IPL 2020: VIVO set to exit after ‘renegotiating’ valuation, experts say BCCI may get reduced sponsor deals next
Move most likely prompted by the anti-China sentiment in India; BCCI plans to invite a new title sponsor for just this year
Chinese smartphone maker Vivo Communication Technology Co’s Indian arm Vivo India is set to withdraw as title sponsors of the upcoming Indian Premier League (IPL), according to people familiar with the matter at the Board of Control for Cricket in India (BCCI).
If it happens, the move would leave IPL poorer by Rs 440 crore, also affecting the finances of each of the teams. Vivo India paid Rs 2200 crore in 2017 for a five-year title sponsorship deal with IPL. Neither BCCI nor Vivo India want to break the contract, but given the current environment, believe that this is the best thing to do—at least for this year. BCCI will have its task cut out to find a sponsor at a time when the economy isn’t doing well, although the hunger for sporting events may increase television viewership of the popular T20 league that will be played in UAE.
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The move comes after BCCI and the IPL Governing Council have both been criticised for retaining Vivo as the title sponsor at a time when anti-China sentiment is running high in India. The government has banned Chinese apps, placed stringent restrictions on Chinese investments, and is reviewing partnerships Indian educational institutions have with Chinese institutions. All of this comes in the backdrop of tensions between the two countries along the Line of Actual Control in Ladakh where a scrap between the two armies resulted in the death of 20 Indian soldiers and an unknown number of Chinese ones.
According to the people cited in the first instance, BCCI top brass were locked in a teleconference through the day to find an amicable settlement with Vivo.
BCCI plans to float a tender to invite a new title sponsor for just this year, for the league that begins September 19 in UAE.
“They could return next year to complete the remaining three-year deal, which would be extended by a year to 2023, if India-China relations improve,” a BCCI official said on condition of anonymity.
A Vivo spokesperson said: “We neither accept nor deny the news. We will issue a statement once there is clarity on the situation.”
On June 19, IPL’s official handle tweeted, “Taking note of the border skirmish that resulted in the martyrdom of our brave jawans, the IPL Governing Council has convened a meeting next week to review IPL’s various sponsorship deals.”
In the IPL governing council meeting which was finally held on August 2, members were told that there was no change in title sponsors. After the meeting, the IPL’s new dates and move to the UAE were announced, with Vivo’s name in the title.
The move resulted in outrage.
Behind the scenes, added the BCCI official, president Sourav Ganguly and secretary Jay Shah were in talks with Vivo officials, because the Chinese company wanted to withdraw to “renegotiate the valuation.”
Chennai Super Kings CEO Kasi Vishwanathan said that he has been “hearing rumours” but, “as far as the financial impact of Vivo’s exit is concerned, let BCCI declare it first and then we can deliberate on it.”
An executive at another IPL franchise, who asked that neither he nor his team be named, said he is concerned about the financial fallout. “One of our demands has been to be compensated for the loss of gate receipts,” he said. “Now, if the central pool will get affected due to Vivo opting out, it will hit us hard. We hope to have a dialogue with BCCI.”
Vivo’s deal as well as that of Star’s broadcast rights contract for Indian cricket, worth Rs 3270 crore a year, meant IPL’s revenue pool went up and the franchises began making a profit upward of Rs 150 crore each season. Industry experts said while BCCI will be able to find a sponsor for IPL at such short notice, the deal may not be as lucrative. “BCCI won’t get a sponsor to cover the Rs 440 crore Vivo would have paid,” said Lloyd Mathias, marketing and business strategist and former Asia marketing head of HP. “They will have to make do with a reduced price, given the limited time and also the fact that many brands have been severely impacted by the lockdown.”
What may work in the BCCI’s favour is that the IPL will be the only Indian sporting tournament at a time when all sports is at a standstill in the country. “Viewer interest will be extremely high,” Mathias said. “In comparison to previous years TRPs may be as good if not better. This may influence potential sponsors decision to bid for IPL at this late stage.”
Harish Bijoor, brand strategist and founder of Harish Bijoor Consults said Vivo’s exit, if true, is a smart move.
“VIVO certainly realised that popular sentiment is against its sponsorship this year. Therefore it may have requested to move out this year and come back next year to complete the contract,” Bijoor said. “This is a face-saver for BCCI and the IPL. Vivo has done the correct thing at this point of time.”