If Pepsi exits, IPL sponsorship pricing may see up to 30% drop
The title sponsor for IPL, PepsiCo, sent a notice to the BCCI last week expressing its interest to terminate the association with the league. The decision by Pepsi also gives way to other sponsors to introspect their association and could also result in them exiting too
PepsiCo recently threatened to pull the rug under the feet of BCCI by exiting from one of its key tournaments the Indian Premier League (IPL). The title sponsor for IPL, PepsiCo, sent a notice to the BCCI last week expressing its interest to terminate the association with the league. The five-year contract was due to expire in 2017, but Pepsi in its notice reportedly cited the issue of IPL bringing disrepute to the game, and hence wanted out from the contract. While the BCCI has tried to play down any rift between the two, a joint statement on Saturday said that they were engaged in amicable discussions and working towards solutions in the interests of the league.
While the IPL has come under threats many times for spot fixing scandals, this situation, it seems, has now turned into a nightmare for the BCCI. The decision by Pepsi also gives way to other sponsors to introspect their association and could also result in them exiting too. As revenues are expected to take a hit, this could pose to be the worst situation for the sports body. Pepsi had signed the five-year deal for Rs. 396 crore. This would equal to Rs.79.2 crore per year, and with two years still remaining on the contract it would mean a Rs. 158.4 crore loss for the sporting body. Not to mention the other brand sponsors that could decide to take a similar decision.
However, the BCCI could look out for a replacement for the title sponsor for the remaining two years, which would offset this loss. If this happens, the prices of the title sponsorship of the IPL could take a major hit. According to senior media planners, the pricing of IPL could see as much as 30 per cent drop. “The pricing of title sponsorship IPL will decline by as much as 30 per cent, mainly due to a couple of reasons. Apart from the taint of the IPL, one of the other reasons is the next brand will probably have a shorter duration of the contract. Secondly it will be hard to build up its association with the league in two years,” said a media planner. Similarly according a media report senior media planners were reported saying that they would expect to see a 25-30 per cent decline in the title sponsorship rights. If the issue regarding IPL is not resolved soon there are also fears that it might not only affect the pricing of the title sponsorship but also other sponsorship including team sponsorship and even TV ad spots.
If Pepsi, however, does exit the title sponsorship deal for the IPL there could be a few takers lined up already. According to media reports brands such as Paytm and Snapdeal could look at taking the title sponsorship rights if the cola giant is to exit. Apart from this, it could also include any other ecommerce company as this would look at this as an opportunity to get the much needed eyeballs in a short span of time and at a cheaper investment too.
With the new BCCI Chief, Shankar Manohar, coming into the organization, a lot of work needs to be done in order to clean up the image of the IPL and the BCCI soon.For more updates, be socially connected with us on
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