By no stretch of imagination can anybody recover the money they have invested in IPL. Once the first tournament is over and the hype dies down people will realise what kind of mind boggling losses they have made. Sample this: For an international match, the highest rate for a television commercial ranges between Rs.1 lakh to Rs.1.5 lakhs per spot. Even if we take that as a basic rate (which, in itself, is very unrealistic), there are about 1500 seconds in every tournament to be sold for 59 matches of the IPL tournament. By no stretch of imagination, Sony can make more than Rs.30 crores; whereas Sony has to pay Rs.60 crores in the first year. That means the net loss of Sony in the first year itself will be around Rs.30 crore, taking the most optimistic approach.”
If Sony has a tough challenge awaiting it, the new ‘sports entrepreneurs’ too have a daunting battle ahead. They have to recover their investments primarily through advertising, merchandising and ticket sales. The real challenge will be to lure viewers into the stadium and then lure millions more on to the TV sets. And top level professionals from the world of advertising do entertain doubts about it. Says Naresh Gupta, Executive Vice President, Planning Division, Publicis, “Will they ever be able to make money? I don’t think in the short run they will be able to make any money. It is only when the format takes off after 10 to 15 years. But then again, there is no certainty about that happening.”
There is no doubt that the blue-blooded industrialists, who have invested big time in IPL and cricket, will have a relatively smoother sailing. Take the example of Vijay Mallya, who has paid $111.6 million for the Bangalore team. He has already decided that he will strategically leverage IPL and his team to promote the Kingfisher brand in a major way. Mallya will also cross leverage IPL with Formula One in his quest to emerge as the liquor baron of the world. He says, “Might be I am not sounding like a typical industrialist, so at the same time I make sure my passions do help me earn and keep our group Kingfisher financially healthy always.” Similarly, the $111.9 million that Mukesh Ambani has paid for the Mumbai team is literally chicken feed for him. And he will use team members like Sachin Tendulkar, the matches, the live telecasts and the media frenzy to promote the Reliance brand, now that Mukesh Ambani is interfacing directly with consumers through corporate initiatives like Reliance Retail.
However, the real challenge will be for the neo-nascent entrepreneurs like Shahrukh and Preity. The audience response to IPL will decide their fate as the new sports entrepreneurs. But while the challenge is daunting and future prospects not crystal clear, it is not as if the more innovative among the new entrepreneurs will not have various ways of generating money through IPL. Says Sainath Saraban of Leo Burnett that is handling Delhi Daredevils, “We are looking at a 360 degree approach to promote the Delhi team and we have devised the communication so that it can involve a high degree of people participation. There would be a lot of direct activities. We would also be looking at merchandising and creating franchisees as an option to lock supporters with their team.” The Delhi team has tied up with Adidas for designing the Delhi team’s dress and merchandising. Since this format and even 20-20 is still new to India, the new sports entrepreneurs will be looking at global sports events, teams and activities to better understand new revenue models that can be stitched up as a part of IPL. Says Melroy D’souza, General Manager, Professional Management Group, “Besides the money generated from central revenue (domestic & international rights, IPL title sponsor & IPL secondary sponsor), local revenues (gate revenues, franchise sponsorship agreements, instadia branding & match concessions) & merchandising the teams can raise money through many other avenues like selling sub properties during the matches – Man of the Match et al – corporate boxes/hospitality boxes, player/celebrity appearances, player transfers and playing matches internationally.”
The editorial team at B&E too is convinced that stars like Shahrukh Khan will have a natural advantage. Imagine a scenario where Shahrukh makes an ‘exclusive’ box for 500 people who will pay money to watch matches with him and his wife Gauri plus Saurav Ganguly’s wife Donna and then get to see Shahrukh doing a twist on a few item numbers while the Royal Bengal Tiger Saurav, too, breaks into a jig. How much do you think rich Indians will be willing to pay for a night out like this? Your guess would be as good as ours, but we bet there are enough rich Indians who will fork out lakhs of rupees just like that. Equally tantalising is the prospect of Preity Zinta shaking a leg for her fans, who have probably paid through their noses to spend an evening with Bollywood and cricket.
For Complete IIPM Article, Click on IIPM Article
Source : IIPM Editorial, 2008
If Sony has a tough challenge awaiting it, the new ‘sports entrepreneurs’ too have a daunting battle ahead. They have to recover their investments primarily through advertising, merchandising and ticket sales. The real challenge will be to lure viewers into the stadium and then lure millions more on to the TV sets. And top level professionals from the world of advertising do entertain doubts about it. Says Naresh Gupta, Executive Vice President, Planning Division, Publicis, “Will they ever be able to make money? I don’t think in the short run they will be able to make any money. It is only when the format takes off after 10 to 15 years. But then again, there is no certainty about that happening.”
There is no doubt that the blue-blooded industrialists, who have invested big time in IPL and cricket, will have a relatively smoother sailing. Take the example of Vijay Mallya, who has paid $111.6 million for the Bangalore team. He has already decided that he will strategically leverage IPL and his team to promote the Kingfisher brand in a major way. Mallya will also cross leverage IPL with Formula One in his quest to emerge as the liquor baron of the world. He says, “Might be I am not sounding like a typical industrialist, so at the same time I make sure my passions do help me earn and keep our group Kingfisher financially healthy always.” Similarly, the $111.9 million that Mukesh Ambani has paid for the Mumbai team is literally chicken feed for him. And he will use team members like Sachin Tendulkar, the matches, the live telecasts and the media frenzy to promote the Reliance brand, now that Mukesh Ambani is interfacing directly with consumers through corporate initiatives like Reliance Retail.
However, the real challenge will be for the neo-nascent entrepreneurs like Shahrukh and Preity. The audience response to IPL will decide their fate as the new sports entrepreneurs. But while the challenge is daunting and future prospects not crystal clear, it is not as if the more innovative among the new entrepreneurs will not have various ways of generating money through IPL. Says Sainath Saraban of Leo Burnett that is handling Delhi Daredevils, “We are looking at a 360 degree approach to promote the Delhi team and we have devised the communication so that it can involve a high degree of people participation. There would be a lot of direct activities. We would also be looking at merchandising and creating franchisees as an option to lock supporters with their team.” The Delhi team has tied up with Adidas for designing the Delhi team’s dress and merchandising. Since this format and even 20-20 is still new to India, the new sports entrepreneurs will be looking at global sports events, teams and activities to better understand new revenue models that can be stitched up as a part of IPL. Says Melroy D’souza, General Manager, Professional Management Group, “Besides the money generated from central revenue (domestic & international rights, IPL title sponsor & IPL secondary sponsor), local revenues (gate revenues, franchise sponsorship agreements, instadia branding & match concessions) & merchandising the teams can raise money through many other avenues like selling sub properties during the matches – Man of the Match et al – corporate boxes/hospitality boxes, player/celebrity appearances, player transfers and playing matches internationally.”
The editorial team at B&E too is convinced that stars like Shahrukh Khan will have a natural advantage. Imagine a scenario where Shahrukh makes an ‘exclusive’ box for 500 people who will pay money to watch matches with him and his wife Gauri plus Saurav Ganguly’s wife Donna and then get to see Shahrukh doing a twist on a few item numbers while the Royal Bengal Tiger Saurav, too, breaks into a jig. How much do you think rich Indians will be willing to pay for a night out like this? Your guess would be as good as ours, but we bet there are enough rich Indians who will fork out lakhs of rupees just like that. Equally tantalising is the prospect of Preity Zinta shaking a leg for her fans, who have probably paid through their noses to spend an evening with Bollywood and cricket.
For Complete IIPM Article, Click on IIPM Article
Source : IIPM Editorial, 2008
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