CaseStudyIPL

IBS Center for Management Research

MKTG/237

Indian Premier League’s Operating Model – Marketing Cricket to the World

This case was written by A. Harish, under the direction of Vivek Gupta, IBS Center for Management Research. It was compiled from published sources, and is intended to be used as a basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation.

2010, IBS Center for Management Research. All rights reserved.

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MKTG/237

Indian Premier League’s Operating Model –Marketing Cricket to the World

“It is not just marketing hype. There is significant substance with top players in the teams. It is a good product which is now getting marketing support. Indian cricket is certainly headed in the same direction as football in the UK and baseball in the US.”1

- Sridhar Samu, Professor, Indian School of Business, Hyderabad, in March 2008.

THE IPL BRAND

In early May 2009, the UK-based brand valuation consultancy, Brand Finance Plc2, valued the Indian Premier League (IPL) enterprise at US$ 2 billion. Launched in April 2008, IPL had created an innovative format3 of Twenty 20 (T20) cricket which differed significantly from the way the decades-old sport had been played. The new format was well received by audiences the world over.

IPL being the first such sporting event in India, it was considered a marketing success in creating hype and translating this into revenues for the stakeholders. According to the analysts, IPL had taken the game of cricket to new heights of commercialization and monetization not witnessed anywhere in the world earlier. What helped IPL become a runaway success was the popularity of cricket, which in India, enjoyed the status of a religion rather than just a sport.

The IPL brand, owned by the Board of Control for Cricket in India (BCCI), 4 had eight teams from eight different cities in India. Each team had a mix of players from India and other nations. Different franchises promoted their teams individually whereas the IPL brand as a whole was promoted by BCCI to generate an interest among cricket fans. A few of the franchises promoted their teams using innovative ways like creating team anthems and music videos.

Several corporate houses and individual investors bought out the franchises in a competitive bidding that took place in early 2008. Franchise owners involved Indian movie stars, who added to the glamour of the event. Cricket and movies are the most popular forms of entertainment in India and IPL brought both these industries together to a certain extent. A new term cricketainment‘(Cricket + entertainment) was also coined because of the involvement of film stars in cricket in IPL.

1 ―Cricket In India: Moving into a League of its Own,‖ h t t p :// k n o w l e d g e . w h a r t o n . u p e nn . e d u , March 20,

2008.2 Brand Finance Plc is a UK-based brand valuation consultancy which specializes in valuation of

intangible assets. The company provides services like brand strategy, brand disposal, brand audit, and financial modeling. As of November 2009, it had branches in over 19 nations.

3 IPL introduced the sports club format in the field of cricket. Each team in IPL comprised players from several nations and teams were based on several cities in India. IPL followed the T20 format of cricket in which each team got to play 20 overs.

4 The BCCI is the apex governing body for cricket in India. It was formed in 1928 as the national governing body for cricket in India. It is headquartered in Mumbai.

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According to analysts, the unpredictability factor added to IPL‘s appeal. Although the matches in IPL were for a shorter duration than other formats of cricket, the IPL format promised lots of action from some of the best players in the cricketing fraternity and not just from India. The innovative format combined with the marketing efforts by the franchises and the BCCI ensured that the IPL would be a huge success. With the involvement of players from several nations, the BCCI expected to transform the IPL into a global brand. Lalit Modi (Modi) Commissioner and Chairman of the IPL and Vice Chairman of the BCCI, said, ―Though a domestic league, IPL will be a global business with global investors, global players, and a global broadcast.‖5

With the successful monetization of the T20 format, analysts predicted that the franchises would go in for initial public offerings (IPO) to raise capital so that they could operate as individual corporate entities. Unni Krishnan, Country Manager of Brand Finance, India, said, ―The IPL brand alone has a value of over $311 million. The brand can certainly create long-term value with its strong intrinsic strength and foundation. The IPL is just like any company today and it holds a long-term shareholder value. In 2-3 years, the IPL clubs may get listed on the bourses just like the popular English Premier League football teams.‖6

BACKGROUND NOTE

The formation of IPL teams began in late 2007 when the BCCI announced that it would accept bids for eight franchises – Bangalore, Chennai, Delhi, Hyderabad, Jaipur, Kolkata, Mohali, and Mumbai. The BCCI fixed US$ 50 million as the floor price for each team. About 90 bidders showed an interest in bidding for the eight franchises. The maximum number of bids came for Mumbai followed by Delhi.

On January 15, 2008, the BCCI announced that the broadcasting rights for the IPL tournaments for the first ten years starting 2008 had been sold to a consortium comprising India‘s Sony Entertainment Television (SET) and Singapore-based World Sports Group (WSG). The consortium agreed to pay US$ 1.026 billion to the BCCI for the worldwide broadcasting rights. Of the US$ 1.026 billion, US$ 918 million went to the BCCI and the rest — US$ 108 million —was to be used for promoting the tournament.

On January 24, 2008, the auction for the franchises was held and the winners were declared. The auction fetched the BCCI US$ 723.59 million7 ( Refer to Table I for Franchise Details of IPL). Successful bidders owned the respective franchise for a period of 10 years. In an extremely competitive bidding, the leading Indian corporate house Reliance Industries Limited managed to win the most popular team, Mumbai, for US$ 111.9 billion, beating the closest contestant, the UB Group. It was assumed that corporate houses would bid high and own the franchises as a popular sport like cricket would provide them with the opportunity to build their own brands. However, participation from the Indian movie industry was a surprising element and created even more hype around the event. Analysts opined then that though the IPL was a new concept and was yet to be established as a popular brand, bidders were viewing it as a good investment opportunity.

The BCCI had established certain rules for the franchises before the auction for individual players started. It had selected a few senior players as icon players and they represented the city they hailed from (Refer to Table II for Icon Players in IPL 2008). The rule made it mandatory for the icon players to play for their cities to increase the fan base and loyalty for a particular franchise in their respective city.

5 Feroz Ahmed, ―Big Game,‖ ww w .b us i n e ss w or l d .i n, January 04, 2008.6 Manu A B, ―IPL Teams May List on The Stock Market!,‖ ww w . r e d i ff .c o m , May 05, 2009.7 Franchises were to pay the franchise fee to the BCCI in equal installments over a period of 10 years.

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There were 89 players who were available for bidding — both Indian and foreign players. Each player was assigned a base player fee that acted as the minimum bid for that player. The players were divided into sets of 12 based on their base player fee. An upper limit of US$ 5 million and a lower limit of US$ 3.3 million for bidding in the players‘auction were imposed on the franchises. The franchises had to form a team of at least 16 players, including players who were not available for bidding during that auction, without exceeding their budget of US$ 5 million. This rule was to restrict cash-rich franchises from cornering the best players among them. Analysts said that by imposing an upper limit on the total bidding amount, the BCCI tried to ensure a fair distribution of cricketing talent among all the franchises.

Table I

IPL 2008 Franchises

Franchise Owner Bid Amount

(In US$ million)

Bangalore UB Group 111.6

Chennai India Cements 91.0

Delhi GMR Holdings 84.0

Hyderabad Deccan Chronicle 107.0

Jaipur Emerging Media 67.0

Kolkata Red Chillies Entertainment 75.09

Mohali Consortium (Film Actress Preity Zinta, industrialistsNess Wadia, Mohit Burman, and Karan Paul)

76.0

Mumbai Reliance Industries Limited 111.9

Source: www.h indu stan times.co m.

Table II

Icon Players in IPL (2008)

PLAYER FRANCHISE

Rahul Dravid Bangalore

Sachin Tendulkar Mumbai

Saurav Ganguly Kolkata

Virender Sehwag Delhi

VVS Laxman* Hyderbad

Yuvraj Singh Mohali

Source: www .i nd i a t w e n ty 20 . c o m.

* VVS Laxman voluntarily opted out of icon status so that Hyderabad franchise would have more money for bidding. Chennai and Jaipur had no senior players from those cities to be awarded icon status.

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As IPL involved players from several nations, the BCCI had to include a variable called percentage of availability of a player for IPL matches. The players from different nations had to play for their nation as well as for IPL and hence there were chances of an overlap in their schedules with that of IPL. To be eligible for the auction, a player had to be available for at least25% of the IPL matches. As a rule, about 25% of the bid amount of that particular player would be deducted for calculation purposes, from the franchise‘s US$ 5 million bid amount, if a player it bid for happened to be completely unavailable or was available for less than four games of the IPL2008 season. For instance, if the bid for a player was US$ 40,000 and he was expected to be completely unavailable for the IPL 2008 season, then US$ 10,000 was to be deducted for calculation purposes from the US$ 5 million total bid amount of the franchise.

The bid amount for each player was to remain his minimum fee for IPL matches in 2008, 2009, and 2010. Icon players were not available for bidding and they were to be paid 115% of the highest player fee in their respective teams. Of the minimum 16 players in the team, there had to be at least four players who were under the age of 22 as on April 1 of the relevant years. Each

franchise had to have at least four players from its catchment area8. Each franchise could bid for a maximum of eight foreign players in the auction and only four foreign players could be part of the participating 11 in any match. Players who did not receive any bids in the auction were all grouped into one set and were re-presented at the end for bidding. All the contracts were for a period of three years but the contract could be broken with the mutual consent of the player and the franchise.

After the completion of the auction, the franchises were free to purchase foreign players who were not available during the auction after informing the BCCI. The BCCI would approach those players on behalf of the franchise and negotiate the player fee up to the amount the franchises were willing to pay. If more than one franchise was interested in the same player, then an auction was to be conducted for that player.

All the franchises had named their teams before the auction for the players started and most of the team names were selected through opinion polls conducted in the respective cities (Refer to Table III for IPL team names). While most of the franchises selected team names that had no relation to their products, three teams – Bangalore, Chennai, and Hyderabad used this opportunity to name

their teams based on the products of the franchise owners9. This enabled the franchises to build the brand image of their products.

8 The catchment areas were decided based on the player‘s registration with his local cricket association.

The catchment area for Mumbai was Mumbai, Maharashtra, and Vidarbha; for Chennai, it was Tamil Nadu, Kerala and Railways; for Bangalore, it was Karnataka, Goa, and Services; for Kolkata, it was Bengal, Jharkhand, Tripura, Assam, and Sikkim; for Hyderabad, it was Hyderabad, Andhra Pradesh, and Orissa; for Delhi, it was Delhi, Uttar Pradesh and Madhya Pradesh; for Mohali, it was Haryana, Punjab, Himachal Pradesh, and Jammu & Kashmir; and for Jaipur, it was Rajasthan, Gujarat, Baroda, and Saurashtra.

9 The UB group that owns the Bangalore franchise has an alcoholic beverage product named Royal Challenge. The Hyderabad franchise is owned by media company, Deccan Chronicle and includes Deccan in the team‘s name. India Cements that owns the Chennai franchise has a product called Coromandel Kings.

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Table III

IPL Team Names

Franchise Team Name

Bangalore Royal Challengers Bangalore

Chennai Chennai Super Kings

Delhi Delhi Daredevils

Hyderabad Deccan Chargers

Jaipur Rajasthan Royals

Kolkata Kolkata Knight Riders

Mohali Kings XI Punjab

Mumbai Mumbai Indians

Source: www .i p lt 20 .c o m.

On February 20, 2008, the players‘auc t i on was held. In the bidding process, the franchises bid more aggressively for Indian players than for foreign players. Over one-third of the US$ 36 million spent in auction went into the pockets of the Indian players (Refer to Table IV for top ten players by fees in IPL 2008). Analysts opined that the bidding process was done keeping in mind both the performance and the glamour that each player could bring to a particular franchise. They said that players ‘popu la r i t y and ability to attract endorsements also played a major role in the purchasing decisions of the franchises. Indian players were in high demand as all the IPL matches were expected to be played in India and the Indian players had more experience on Indian pitches. Trading of players between teams was not permitted in 2008 but could be done from 2009 onward. IPL‘s management said that it would in no way be involved in the trading of players between franchises and the franchises could trade players with the players‘consent.

Table IV

Top Ten Players by Fees in IPL (2008)

Player (Country) Bid Amount (in US$) Franchise

Mahendra Singh Dhoni (India) 1.50 million Chennai

Andrew Symonds (Australia) 1.35 million Hyderabad

Sanath Jayasuriya (Srilanka) 0.975 million Mumbai

Ishant Sharma (India) 0.95 million Kolkata

Irfan Pathan (India) 0.925 million Mohali

Brett Lee (Australia) 0.90 million Mohali

Jacques Kallis (South Africa) 0.90 million Bangalore

Rudra Pratap Singh (India) 0.875 million Hyderabad

Harbhajan Singh (India) 0.85 million Mumbai

Chris Gayle (West Indies) 0.80 million Kolkata

Source: www .t h e h i ndu . c o m.

* Icon players are not included in the table.

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IPL Season 1 started on April 18, 2008. The tournament had 59 matches played over 45 days. All eight teams in the IPL played two matches against each other in the round robin format and the top four performing teams went into the semi-finals. The final match, held on June 01, 2008, saw a clash between Chennai Super Kings and Rajasthan Royals, with Rajasthan Royals emerging the victors.

ECONOMICS OF IPL

The revenue sources of the IPL included broadcasting rights, title sponsorships, team sponsorship, gate receipts, and in-stadium advertising. IPL‘s title sponsorship was sold to India‘s leading real estate company, DLF, for US$ 50 million for the first five years (US$ 10 million payable every year). The revenues from broadcasting rights, gate receipts, and title sponsorship formed the central pool and were divided between the franchises and the IPL.

In the first two years, 80% of the broadcasting revenues were shared equally among eight teams and 20% went to the IPL. The IPL‘s share of broadcasting revenues was to increase gradually from the third year and reach 40% by the 5th year. About 40% of the IPL‘s title sponsorship revenue was retained by the IPL and the remaining 60% was distributed to the eight franchises equally.

Each franchise was to get seven matches to be played on their home grounds. About 20% of the gate receipts would go to IPL while the rest would go to the local franchise. Other local revenues like in-stadium signage, team title sponsorship, partner sponsors, and merchandise would go to the franchise. The prize money for the winner of the tournament was US$ 3 million and prize money of US$ 2 million was divided among the winners of different league matches.

The expenses for the franchises included the franchise fee, player fees, stadium leasing costs, players‘ transportation and accommodation costs, security costs, trainer and coaching costs, administrative costs, and other staff costs.

THE ADVERTISING STRATEGY

The IPL brand was advertised by the BCCI whereas individual franchises promoted their own teams. For the 2008 IPL tournament, the BCCI had allocated Rs. 1 billion for marketing the IPL. Ad agency Ogilvy & Mather (O&M) was awarded the contract to promote the brand.

O&M designed a two-phase advertisement campaign for promoting the IPL brand. According to O&M, the IPL wasn‘t about the national team and the country as cricket had been perceived before the IPL tournament. It was about performance on a particular day and all about a battle of skills. O&M created a theme called ‗Karmayudh‘(battle of performance). The advertisement campaign was aimed at introducing the IPL brand and its format to the audience. The ad film contained cricketing moments like the batting, fielding, and bowling of prominent players (Refer to Exhibit I for Visuals of Karmayudh campaign). According to experts, the high decibel ad was eye catchy and the motivational anthem created an interest in the IPL. Television, radio, and the print media were used extensively for promoting the brand IPL using the theme Karmayudh‘.

The second phase of the ad campaign was aimed at driving the concept of ‗city‘-based teams to the audience, polarizing them, and encouraging them to take sides. The second phase comprised a series of TV commercials with videos involving people supporting different sides. For instance, one of the ads featured a dentist supporting Mumbai and his patient supporting the Delhi team. On discovering that the dentist is supporting a rival team, the patient starts worrying about how the dentist will treat him. Coincidentally, the treatment on that day turns out to be more painful than usual. Another ad showed a young man in a crowded bus rising from his seat to offer it to an elderly man who is standing. However, he discovers that that elderly man is supporting a rival team and sinks back into his seat hurriedly.

10 Ogilvy & Mather is an international advertising agency based in New York. It was founded in 1948. It operates more than 450 offices in 169 cities across the world.

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Another commercial had a woman in a lift with a few men. One of the men has on a Chennai Super Kings jersey. The woman alleges that the man had misbehaved with her though he was innocent. Other men in the lift start looking at him accusingly and the woman gets off the lift. The woman leaves after triumphantly showing a key chain of the Kolkata Knight Riders to the man she had accused.

All these ads ended with the question ―Which side are you on? O&M used print and TV for promoting these ads. As IPL was a new concept, many people did not know the names of all the eight teams. O&M used all the eight teams‘logos in some of its print ads (Refer to Exhibit II for Visuals of IPL Ads). Commenting on O&M‘s ad strategy, Anup Chitnis (Anup), Executive Creative Director, O&M South Asia, said, ―In a sense, we‘re creating a debate in consumer minds on which team they want to support while also heating the fight up.‖11

In early April 2008, SET MAX d e v e l o p e d a creative ad to communicate the arrival of IPL. TheAd was titled ‗Manoranjan ka Baap‘ (Father of Entertainment) and was shot like an Indian file of1980s. the ad featured a woman giving birth to twins whom she names Mano and Ranjan. In the ad, the father of the twins is not on the scene at all and the whole village constantly taunts the kids asking them, ‗Kab Ayega Tera Baap?‘ (When Will Your Father Come?). The kids keep reiterating that their father will definitely come home one day. Unable to bear the jeers and taunts her kids have to face, their mother contemplates ending her life by jumping into a well. Even as she prepares to commit suicide, the children come in screaming that their father has arrived. The children are then shown dancing and kissing their TV set which announces ‗Aagaya Manoranjan Ka Baap. DLF Indian Premier League. Sirf MAX par,‘ (The Father of Entertainment Has Arrived. DLF Indian Premier League. Only on MAX). The ad which was shot in the typical old Indian movie style with dramatic scenes, received a good response for being funny and creative.

SET MAX ran this campaign on several news, music, and regional channels on TV. It ran the campaign on radio, cinema halls, the Internet, and outdoors to promote viewership for the IPL matches that were telecast on its channel. T. Gangadhar, Vice President and Head of Marketing, SET MAX, said, ―From a broadcast strategy perspective, the challenge was to find a unifier that binds the entire country – a lowest common denominator that is compelling enough to take on existing TV viewing habits. And that glue can only be our insatiable passion for wholesome entertainment. This is precisely why the DLF IPL broadcast has been positioned as the definitive and ultimate entertainment destination for those 44 days when the League is in progress.‖13

While the BCCI and SET MAX made efforts to create awareness about the IPL, the franchises also promoted their brands, mostly using the players in the team as well as brand ambassadors. Two of the franchises were owned by Indian film stars – Shahrukh Khan (Kolkata Knight Riders) and Preity Zinta (Kings XI Punjab) who promoted the brands using music videos in which they featured. These music videos were based on their team anthems. The Bangalore, Delhi, Mumbai, and Chennai franchises hired film stars to be their brand ambassadors. All the teams had their own anthems.

The franchises designed and sold a variety of merchandise like jerseys, car flags, stickers, mugs, badges, cheering sticks, banners, and collectibles. The merchandise improved brand visibility as well as revenue for the franchises. Besides the franchises promoting their teams, the sponsors of the teams also promoted them. For instance, Nokia, which sponsored the Kolkata Knight Riders team, promoted the brand by conducting road shows in Kolkata and advertising on the Internet. Nokia conducted a promotional event called ‗Blog with Shahrukh Khan‘to improve the fan base for the team.

11 Devina Joshi, ―IPL: The War is About to Begin,‖ ww w . a f a q s .c o m , April 16, 2008.12 SET MAX is one of the channels in the network of SET on which IPL matches were broadcasted.13 ―SET MAX Telecast-Manoranjan Ka Baap IPL Ad Ready,‖ ww w . d a n c e w i t h sh a d o w s .c o m , April 10,

2008.

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The matches were scheduled mostly in the evenings so that they did not disrupt the daily work schedule of the audience and could also attract more viewers to the stadium. Even on TV, evenings were considered prime time as advertisers could attract most eye balls during this time. It also benefited the broadcasters who could charge premium rates from advertisers — which might not have been the case if the matches had been held in the mornings on weekdays. According to Sanchayeeta Verma, National Director, Insights and Communications Planning, Mindshare, ―IPL blended easily into the daily routines of people because it aired during prime TV viewing times and also because the quick 3-hour format was convenient to follow. While it was curiosity at first that drew viewers to the set, the interesting form, the hype, and success around IPL made the programme a reason for get-togethers with family and friends.‖14

The franchises also organized on-ground entertainment besides cricket, attracting more viewership for IPL. They arranged for dance and music performances, cheerleaders, and fireworks to add to the entertainment. Most of these activities were scheduled before the match started and in the breaks during the match to entertain the audience. The marketing efforts by BCCI, SET, and individual franchises had good results, translating into packed stadiums for most of the matches.

IPL Season 1 witnessed a cumulative viewership of around 349 million15. The TRP16 rating for the inaugural match was recorded at 8 and the average TRP for the entire 2008 tournament was recorded at 5.

IPL SEASON TWO

In February 2009, SET MAX designed a campaign called ‗Beyond Boundary‘ for promoting IPL. The ad started with a voice over saying – ‗God has given us one land which we divided into bits and pieces and created our own demarcations. Had it not been the case, a barber from India would have been doing massage to someone in Tokyo, a teacher from Caribbean would have been teaching Sanskrit to someone in Benaras, and Vada pav would have been national cuisine of the UK. Sounds impossible? Not any more because with IPL Season 2, boundaries will break and people from all races, creeds, castes, and religions would come together to cheer for a common cause. Whether its Savitri fasting for Symonds, or sister Anne praying for Dhoni, or entire Punjab praying for Sangakara or Razia praying for Sehwag‘. The ad ended with a voice over saying that it‘s all possible only on MAX, the home for DLF India IPL. Commenting on the advertising strategy for IPL, Gaurav Seth (Seth), Vice-president, Marketing, SET MAX, said, ―Our advertising has always been funny and tongue-in-cheek. We are clear about the fact that this format of cricket is not just for the fanatic or the purist, but for everybody who longs for indulgence in some high voltage event. Therefore, we have stuck to our ‗filmi‘ approach to cricket.‖17

In March 2009, SET MAX designed another advertising campaign titled ‗Ek Desh, Ek Junoon‘ (One country, one spirit) to promote IPL Season 2. This was a 60-second ad film that showed people from various parts of India doing exactly same thing at the same time. For instance, a number of people were shown reading a particular newspaper at a place and all of them flipping to another page at the same time; around 500 people standing at a Mumbai railway station call out for a taxi at the same time. Several such montages were shown. Then a voice over says ‗Kabhi sau crore logon ko ek saath ek hi cheez karte dekha hain?‘ (Have you ever witnessed 1 billion people doing the same thing at the same time?). Then an assortment of IPL Season 1 shots to which several people reacted in the same manner (cheering or depressed) at the same time were shown. The ad ended with a voice over saying – ‗Ek Desh Ek Junoon, DLF IPL Sirf MAX Par.‘ (One country, one spirit, DLF IPL only on MAX)

14 Priyanka Mehra, ―Yes to IPL, No to Cheerleaders,‖ w w w . li v e m i n t. c o m , August 17, 2008.15 Ashish Sinha, ―Final vs Final: IPL-1 Wins,‖ ww w . b us i n e s s- s ta n d a rd .c o m , May 26, 2009.16 TRP is television rating point system where the viewership of a particular program or event or a

channel in a geography is determined using sampling methods.17 Abhishek Chanda, ―IPL Promotes Global Citizenship,‖ www.a faq s.co m, February 04, 2009.

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However, the promotions by the franchises in IPL Season 2 were subdued when compared to IPL Season 1. Only the Kolkata franchise promoted their brand as aggressively as they had done in IPL Season 1. They launched a campaign called ‗Kolkata Knight Riders Reloaded‘ and had a series of videos driving the message that the team had been reloaded and would bounce back. Even though the other teams launched promotional campaigns, the ad spends appeared low. Analysts said that the ongoing economic slowdown must have impacted sponsorship revenues and hence the franchises were not as aggressive as they had been in 2008. Indian film actress Shilpa Shetty (Shetty) partnered with industrialist Raj Kundra (Kundra) and together they bought a 12% stake in the Rajasthan Royals team for US$ 16.8 million. This put the value of the team at US$ 140 million against its auctioned price of US$ 67 million in 2008. The Jaipur franchise released a new video with their team anthem featuring Shetty.

IPL Season 2, which was scheduled to start on April 10, 2009, faced an unexpected road block. The Indian government refused to approve its schedule as it overlapped with the general elections in the country. The Indian government suggested to the BCCI that it postpone the matches as arranging security for IPL and elections at the same time would not be possible. Moreover, IPL had to schedule its matches according to the International Cricket Council‘s (ICC) schedule of matches to avoid any overlaps with the international commitments of the IPL players. With the government refusing permission just three weeks before the IPL was scheduled to start, IPL consulted Cricket South Africa (CSA) to know if South Africa would be able to host IPL Season 2. With CSA‘s assurance, BCCI announced on March 25, 2009, that IPL Season 2 would be hosted in South Africa.

The IPL schedule was delayed by a week to start on April 18, 2009. Eight venues were selected to conduct 59 matches in 36 days. The BCCI terminated the broadcasting contract with SET and WSG for the IPL matches after Season 1 stating that the companies had violated their contractual obligations. The BCCI alleged that the broadcasting quality was poor and that SET had violated ground sponsor rights18. SET and WSG went to court to challenge the BCCI on termination of the deal and eventually in an out-of-the-court settlement, Modi renegotiated the broadcasting contract for an increased amount of US$ 1.64 billion for the next nine years. Ireland-Davenport (ID), an advertising agency of Ogilvy South Africa, was assigned the responsibility of promoting IPL in South Africa.

The challenge for ID was to create awareness about IPL in South Africa where cricket was not as popular as it was in India. Another challenge was to create an affinity for teams comprising players from several other nations. Not all the teams in IPL had South African players in their squads. There was the apprehension that this might result in partially filled stadiums that would act as a turn off for sponsors as well as for viewers. To ensure that stadiums were filled ID had to design marketing campaigns to create an interest in the IPL format among South African audiences. John Davenport (John), Creative Director of Ireland Davenport, said, ―The biggest challenge was that nobody - or only a few people in South Africa - knew who any of the teams were and we had no connection to teams like the Mumbai Indians or Kings XI Punjab. Filling all those seats was quite daunting - after all, nothing makes for bad TV quite like an empty stadium.‖19

ID launched its ‗Heat is Coming‘ campaign in the first phase of promotions for IPL. The campaign featured famous cricketers in action and was promoted through print, radio, and outdoor billboards. It highlighted the entertainment elements in the matches like Indian film stars and music besides cricket to attract audience to the stadium (Refer to Exhibit III for Visual of ‘Heat is Coming’ campaign). As ID did not have the time to design and develop new TVCs, it used the existing TVCs of IPL and the franchises after dubbing them into English.

18 BCCI had awarded ground sponsor rights for one of the leading direct to home service providers BIG TVwhereas SET had signed on BIG TV‘s rival Airtel without the consent of BCCI.

19 ―Behind the Success of The IPL Cricket Tournament,‖ www. mar keti ng web .co .za, May 28, 2009.

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Phase II of the campaign was titled ―Heat is On‘ and was launched on April 17, 2009, with a street carnival in Cape Town and all the eight teams along with several Indian film actors. The carnival was held to enhance the excitement of the launch of IPL in the country and to attract crowds (Refer to Exhibit IV for IPL 2009 Street Carnival Pictures). The ‘Heat is On‘ campaign was promoted using the player versus player concept where both the players belonged to the same nation but played for different teams in IPL (Refer to Exhibit V for ‘Heat is On’ Visual). Explaining the strategy used in the advertising campaigns, Avril Van der Merwe (Avril), Business Unit Head for the IPL account, ID, said, ―When you have two weeks to launch a tournament of this size, simple branding is the way to go. Throughout the campaign we kept things simple and used outdoor as the lead medium. When time is this tight and the job is this big, the trick is to do the basics and try to do them well. The backbone of the campaign was always designed to be outdoor, but the response to the radio, and TV commercials was also terrific and way beyond expectation.‖20

IPL hired Francois Pienaar (Pienaar), Former Captain of South Africa‘s rugby team that won the Rugby World Cup in 1995, to head IPL‘s marketing efforts in South Africa. Pienaar was a well- known personality in South Africa and was well respected too. Being an ex-sportsman, he had good insights on sports marketing in South Africa. Experts felt that Pienaar‘s association with IPL also helped it in attracting crowds to the stadium.

To attract more viewers into the stadium, IPL priced the tickets at lower rates. IPL also conducted a beauty contest called ―Miss IPL Bollywood South Africa‖ where a South African woman with star qualities would be selected from the crowd in each game and a final winner would be chosen based on the opinion polls by the end of the tournament. The winner of the contest would get50,000 Rands21, a free business class trip to India, and offered a role in a Bollywood movie. Analysts felt that this contest was one of the initiatives by IPL to attract more people to thestadiums. IPL used 34 cameras for each match in South Africa. There was more than usual camera focus on people who appeared in distinct costumes, big groups, cheered players, and these wereshown live on big screens installed at several places in the stadium. Celebrities were also given extra focus during the matches.

In IPL 2009, a new concept of strategic breaks was introduced. Strategic breaks were seven and a half minute breaks after every 10 overs in the match used by both teams to discuss strategies for rest of the match. IPL arranged different forms of entertainment like performances by film stars, popular tunes played by DJs, and fireworks during these breaks to keep the crowd entertained.

Besides providing entertainment to people on the field, IPL also contributed toward education in South Africa. IPL initiated the Help, Educate and Teach (HEAT), an eight million Rand scholarship program before IPL started in South Africa. IPL selected four underprivileged schools near each of the eight cities that hosted the IPL Season 2 matches in the country. In the first part of the program, 0.1 million Rands were contributed to these 32 schools identified by IPL. The second part of HEAT involved students of several schools that attended IPL matches. At every IPL match, five school students were identified and were shown on large screens installed at the stadium. At the end of the match, each of these five students was awarded 15,000 Rands toward their school fees. Speaking about the HEAT program, Modi said, ―It is well known that many parents struggle with school fees while striving to ensure that their children stay in school and get a good education. We hope the HEAT programme will make a real difference in the lives of those who benefit from it.‖22

20 ―Behind the Success of the IPL Cricket Tournament,‖ www . m a r k et i ng w e b .c o .z a, May 28, 2009.21 As on November 24, 2009, US$ 1= 7.466 Rands.22 ―The IPL Heat Programme Will Benefit Schools and Individual Students,‖ ww w . r a i n b o w sk i l l. c o m , April

18, 2009.

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Indian Premier League’s Operating Model – …

Two teams, Royal Challengers Bangalore and Deccan Chargers, which had been the bottom two performers in IPL Season 1, emerged as the finalists in IPL Season 2. Deccan Chargers, which had been the worst performer in IPL Season 1, won the title in IPL Season 2 (Refer to Exhibit VI for IPL 2008 Points Table). IPL Season 2 had a cumulative viewership of 419 million23 and experts opined that it had been more successful than Season 1 based on the cumulative viewership.

BRAND VALUATION

The UK-based brand valuation consultancy firm – Brand Finance Plc — valued the IPL enterprise at US$ 2 billion. Brand Finance‘s method of valuation was based on several revenue sources like broadcasting, IPL sponsorship, team sponsorship, merchandising, gate receipts, effect of performance, catchment population of the city, capacity of the stadium, and presence of iconic players in the team.

The IPL enterprise brand valuation included brand values of individual franchises as well as IPL. IPL‘s brand was valued at US$ 311.44 million based on the income that it would be generating in the future. The brand value of Kolkata Knight Riders was the highest at US$ 42.1 billion, despite its not being the top performer. According to analysts, one of the reasons for the team‘s higher brand valuation was the hard selling skills of the franchise‘s co-owner Shahrukh Khan. Many of the brands which he personally endorsed were also among the team sponsors of Kolkata Knight Riders. He built a rapport with the local community by various activities like conducting road shows and creating an attractive jingle in the local language. Kolkata also scored by having a huge population in its catchment area and high stadium capacity24. The cost of the franchise was also less than some of the other franchises.

The brand valuation was conducted when IPL Season 2 was in progress. The brand valuations baffled some of the industry observers as Deccan Chargers which was performing well in IPL Season 2 had the lowest valuation among the eight teams (Refer to Table V for IPL teams’ Brand Value and Exhibit VII for IPL 2009 Points Table). Commenting on this issue, Unni Krishnan, Country Manager, Brand Finance India, said, ―Performance is not the only variable. There are variables like sponsorship deal, licensing and merchandising deal, presence of star players.‖25

In early 2009, IPL planned to globalize the brand by developing the fan base in other cricket playing nations over a period of time. According to Modi, ―Our aim is to build fan bases across the world. In England, you have EPL [the Barclays Premier League] and they all have fans all over the world. My son likes Manchester United. He has never been to a game but watches religiously on television. We want people to get attached to teams and it‘s a huge opportunity to build IPL as a global brand.‖26 However, with the shift in venue to South Africa and the success of IPL Season 2, the media had already begun terming the brand as a global one.

IPL was working on a proposal to expand the catchment areas of teams beyond the Indian boundaries. As the IPL teams comprised players from several nations, it made sense to expand the brand globally to other cricket playing nations. Modi said, ―We are also trying to expand the catchment territory to the neighboring countries, subject to approval from other boards. For instance, the Knight Riders can have some matches in Bangladesh, the Chennai Super Kings in Sri Lanka, and the King‘s XI Punjab in Pakistan. Whether it‘s possible or not is a million dollar question but this is our long-term plan to expand the base.‖27

23 Ashish Sinha, ―Final Vs Final: IPL-1 Wins,‖ ww w . bu s i n e ss - s ta n d a rd .c o m , May 26, 2009.24 Eden Garden stadium in Kolkata has a seating capacity of 0.1 million people, highest among all

the stadiums in which IPL was conducted.25 ―Battered Knight Riders The Brand to Beat,‖ h t t p ://cric k et n e x t.i n .c o m , May 05, 2009.26 Rick Broadbent, ―South Africa Laps Up Glitz of IPL But Anyone Care Who Wins?‖

ww w . t i m es o n l i n e . c o . u k , April 17, 2009.27 ―‗One Over Eliminator‘ to Debut in IPL,‖ www.r ed iff.co m, February 05, 2009.

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Indian Premier League’s Operating Model – …

Table V

IPL Teams – Brand Value

(In US$ million)

Team Valuation*

Kolkata Knight Riders 42.1

Mumbai Indians 41.6

Rajasthan Royals 39.5

Chennai Super Kings 39.4

Delhi Daredevils 39.2

Royal Challengers Bangalore 37.4

Kings XI Punjab 36.3

Deccan Chargers 34.8

Source: h tt p : //ec ono mictimes.i nd i a times.c o m.

* Valuations as on May 04, 2009.

Experts opined that the IPL had just finished 2 seasons and was yet to take a complete professionally managed corporate structure. Though the franchises appointed professionals to manage teams, the concept of sports clubs in India was yet to mature. They said that valuations would go higher when each team was run as a corporate body. However, analysts felt that it would not take much time for the franchises to learn how to manage teams efficiently as they could learn from the operations of clubs like the English Premier League (EPL), a club which had a heritage of over 100 years and was run as a corporate structure. Analysts said that licensing and merchandising (L&M) in the field of sports was relatively new to India and once IPL franchises got a grip on it, they would be able to leverage their brands and generate more income. According to Unni Krishnan, ―These are India‘s first steps in what is worldwide a US$ 103 billion merchandising and licensing business.‖28

THE ROAD AHEAD

In November 2009, IPL announced that it would add four more venues for Season 3 to be held in March 2010. IPL also planned to add two more teams in its Season 4 to be held in 2011. Besides, it announced other changes like increasing the number of fielding substitutes from one to four, using pink balls during practice matches, and adopting an one over eliminator29 in case of a tied match. The icon status of the players would also be repealed from Season 4 to be held in 2011 and the icon players would also be available for bidding from then. Of the changes that were proposed, the one which would impact the existing franchises was increasing the number of teams. The central pool of revenue which BCCI distributed among the existing eight franchises would then be shared among 10 franchises. Revenues from the central pool were critical for the franchises as they formed a major chunk of the total franchise revenues in the first two seasons.

28 Govindkrishna Seshan and Aminah Sheik, ―Pitch Report,‖ ww w . b us i n e s s - s t a n d a rd .c o m , April 29, 2008.29 In case of a tie in any match, both the teams would nominate a mini team of three batsmen and

one bowler. Both mini teams would get to play one over each. If any of the three batsmen were bowled out in that one over then the mini team would be considered as all out. If the single over also was tied, then the team which had lost fewer wickets would be declared winner. If both teams lost an equal number of wickets then the maximum number of sixes and fours would be considered to determine the winner.

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Indian Premier League’s Operating Model – …

It was estimated that all the eight franchises collectively had made a profit of between Rs. 2.25 billion and Rs 2.4 billion in IPL Season 2 mainly due to the additional revenues from the re- negotiated broadcasting rights. It was estimated that BCCI alone had made profits of about Rs. 3.5 billion in IPL Season 2 as compared to Rs. 3.05 billion in IPL Season 1 despite the additional expenditure incurred because of shifting the venue to South Africa.30

In November 2009, BCCI sold the theatrical rights of IPL matches to be held between 2010 and2019 for US$ 70 million to Entertainment and Sports Direct (ESD). This contract gave ESDexclusive distribution rights of IPL matches for audiences in cinema halls, stadiums, water-borne vessels, buses, trains, armed service establishments, hospitals, bars, hotels, restaurants, airports, railway stations, shopping malls, offices, construction sites, oil rigs, clubs, auditoriums, spas, salons, and other similar public venues. However, the restriction for ESD was not to telecast the match in multiplexes in any city where the IPL match was to be hosted on that particular day. Though the BCCI was finding new ways to generate more income through IPL, the format faced a few challenges.

IPL faced challenges like competition from other cricketing nations starting similar tournaments, the possibility of audiences losing interest in matches over a period of time resulting in lower TRP ratings, more international assignments for IPL players in future that would keep them engaged during IPL, etc. Unni Krishnan said, ―There will be tough competition for IPL, with other countries like South Africa and England planning similar cricket leagues. IPL cannot afford to rest on its laurels. It has to improve the quality of the game and strive to win a larger fan following and boost its brand loyalty. IPL has to leverage its fan following to get more revenues‖31.

30 Ashish Sinha, ―BCCI Scores High on IPL-2 Revenues, But Costs Rose, Too,‖ www.business- standard.com, May 27, 2009.

31 Manu AB, ―IPL Teams May List on The Stock Market!,‖ www.r ed i ff.co m, May 05, 2009.

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NOT

Indian Premier League’s Operating Model – …

Exhibit I

Visuals of Karmayudh Campaign

Compiled from various sources.

Exhibit II

Visual of IPL Advertisements

Compiled from various sources.

14

NO DO

T

Indian Premier League’s Operating Model – …

Exhibit III

Visual of ‘Heat is Coming’ Campaign

Source: www .livemi n t. co m.

Exhibit IV

IPL 2009 Street Carnival Visuals

Source: h ttp: //krish ma ll.b log spo t.co m.

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Indian Premier League’s Operating Model – …

Exhibit V

Visual of ‘Heat is On’ Campaign

Source: www .m a r k e ti ng w e b .c o . z a .

Exhibit VI

IPL 2008 Points Table

Team Matches Won Lost No Result Points

Rajasthan Royals 14 11 3 0 22

Kings XI Punjab 14 10 4 0 20

Chennai Super Kings 14 8 6 0 16

Delhi Daredevils 14 7 6 1 15

Mumbai Indians 14 7 7 0 14

Kolkata Knight Riders 14 6 7 1 13

Royal Challengers Bangalore 14 4 10 0 8

Deccan Chargers 14 2 12 0 4

Source: www.ind ia - server.co m.

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Indian Premier League’s Operating Model – …

Exhibit VII

IPL 2009 Points Table

Team Matches Won Lost No Result Points

Delhi Daredevils 14 10 4 0 20

Chennai Super Kings 14 8 5 1 17

Royal Challengers Bangalore 14 8 6 0 16

Deccan Chargers 14 7 7 1 14

Kings XI Punjab 14 7 7 0 14

Rajasthan Royals 14 6 7 1 13

Mumbai Indians 14 5 8 1 11

Kolkata Knight Riders 14 3 10 1 7

Source: www.ind ia - serv er.co m.

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Suggested Readings and References:

Indian Premier League’s Operating Model – …

1. Feroz Ahmed, Big Game, www .bus i ne s swo r l d . i n, January 04, 2008.

2. Bcci Makes A Billion Dollars In IPL Deal, And While Franchisees Have Their TaskCut Out, www . f a i r v a l c ap it a l .co m, January 28, 2008.

3. SET MAX Telecast-Manoranjan Ka Baap IPL Ad Ready,www .dancew i t hs h adows. co m , April 10, 2008.

4. Devina Joshi, IPL: The War is About to Begin, www .a f aq s .co m, April 16, 2008.

5. IPL’s Big Branding Game, h t t p : / / s i f y .co m, April 22, 2008.

6. Govindkrishna Seshan and Aminah Sheik, Pitch Report, www . b u s i ne s s - s t an d a r d. c o m, April 29, 2008.

7. Priyanka Mehra, Yes to IPL, No to Cheerleaders, www . li v e m i n t .co m, August 17, 2008.

8. Abhishek Chanda, IPL Promotes Global Citizenship, www .a f aq s .co m, February 04,2009.

9. ‘One Over Eliminator’ to Debut in IPL, www . r e d i f f . co m, February 05, 2009.

10. Rick Broadbent, South Africa Laps up Glitz of IPL but Anyone Care Who Wins?www . ti m e s on li n e.co . u k, April 17, 2009.

11. The IPL Heat Programme Will Benefit Schools and Individual Students, www . r a i nbo w s k i ll . co m, April 18, 2009.

12. Battered Knight Riders The Brand to Beat, h t t p :/ / c r i c k e t ne x t . i n.co m, May 05, 2009.

13. Manu A B, IPL Teams May List on The Stock Market!, www . r ed i f f . c o m, May 05,2009.

14. Ashish Sinha, Final vs Final: IPL-1 Wins, www .bus i ne ss - s t and a r d. c o m, May 26, 2009.

15. Ashish Sinha, BCCI Scores High on IPL-2 Revenues, But Costs Rose, Too,www .bus i ne s s - s t and a r d.c o m , May 27, 2009.

16. Behind the Success of the IPL Cricket Tournament, www . m a r k e ti n g w eb.co .z a, May28, 2009.

17. Aminah Sheikh, BCCI Expands the Field for IPL 2010, Adds Two Teams,www .bus i ne s s - s t and a r d.c o m , November 17, 2009.

18. www .h i ndu s t a n ti m e s .co m.

19. www . t heh i n d u.co m.

20. www . li v e m i n t .co m.

21. www . m a r k e ti n g w eb.co. z a.

22. www . i nd ia - s er v e r .co m.

23. www . i nd i a t w en t y 20. c o m.

24. htt p: // kri shmall .blogspot .com.

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