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Sponsorship of non-cricket leagues sees massive slump but cricket grows at 34%: ESP Properties Study

The GroupM’s ESP Properties study says overall sports sponsorship grew by 12% in 2018 in India and sports advertising went up to Rs 7,762 crore. Cricket was a major revenue driver and saw an upsurge of 34% in terms of sponsorship on the back of new IPL deals. But some non-cricket sporting events had a tough time last year and couldn’t even be organised due to fall in sponsorship

The success of the Indian Premier League (IPL) has boosted the launch of several sports leagues in India. However, most of these non-cricket tournaments have failed to garner a positive response on the sponsorship front.

The sixth edition of ‘Sporting Nation in the Making’, a study released by GroupM’s ESP Properties, states that a massive slowdown was seen in the non-cricket leagues.

Leagues such as Hockey India League, Premier Futsal, Super Boxing League, Cue Slam, P1 Power Racing didn’t take place because of dearth of sponsorship and several other reasons.

Vinit Karnik, Business Head, ESP Properties, said the failure in the launch of leagues needs to be focused on. “According to me, there are multiple reasons behind why the leagues didn’t happen. I think the root cause is that most of these leagues tried to follow IPL, by launching eight franchise, franchise fee, home and away games, etc. But, everything can’t be IPL, every sport has a unique offering. Now, I don't know if these guys bought that unique offering. Also, not every sport is television-friendly, Super Boxing League, for instance, has two revenue models worldwide — pay per view and betting. While betting is illegal in India, pay per view is kind of coming in India following TRAI’s new tariff order. These guys need to understand that,” Karnik added.

While there was a slowdown in non-cricket leagues, the overall sport sponsorship still witnessed a healthy growth of 12%.  The on-ground sponsorship was 20% while central sponsorship contributed to revenue of more than Rs 600 crore ($88+ mn) in 2018.

Cricket was major revenue driver though India didn't play many cricket matches in 2018

Cricket witnessed an upsurge of 34% on the back of new IPL deals and more than double the growth of central sponsorship. The growth was also on the back of IPL franchise fee, amounting to approximately Rs 291 crore ($43 mn).

“We all know that IPL teams use to pay a franchise fee to BCCI, amounting to Rs 291 crore. That doesn't exist since last year. Now, IPL teams give 10% of the revenue extracted from sponsorship and other things as royalty to BCCI.  So, it means that the money is getting counted elsewhere though there is no difference in the industry size. We used to capture that number separately as franchise fee, which now got moved to the sponsorship column,” Karnik said.

Team sponsorships grew at 9% in 2018. The contribution of cricket, which had accounted for 63% of team sponsorship in 2017, rose to 68% last year. The growth can be pointed to Oppo’s continued sponsorship to Team India till 2020, amounting to Rs 1,079 crore. 2018 also saw major growths in IPL team sponsorships, which crossed Rs 300 crore ($44 mn) for the first time.

 Emerging sports too gave positive signals as kabbadi registered a growth of 31% over the previous year in on-ground sponsorship in 2018. This was further backed by the Odisha government announcing a five-year deal with Hockey India for junior and senior men and women teams. Indian Super League (ISL) has also grown into a strong property with a calendar spread over six months. Tata Motors also become the principal sponsor of Indian wrestling in the non-cricket team sponsorship.

Media investment in sports grew on the back of TV and digital

Media investments in sports grew by 9% as the sports advertising industry grew to Rs 7,762 crore. TV still drove the bulk of the growth story in India but 44% growth happened on digital, which is predominantly driven by Hotstar and SonyLiv. 

“Media investment in 2018 was little low, in comparison, because India played less cricket last year. So, 2018 was an under index cricketing year. But 85% of ad spend in sports were recorded on TV while 44% growth was on digital. Hotstar and SonyLiv drove the digital growth as they had acquired the rights of some of the best sporting events,” Karnik said.

La Liga also signed a three-year exclusive agreement with Facebook to show all 380 matches to users in India, Afghanistan, Bangladesh, Bhutan, Nepal, the Maldives, Sri Lanka and Pakistan. With the Facebook deals, digital media is expected to grow in the future as a wider viewer base will attract more ad revenue.

Karnik also said they are seeing gaming, mainly e-sport, on mobile as an emerging trend for 2019. “There is no number to show in 2018 but I would say that it is one of the trends in 2019. Gaming companies like Dream11 and Fantain are advertising fiercely in IPL 2019, which means people are playing on mobile. So it is definitely a call out for 2019,” he said.

Cricket widens lead over the rest of the sports on the endorsement front

2018 saw a healthy growth of 22% in athlete brand endorsement value. Of the Rs 482 crore ($71 mn) spent by brands on acquisition of sports stars, 81% was accounted for cricket. Around 133 brands signed with cricketers for 2018, compared to 90 brands in 2017. But 86 brands had signed up with non-cricketing stars in comparison with 78 in the previous year.

Virat Kohli and MS Dhoni pulled in 66% of all athlete endorsement monies spent by Indian brands last year. Virat Kohli leads with an endorsement value of approximately Rs 200 crore. PV Sindhu also had a momentous 2018 and was one of the most endorsed athletes.

2019 an year for IPL, World Cup and General Elections

The sports market is going to see an interesting result in 2019 as IPL, the General Elections and the World Cup are taking place consecutively. Some are predicting that the World Cup may witness an adverse impact as IPL and General Elections will drain the majority of ad revenue. However, Karnik states that India has a great appetite for cricket and both the cricketing event will fare well in 2019. He feels the uncertainty after TRAI’s tariff order won't be an issue as OTT and TV parity will come into play.

“I have been asked whether the peak of elections will have an impact on IPL, the answer is Yes. But will that have an impact on ratings? Maybe no, because somewhere OTT and TV parity will come into play, and it will help the boat to float. However, we can't predict these things. I don't think there won't be an issue between TV and OTT. The advantage here is that the broadcaster is same for TV and digital. Unlike before where matches were telecast on Sony while Hotstar had the rights for digital. Now, since the broadcaster is the same, he can put the cumulative number,” he said.

Karnik also said that with smartphone mobile penetration and cheap data in India, second screens are going to play a big role in revenue growth.

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