The Indian Premier League (IPL) and its franchisees can emulate other global sporting events to exploit the brand value for increasing their revenue collections through merchandising, according to global valuation and corporate finance advisor Duff & Phelps.
Unlike the global sports events, the premier T20 cricket hasn’t been able to monetise at a large scale through merchandising despite its huge popularity, but this could change in the next few years, it said.
“Merchandising, which has not picked up as anticipated, is a huge opportunity for IPL and the franchisees to monetise the brand, and we hope to see IPL replicating the global sporting events’ success in monetising their brands through merchandising,” Duff & Phelps India Managing Director Santosh N told PTI.
Globally, merchandising is a $20 billion-plus industry, but in India and more specifically in the IPL, it is still at a nascent stage due to competition from the unorganised and counterfeit market in India.
“Most of the global football teams such as Manchester United, Chelsea, Barcelona and Real Madrid’s merchandising revenue contribution is in the range of 15 percent to 20 percent of their total revenue, whereas in case of IPL, this may be less than 5 percent at this stage. However, considering the huge market IPL is catering to, we anticipate the IPL merchandising revenue to grow substantially in the next few years and be on par with global sports teams in the long term,” he said.
IPL as a total business was valued at USD 5.3 billion in 2017, according to Duff & Phelps.
Backed by a huge fan following, the franchisees and broadcasters would look at creating additional revenue streams to leverage brand in the next few years.
“Various IPL stakeholders have found different avenues to monetise their association with the IPL. This unprecedented response from advertisers, broadcasters, sponsors, affiliates and general viewing public is expected to continue in the future. In the next few years, franchisees and broadcasters will look to find more avenues to leverage brand IPL,” he said.
As per Duff & Phelps’s brand valuation report last year, Mumbai Indians with USD 106 million became the first IPL team to cross the USD 100 million mark. Kolkata Knight Riders were valued at USD 99 million and Royal Challengers Bangalore at USD 88 million.
Santosh added that JSW Sports that acquired 50 percent stake in GMR Group-owned franchise Delhi Daredevils, “underscores the popularity of the tournament and how every big corporate house wants a slice of it”.
IPL, which entered its 11th edition this year, has seen a phenomenal response from sponsors and broadcasters.
The cash-rich league’s title sponsorship has seen a massive growth of 800 percent from Season 1 to Season 11.
During Season 1, DLF was paying Rs 50 crore per year for IPL title sponsorship and Chinese handset maker Vivo has agreed to pay Rs 440 crore per year for the next five years in 2018, a big jump.
Sony Pictures Network that was the official broadcaster for IPL for the first 10 years, generated Rs 1,200 crore in advertising revenues last year.
Star India, which bagged the broadcasting rights for five years from 2018 edition for a massive Rs 16,347.50 crore for next 5 years, expects the advertising revenue from IPL to cross Rs 2000 crore this year.