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Perception is reality. So said Lee Atwater, the guitar-playing American political strategist responsible for the Presidential triumph of George HW Bush in 1988. But try and apply that phrase to the business model of Indian cricket, and you’ll end up with mud on your face (sorry, Queen devotees).
How else do you explain the Rs.2,199 crore shelled out by Vivo , the Chinese smartphone brand, for the title rights of the Indian Premier League (IPL) from 2018 to 2022?
Here we have the Board of Control for Cricket in India (BCCI), embroiled in a massive legal wrangle that threatens to stir and shake the very core of its systems of governance. Add to that the ongoing tussle between the old guard and the Supreme Court–appointed Committee of Administrators, and the just-concluded bout between Virat Kohli and Anil Kumble , and you have a recipe for disaster. But, as is its wont, the BCCI is actually laughing its way to the bank.
To understand the sheer value of the deal, one has to go back to 2008, the year the IPL was born. When Delhi Land and Finance Limited (DLF), the country’s largest commercial real-estate developer, came on board as the title sponsor for Rs.200 crore (2008-2012), it was said to have broken the glass ceiling. Five years later, Pepsi almost doubled the BCCI’s earnings by agreeing to pay Rs.396.8 crore for the next cycle (2013-2017). In October 2015, just three years into the deal, the beverage giant pulled the plug on the partnership because of governance issues plaguing the BCCI following the 2013 spot-fixing and betting scandal.
That’s when Vivo stepped in to spare the BCCI’s blushes, further enhancing its coffers by nearly Rs.200 crore for the remaining two years of the cycle. Last week, the same company got the BCCI to renew the contract with a hitherto unimaginable 554% rise in sponsorship money. Vivo was challenged by another Chinese smartphone brand, Oppo, which reportedly quoted Rs.1,430 crore. Incidentally, Oppo had, in March this year, won the sponsorship rights of the Indian cricket teams for Rs.1,079 crore for five years. This gives Oppo the opportunity to display its logo on the jerseys and practice travel kits of the Indian men’s, women’s, Under-19 and ‘A’ teams. Oh, and yes, Vivo had lost out to Oppo in that bout as it quoted only Rs.768 crore. Things have more or less evened out following Vivo’s IPL ‘victory’.
There are several ways of looking at this Chinese invasion.
I see a direct correlation between the boom in the smartphone segment and the aspiring ‘Bharat’ reflected in the the rising popularity and reach of cricket. ~ Basabdatta Chowdhury, COO, Starcom India
Incredibly, both Vivo and Oppo are owned by the same company, BBK Electronics, whose 56-year-old founder and chairman Duan Yongping famously paid $620,100 for a lunch date with Warren Buffett in 2006. Yongping, a reclusive billionaire who also designed the world’s best VCD and DVD players in the 2000s, masterminded Apple’s fall from grace in China. It’s a different matter, though, that he is a huge fan of Apple and continues to own a large number of its shares.
Today, India has nearly 850 million (85 crore) cellphone subscribers. The number of cellphones collectively owned by the people in our country is about 1.2 billion (120 crore), which is second only to China’s 1.4 billion (140 crore). This translates to 91 connections per 100 citizens. The corresponding number for China is 97.
According to Harish Bijoor, the perennial rise in the number of smartphone users in India, coupled with the age-old love for cricket, has prompted Vivo to spend such a huge sum of money. “In a way, you can say the money they are paying is outrageous but please don’t forget that Vivo is a global brand. Companies do a lot of homework before entering into such deals. Also, Vivo will be known synonymously with the IPL for five long years. Yes, they are paying the BCCI nearly Rs.1.2 crore a day (Rs.2,199 crore for 1,825 days) but I think they will recover that money,” says Bijoor, who owns and manages Harish Bijoor Consults, a private-label consulting firm that specialises in brand and business strategy with offices in Bangalore, Hong Kong, London and Dubai. “Where else will you get so many eyeballs? IPL 10 alone recorded more than a billion impressions,” he adds.
Bijoor is right. With 1.25 billion impressions, the tenth season of the IPL got witnessed a 22.5% ris e from a year ago. In 2016, the tournament had clocked 1.02 billion impressions for the 60 matches watched across five channels — Sony Max , Sony Six , Sony Six HD , Sony ESPN and Sony ESPN HD — according to data released by television viewership measurement agency Broadcast Audience Research Council (BARC) India.
As for the ‘perception vs reality’ debate vis-à-vis the BCCI, Bijoor lets out a hearty laugh. “Cricket is a crazy game. And the admirers of cricket are a crazy set of people. The craze for cricket is quite undying. So, it doesn't really matter if the IPL or the BCCI is embroiled in one controversy after another. These things don’t affect viewership at all. As a property, the IPL is looked forward to year after year irrespective of the controversies. In any case, I believe the IPL is not cricket at all. It’s ‘cricketainment’ and, therefore, more the controversy the better [for the business of cricket],” he adds.
Ashish Bhasin, Chairman & CEO (South Asia), Dentsu Aegis Network, a multinational media and digital marketing communications company headquartered in London, has another take on the Vivo-Oppo phenomenon. “All the bidders this year were smartphone-makers,” he says. Intex Technologies, whose tryst with the IPL lasted two years through its franchise Gujarat Lions, also reportedly purchased the bid document but pulled out of the race. “Cellphones are used by people across age-groups. So, Vivo’s bid is a reflection of the same. Also, please remember that the IPL has, over the past 10 years, over-delivered. Naturally, brands consider it a national platform. Also, with more and more women watching the IPL, brands get to reach out to the whole family, and not just the male members as was the case, say, two decades ago. I see no reason why the IPL’s value won’t grow of the over next five years and beyond,” he adds.
Companies do a lot of homework before entering into such deals. Also, Vivo will be known synonymously with the IPL for five long years. Yes, they are paying the BCCI nearly Rs.1.2 crore a day (Rs.2,199 crore for 1,825 days) but I think they will recover that money. ~ Harish Bijoor, brand consultant
Basabdatta Chowdhury, who is COO at Starcom India, part of the iconic French PR firm Publicis Groupe, takes us back to the 1990s when the ‘cola wars’ dominated the cricket scene. There was ‘nothing official about it’ then, you see. “We saw Pepsi and Coke repeatedly fight it out. Then, it was the turn of consumer electronic giants like LG and Samsung in the 2000s. Soon, telecom operators like Vodafone, Airtel and Idea vied for space. With the country witnessing a surge in the number of mobile subscriptions, it’s now the turn of smartphones. I see a direct correlation between the boom in the smartphone segment and the aspiring ‘Bharat’ reflected in the rising popularity and reach of cricket,” she says.
Ms. Chowdhury has a valid point. In the 1980s and 1990s, cricketers came from Tier-1 cities like Mumbai, Delhi, Chennai, Bangalore and Hyderabad. Then, thanks to the BCCI’s foresight and vision, we got to see the Dhonis, Rainas, Pathans and Sreesanths break into the national team. Today, it’s anything but a surprise when you see a small-town lad or lass make it big in the IPL or, for that matter, at the international level. Just like the aforementioned consumer and durable products made their way into the remotest parts of the country, the smartphones are 4G-ing and WiFi-ing their way into the hamlets today. And so has cricket.
CVL Srinivas, CEO (South Asia), GroupM, the world’s largest advertising media company headquartered in New York City, has this to say, “I think too much is being read into the so-called ‘Chinese invasion’ into cricket. The sport is obviously high-profile in India and has some of the biggest brands across various sectors, including the colas, real estate, telecommunication companies as well as e-commerce giants supporting it through sponsorships. It so happens that mobile handsets are seeing renewed competitive activity and so these brands are dominating sponsorships at the moment. Cricket is a pan-India sport and continues to deliver to audiences across the board.”
Cricket isn't the only sport where Vivo is making waves. Even FIFA, the governing body of football, and the ProKabaddi League has managed to get Vivo on board. | AFP
Cricket isn't the only sport where Vivo is making waves. Even FIFA, the governing body of football, and the ProKabaddi League has managed to get Vivo on board. The smartphone-maker will pay nearly €70 million a year to sponsor tournaments run by FIFA, up until the 2022 World Cup in Qatar, says a report in The Financial Times . The value of the six-year deal is reported to be in the range of €400 million for six years. It has also paid Star Sports , which owns the ProKabaddi League, a whopping 300 crore for five years.
For the record, the cheapest smartphone sold by Vivo in India is the Y21L model that costs Rs.7,500. And the costliest model on offer is the V5Plus that commands a price of Rs.26,000. Oppo’s Neo 7 and A37 models cost Rs.9,000 and Rs.10,000 respectively. Its high-end model for the Indian market is the F3 Plus which costs Rs.28,000. These phones are clearly more affordable than an Apple iPhone 6s or, for that matter, a Samsung Galaxy S8, both of which will leave a big hole in your pocket. Retailers say that Vivo and Oppo “take care” of their dealers by sponsoring shining boards for their shops. “If you purchase 50 handsets from Vivo or Oppo, you are sure to get 3% ‘sale-in’ commission just for displaying their products in your shop. The ‘sale-out’ commission is 10-11% on every handset sold. A Samsung will never give a retailer that kind of incentive,” says an industry insider.
According to International Data Corporation India, the world’s premier provider of market intelligence, Chinese smartphone brands together command more than 51% of the market share in India. Vivo and Oppo account for nearly half of that. Mind you, both companies are less than five years old in India. Their dual foray into cricket only means that their brand positioning is set to improve. The BCCI is certainly not complaining. Perception can go take a walk.
(The author has not worked with Vivo, Oppo or the Indian Premier League)
