Television

Shah Rukh Khan’s KKR most valued IPL brand at $86 million: American Appraisal

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MUMBAI: As the Indian Premier League (IPL) gathers full speed, American Appraisal has released a concise report called “On a sticky wicket” on the brand values in IPL. While many expected that the latest round of controversies will shake the belief that advertisers and corporates had put in the million dollar cricketing extravaganza, the report is upbeat about the IPL and tags the event as most popular and anticipated event around, which advertising campaigns are run despite the launch of several rival sporting leagues in the country during the last 12 months.

As per the report, Shah Rukh Khan co-owned franchisee Kolkata Knight Riders (KKR), grabs pole position in the brand valuation chart, followed by Mumbai Indians (MI). KKR’s brand value increased from $69 million to $86 million, while MI was stagnant at $72 million. Chennai Super Kings dropped to number three slot as their brand value declined to $69 million as compared to $72 million in 2014. Royal Challengers Bangalore (RCB) and Rajasthan Royals (RR) were also stagnated at fourth and fifth berth with $51 million and $45 million respectively.

Meanwhile, Kings XI Punjab after their strong performance in the 2014 edition, rose to number six position as their brand value hiked from $32 million to $41 million in the 2015 edition. Sunrisers Hyderabad (SRH), at penultimate position, also secure growth as their valuation rose to $35 million from $25 million. Positioned at the bottom of the table in terms of brand valuation, Delhi Daredevils saw the biggest dip following an underperformed 2014, with a brand valuation of $34 million, which dipped from $40 million in 2014.

The report also depicts that player selection is not just limited to skills and performance but also to the ability of a player to garner sponsorships, case in point being Delhi Daredevils’ acquisition of Yuvraj Singh for a record Rs 160 million. Yuvraj has all the abilities to change the fate of a match single handedly with either batting or bowling but in recent times he failed to step up to his ability as he registered average performances. He started his IPL career with Kings XI Punjab then went to Pune Warriors before Royal Challengers paid a hefty amount for his services. However, his stint with RCB didn’t last for long as the Vijay Malya owned franchisee decided to let him go following his exclusion from India’s World Cup team. In the current season, Yuvraj is a part of Delhi Daredevils and the franchise will hope that he can change both his and the team’s luck with strong performance. The irony is that despite not showing a satisfactory performance, Yuvraj’s value kept increasing year after year.

There is a clear sense of maturity and business intent by franchises in selecting their teams, evident in the way player auctions took place earlier this year. With almost all social media platforms set to be awash with IPL content over the next few weeks, and the fact that the Indian national cricket team did unexpectedly well at the recently concluded World Cup, there is no surprise that the real winner of the next IPL will be cricket.

Viewership

The cumulative reach of the IPL increased from 155 million for the 2013 edition to 190 million for the 2014 edition. The TV reach of IPL has been consistently growing at a compound annual growth rate (CAGR) of 10 per cent since the first edition, despite the fact that the IPL’s TV ratings have been consistently falling every year since the first edition suggests the report. The report describes 2014 as a tremendous year for India when it comes to sport and entertainment, driven by the success of the IPL, the country saw a plethora of new sporting leagues, some of which have seen unexpectedly high levels of popularity. The Pro Kabbadi League (PKL) and the Hero Indian Super League (ISL), both of which had their first editions in 2014, saw viewership numbers large enough to rival even the IPL. The PKL garnered viewership of 435 million viewers for its first edition, a shade more than the ISL’s 429 million viewership, while season seven of the IPL garnered close to 552 million viewers, despite the controversies and changes in venue.

Emergence of Digital

In a recent development, the global digital media rights (excluding the US region, which were sold separately to ESPN for an estimated $12.4 million for a three year contract) for the IPL were sold to a Star Group company for a staggering Rs 302 crores for a three year contract. This represents a 50 per cent increase in previous deal value. With the TV broadcasting rights for the IPL due for renewal in a few years, we could be looking at a TV broadcasting deal of record proportions in India. Some food for thought here would be the 83 per cent increase in the annual broadcasting fees for the English Premier League paid by Sky and BT for a league whose viewership has been increasing at a fraction of the growth seen in the IPL.

Understanding The Brand Value

Great sporting brands across the world have been built over several decades of fan following, successful performances, the ability of a team to attract great talent, and continued association with large companies, partners and sponsors. Teams like the New York Yankees, Dallas Cowboys, Manchester United, Chelsea, Real Madrid, Barcelona, Los Angeles Lakers and the like have become much sought after brands by advertisers and represent brand values in the billion dollar range.

In the IPL, brand value is derived from a wider variety of reasons, keeping in mind the Indian viewer’s association preference for vernacular proclivities, cricketing knowledge and celebrity influence. Accordingly, drivers of brand value in the IPL can be categorised under the following broad headings.

Management Strength and On Field Performance

For an advertiser / sponsor, being associated with a team that is consistently performing at the top of the table is a key factor in assessing brand potential. A look at the largest deals in the sponsorship space not only in the IPL, but also internationally, will reveal that teams that are better on field performers garner higher sponsorship values In the IPL, the estimated lead sponsorships (lead chest and limited player promotions) were valued at a 100 per cent premium for a top ranked team over its lower rung peer.

Of course, a team that consistently performs at the top of the table is not the result of a prefixed formula. Team management plays an important role in squad selection, talent acquisition, performance management and administrative support. Clearly, a winning team is the result of a combination of several factors including the strength of the management team.

Marketing Strategy

Based on an analysis, it is estimated that, on average, franchises spend anywhere between 15 and 25 per cent of their revenues towards marketing and promotion. Some teams, like Kolkata Knight Riders, who invested significantly towards brand building in the early part of their IPL existence, have seen fantastic support from sponsors and partners. IPL events, television advertisements, merchandising, in stadium freebies and other such promotional activities driven by the franchise go a long way in garnering exposure and support translating into brand gains. Merchandising in the IPL is presently in a nascent stage, and most franchises are still coming to terms with the best possible way to monetise different streams. The reports suggests that this will be a game changer for franchises that are able to crack this difficult market and identify new monetisation streams by tapping into their existing fan base.

Celebrity Influence and Marquee Players

The presence of key marquee players and celebrity owners in a franchise brings additional popularity to the individual team brands. However, it may be added that cricket is a team game, and no one person can change the fortunes of a badly performing franchise. In addition, while franchise brands may be able to ride on the brand of a celebrity owner or a marquee player, they are also open to the risk of damage in cases where said individual is embroiled in a controversy, even if that controversy is outside of the IPL.

Geographical Location

The geographical location of the franchise determines the population of its support base and is an important factor in assessing the strength of an individual team brand. In general, it is likely that higher density of teams in a particular region of the country will split the fan base and impact the ability of a team to garner support outside of its immediate location. While the intention of the IPL was never to split support on the basis of vernacular lines, this does seem to be the current situation with every team in the current season belonging to a different state of the country. While this makes support for each team more intense, it remains to be seen how support will be impacted once a few more franchises are added to the current format.

Governance and Transparency

Over the last few months, teams or promoters of teams accused of professional misconduct or embroiled in any controversy have had a negative impact on brand perception. Last year, as part of the survey, respondents were asked to rate their preferred IPL franchises on the basis of their perceived brand strength and the quality and transparency of their management teams. The results were interesting, to say the least.

Social Media Engagement

The ability of a franchise to engage fans on a regular basis, particularly during the IPL season, has been crucial in building positive brand perception. Over the last few seasons, dedicated Twitter campaigns and “player battles” organised by the franchises have been seen with the intention of engaging fans regularly and keeping them up to date with the events of the individual teams.

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