give confidence and gain confidence. Beyond the merits of our contracts, the management will do everything possible to ease the discomfort of all our sponsors,” said the team official.

The brands had collectively committed ₹ 450-500 crore to the eight IPL teams with the four-time champions Mumbai Indians taking the major share in the pie. However, in a force-majeure situation, the values are bound to fall drastically even if the Board of Control for Cricket in India is able to ensure all 60 matches on another schedule.

“The celebratory economy is dead in India. IPL is a major part of this celebratory economy. When that part of the economy itself is on a stretcher, brands will need to call this an act of God and invoke force majeure clauses on their brand plans,” says brand and business strategist Harish Bijoor, founder of Harish Bijoor Consults Inc. “The plans of brands and sponsors need to be put into cold storage for now. Everything can and has to stop till Covid19 is halted in its path of spread.”

A leading brand with a huge sponsorship commitment has unofficially confirmed that their entire purpose of IPL investment is defeated. “We were seeing the IPL as the key driver for the marketing campaign of our new product launch. It’s like a duel blow. In a grim market when competitors will be aggressively fighting for the market share, all our activation plans for the new product have come to a screeching halt,” said a senior marketing professional of one of the leading IPL sponsor brands. “Any other schedule will not get the same value for money.”

This year was being seen as one of the best for the India Premier League sponsorship business when the franchisees had sold all their inventories well in advance, unlike the previous seasons when some of the team owners were compelled to make compromises in their sponsorship deals, which were locked several days before the league was to start. IPL 2019 had witnessed similar concerns for Kings XI Punjab (KXIP) and Royal Challengers Bangalore (RCB), who had to rope in Aajtak and Wrogn as their respective title sponsors at the 11th hour.

Kolkata Knight Riders (KKR) were the last team to close their title sponsor for the IPL 2020. But they too had succeeded in getting Byju’s on board good three weeks ahead of the March 29 scheduled start date.

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Besides the marketing strategy aspects, brands will also be hit hard by the global economic impact that has sent the markets worldwide tumbling. “For brands COVID-19 is a quarantine moment all its own. Inventories will pile up for ‘desires and aspirations’ products and services alike. Only the ‘needs and wants’ products will thrive for now,” says Bijoor.

The BCCI is reportedly considering to conduct all the 60 IPL games during a window between July and September. That, however, doesn’t please the sponsors much for numerous reasons.

The doubleheader on weekdays will have poor television ratings, thus denying the brands of the desired television exposures. Another bigger issue will be the Tokyo 2020 Olympic Games between July 24 and August 9, when the brands had strategized different activations. They, off course, see not much sense and value in making big investments on two events which are going to chew into each other’s time.

Also read: BCCI exploring possibility for IPL during July-Sept