Cricket: Too Much at Stake for the Corporate?
Cricket as a game, particularly in the Indian sub-continent has glamour, money, popularity and even public emotions involved in it. The national teams have the eyes and ears of millions of cricket enthusiasts upon them. Cashing in on this is a vast economy spawned by cricket, which has grown phenomenally over the years.
Knowledge@Wharton on cricket in India cites statistics on the stupendous growth of the cricket world. International Cricket Council (ICC), the sport's apex governing body, had a deficit of $ 150,000 in 1992. By 1997, it was no longer in the red and had made $ 25,000. It has been on the rise ever since. With 2007 World Cup, ICC was expected to make a profit of $ 239 million (Actual figures not yet available). Its main source of income is the world cup tournaments. The attempts such as ICC Champions Trophy and ICC Super Series have not been much of a success.
India's own BCCI, considered to be the richest cricket association worldwide, has increased its profits from $ 1.11 to $ 7.64 million during 2004-05 and 2005-06. The various cricket governing bodies have their income coming from ticket sales, television broad-casting and sponsorships. Given the huge following of televised cricket in India (200 million in the 2003 World Cup); companies have been willing to spend huge amounts on advertising. Thus, not surprisingly, 85% of the sponsorship for the 2003 World Cup came from Indian companies! India's dominance in the commercial space is evident in the spectator strength, the advertisements, the official global partners for specific events and the sponsorships.
Forbes Magazine's valuation of the cricket boards in 2006 pegs BCCI's worth at $ 1.5 billion, while ICC was at a comparatively lesser figure of $ 200 million. While there are 10 test-playing members of ICC, India contributes more than 70% of revenue to the entire sport. The magazine reports: "Most sponsorships and broadcast rights come from India, and Indian tours make foreign boards rich."
Televised Cricket: The Kerry Packer Effect
Cricket tournaments have generated increasing media attention as one-day internationals have become more established. The credit goes to Kerry Parker, the Australian media tycoon who changed cricket marketing and the experience of watching ODI.
He enhanced the experience of watching one-day cricket by introducing changes such as: -
Commercials between overs
Close-ups and instant replays with ring-side view and appeal
Visibility of players with each team having its own colored uniform
Day and night matches
Technology with cameras and microphones on ground
All these have changed the contours of the game, build up the global audience with a direct bearing on the economics spawned by the game. Like all sports with an international audience, cricket also has undergone a huge transition in a short spate of time. The Parker Legacy is riding on the advent of the growth of cable, satellite TV and the Internet. This is evident from the commercial fortunes of BCCI - the magnitude of advertisements and the amounts involved.
Televised cricket in India alone was estimated a $ 150 million annual advertising market! The BCCI set new records with the sale of global media rights to Nimbus Communication, for all international and domestic crickets to be played in India from 2006 to 2010. In the run-up to the 2007 World Cup, 3 sets of television deals hogged the headlines in newspapers, perhaps more than the results of the game itself! These deals include Zee Telefilms and Sony TV agreements, apart from the Nimbus deal. The much-hyped Nimbus deal was worth $ 612 million for all cricket matches played in India. While Zee Telefilms bagged the broad-cast rights for cricket matches in "offshore' neutral venues (such as Holland, U.S., Malaysia.) for $ 220 million, Sony TV bought the Indian rights for World Cup and the Champions Trophy till 2007 and ESPN-Star Sports for the subsequent tournaments (2007-15).
The growth in cricket broad-casting has a cascading effect. Once the broadcasting channels have the right to telecast the tournament, they can sell the advertising space. Also, the media has a profound effect on the ticket sales and the sponsorship revenue. The expected ticket revenue for the 2007 World Cup was $ 69 million on the assumption of India reaching the finals! (A feat attained in the 2003 World Cup). Despite India's early exit, the Caribbean World Cup sold more than 570,000 tickets and recorded the highest ticketing revenue for a world cup. Also there are ICC/GCC events and tours between the nations, which offer a lot of opportunities for the sale of sponsorship rights including kit, team, hotel, travel and ground.
Exploiting the growth of the media, there are other rights such as score updates, merchandising and the world of the mobile cricket content which includes voting contests, match alerts and audio match analysis.
The merchandising around the game crossed all imagination to even include perfumes, with official limited edition fragrance released prior to World Cup 2007.
All these generate opportunities for sponsorship partner deals.
Full Coffers... What About Performance?
With so much corporate money pouring into cricket, where does performance stand? Ultimately, it is the performance that ensures flow of corporate money. India's early exit from the World Cup 2007 failed to provide the expected eyeball time for the sponsoring Indian companies. Hero Honda motorcycles are not going to be bought in Trinidad, Ireland or Jamaica, because the company is sponsoring the World Cup. They are interested in the Indian viewers who are their potential consumers. The fates of many deals are uncertain, but the recent victory over South Africa brightens the prospect as of now.
Indian cricket fans have raised its good players and given them "star" status. The most noted example is Sachin Tendulkar, a brand in himself. The star players have been able to leverage their iconic status for commercial purposes. The top players have made more money through endorsements than through playing. Now the question arises: Has money changed the motivation and nature of the game? In the first place, players get these opportunities because of their performance. If they do not sustain the performance, the companies would not prefer making them their brand advocates. The world cup debacle prompted Videocon to immediately announce dropping Dhoni from its ads. Similarly, Sansui India which had a 40-day ad campaign with Dravid, decided not to feature him in its new campaign. The company reportedly lost Rs. 6 crores in the Rahul Dravid campaign. So much money at stake!
With all the hype on the revenue, the deals, the sponsorship rights, and indeed the endorsements to individual super star cricketers, the fortunes seem to ride on the back of their performance. The effect of the whole economic cycle will be felt in the corporate world with high stakes in cricket and the advertising media. Whatever the outcome of a match or a series, the effect seems to be momentary. The fans tend to have a short memory; with one or two 'good' matches, they will once again idolize the players - with its consequent effects.
Concluded.
