ON A STICKY WICKET A Concise Report on brand values in the Indian Premier League April 2015 Prepared by: Table of Contents A Concise Report Contents Page No. on brand values in the Indian Premier Foreword: On a sticky wicket 3 League Summary of Brand Values 4 Coming of age of the IPL 5 Taking it on the chin! 7 Understanding Brand Value in the IPL 9 Valuation Approach and Methodology 12 Conclusion 13 Duff & Phelps India Private Limited 2 Preface On a sticky wicket Dear Readers, If news reports are true, IPL advertising rates are also expected It gives me great pleasure in to see a 10% - 15% increase for the welcoming you to the latest edition of current season and even higher for our annual study of brand values in the final stages of the tournament as the Indian Premier League. inventories are sought by a host of It goes without saying that it has interested takers. It is no surprise, been a tumultuous year for the IPL, then, that the overall brand value of one characterised by an almost various franchises has increased by expected bit of controversy and 6% over last year and the value of intrigue. Over the years, we have the IPL as a business has increased seen multiple instances of scandals to USD 3.5 billion from USD 3.2 surrounding the premier sporting billion last year. Clearly, the IPL is on Varun Gupta event of the country, but in almost a sticky wicket but it is still not out. Managing Director every single year, the IPL has come out stronger and more popular than As an aside, we are happy to American Appraisal India before. This year is no different. announce that American Appraisal has merged with Duff & Phelps, the While many expected the latest premier global valuation and round of controversies to shake the corporate finance advisor. These are belief that advertisers and corporates exciting times at American Appraisal, had put in the IPL, it would appear as this combination brings together that the IPL remains the most two like-minded organisations that popular and anticipated event around are equally committed to which advertising campaigns are run independence, technical excellence - despite the launch of several rival and exceptional client service. We sporting leagues in the country are as excited about the opportunity during the last 12 months. this presents as we are in introducing our latest report on Brand Values in Broadcasters too continue to see the Indian Premier League. value in the IPL, evident in the 50% We look forward to your feedback. increase in average annual contract terms for the digital media rights Varun Gupta agreement with the Star Group a few Managing Director months ago. Duff & Phelps India Private Limited 3 Kolkata Knight Brand Value Brand Value (2014) (2015) Riders Rank: 1 $69mn $86mn Mumbai Indians Brand Value Brand Value (2014) (2015) Rank: 2 $72mn $72mn Brand Value Brand Value Chennai Super (2014) (2015) Kings Rank: 3 $72mn $67mn Royal Brand Value Brand Value (2014) (2015) Challengers Bangalore $51mn $51mn Rank: 4 Rajasthan Brand Value Brand Value (2014) (2015) Royals Rank: 5 $45mn $45mn Kings IX Punjab Brand Value Brand Value (2014) (2015) Rank: 6 $32mn $41mn Sun Risers Brand Value Brand Value (2014) (2015) Hyderabad Rank: 7 $25mn $35mn Delhi Brand Value Brand Value (2014) (2015) Daredevils Rank: 8 $40mn $34mn Duff & Phelps India Private Limited 4 Image source BCCI Introduction Coming of age of the IPL The Indian Premier League is truly, We have already seen this with India slowly but surely, coming of age. Cements recently restructuring its While the IPL itself is synonymous Chennai Super Kings franchise into with the glitz, glamour and a new company with identical controversy usually reserved for a hit shareholding. reality show, no one can question the fact that the IPL is now more about Such restructurings are not only born the game of cricket than the hype of out of the controversies that have the spectacle. It has not been an plagued the IPL for a while now, but easy ride getting there. In fact, it also from an increased focus on would be fair to say that the last 18 developing a sound brand strategy Kapil Bellubi months have been the toughest time for the franchise. We are not far from Vice President for the IPL ever since its launch in seeing IPL franchises with multiple American Appraisal India 2008. merchandise offerings, restaurants and cafes, much on the same lines Allegations of match fixing, as some of the large English Premier convoluted ownership structures of League franchises. Interestingly, we franchises, professional misconduct are also seeing several franchises of high-ranking officials and mud- looking at extending brand support slinging within and outside the to domestic events and sports that cricketing fraternity has been the are closer to home. Several order of the day, and the Supreme franchises are looking to engage Court of India is now almost certain with fans and supporters through to hold franchises and owners brand association for smaller accountable for their actions on and sporting events such as corporate off the field. The effects of these leagues and other sports controversies are sure to trickle down tournaments. to franchises who would be more than willing to clean up their act. In IPL teams are also increasingly fact, keeping in mind that several of looking at technology and social the franchises are partly owned by media to ensure maximum brand large corporates or promoters with exposure and also to build winning significant holdings in listed rosters of players at cost effective companies, there is an even greater rates. likelihood that improved transparency and governance will be at the forefront of a majority of the franchises going forward. Duff & Phelps India Private Limited 5 Introduction Coming of age of the IPL Player selection is not just limited to So how does this impact the brand We are not far from skills and performance but also to the values of the various franchises? ability of a player to garner The following pages provide our seeing IPL franchises sponsorships, case in point being analysis and detail our approach to with multiple Delhi Daredevils’ acquisition of the assessment. Yuvraj Singh for a record INR 160 merchandise million. offerings, restaurants There is a clear sense of maturity and business intent by franchises in and cafes, much on selecting their teams, evident in the the same lines as way player auctions took place earlier this year. With almost all some of the large social media platforms set to be awash with IPL content over the next English Premier few weeks, and the fact that the Indian national cricket team did League franchises. unexpectedly well at the recently concluded World Cup, there is no surprise that the real winner of the next IPL will be cricket. Yuvraj Singh Annual Cost Trend (INR Mn) 160.0 140.0 108.0 2013 2014 2015 Duff & Phelps India Private Limited 6 Introduction Taking it on the chin Despite the recent controversies, Driven by the success of the IPL, we Reach Vs. Week 1 TVR many of which continued into the have seen a plethora of new sporting 200 6.0 seventh season of the IPL last year, leagues in the country, some of the cumulative reach of the IPL which have seen unexpectedly high increased from 155 million for the levels of popularity. The Pro- 190 190 2013 edition to 190 million for the Kabbadi League (PKL) and the Hero 5.6 Indian Super League (ISL), both of 5.5 2014 edition. The TV reach of the 180 IPL has been consistently growing at which had their first editions in 2014, a compound annual growth rate saw viewership numbers large (CAGR) of 10% since the first edition enough to rival even the IPL. The 170 5.0 , despite the fact that the IPL’s TV PKL garnered viewership of 435 162 163 5.0 ratings have been consistently falling million viewers for its first edition, a shade more than the ISL’s 429 160 every year since the first edition. 4.8 million viewership, while Season 7 of 4.6 155 This, however, is an expected the IPL garnered close to 552 million 150 4.5 phenomenon. TV ratings for large viewers, despite the controversies sporting events such as the IPL and changes in venue . 144 normally stabilise after a few years. 140 Of course, it cannot be denied that For the BCCI (Board of Control for Cricket in India), the IPL remains a 4.0 the IPL’s TV ratings have also been 130 3.9 impacted by some of the money spinner beyond expectations. 3.8 controversies and changes in venue According to its annual report, BCCI 123 on account of Lok Sabha elections earned a staggering INR 11,940 120 last year. It will be interesting to see million from the 2013 edition against 3.5 if the TV ratings for the IPL see any the INR 8,920 million it earned in the previous edition (2012). The Board 110 improvement this year. Television is no longer the only platform to profited from IPL, earning a surplus of INR 3,348.6 million in comparison 102 3.1 consume IPL-related content. 100 3.0 Viewership on digital platforms to the previous year’s INR 1,500.3 IPL 1 IPL 2 IPL 3 IPL 4 IPL 5 IPL 6 IPL 7 (phones, tablets, computers, etc.) million. In addition, filings by five of has also increased by over 30% in the tournament’s eight teams with the Registrar of Companies (RoC) Cumulative Reach(Mn) Season 7 over Season 6, an indication of the shift in preferences show that three of the franchises Week 1 TVR and viewership.