Guru Gyan
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Guru Gyan

As Vivo Says Goodbye To IPL 2020…

Vivo has quit as the title sponsor of IPL this year, making us wonder what will the impact of this exit will be on IPL, the teams and BCCI?

What Happened?

It’s official! Vivo is not the title sponsor of IPL anymore. A Board of Control for Cricket in India (BCCI) official said that BCCI and Vivo have officially agreed to suspend their partnership for the IPL in 2020. The official said that they have agreed on a one-year moratorium and BCCI will also see if their contract can be extended by one year after 2023.

This move by BCCI comes after it faced criticism from political leaders, organisations and trade unions, following its announcement to continue this year’s IPL tournament with sponsors linked to China.

The Game

When IPL was introduced in 2008, many were hesitant because cricket matches were played for days and weeks and the concept of a match being finished within 3 hours sounded foreign and strange. However, once the game began, the love for the game poured in. Along with love, money poured in as well.

IPL is the cash cow of BCCI and the largest media property from India. According to Duff & Phelps, the brand value of IPL witnessed a 13.5% surge to ₹47,500 crore from ₹41,800 crore last season. These numbers indicate that IPL is not a joke; it is a serious business — a business that makes a lot of money and gives the opportunity to all those who are involved in it to make huge amounts of money as well.

Vivo & IPL

Vivo entered the IPL in 2016 as a short-term sponsor and the firm’s first two-year sponsorship was worth ₹200 crore. The company signed a new deal after the 2018 edition of the T20 league. The deal with Vivo gave a significant boost to the sponsorship revenue of the tournament. As the tournament’s title sponsor, Vivo pays BCCI ₹439 crore annually. The total revenue (broadcast revenue + sponsorship revenue) is distributed between the BCCI and franchises in a 60:40 ratio.

The Impact

If you ask us whether Vivo pulling out its sponsorship from IPL will affect IPL or BCCI, we will tell you this — Yes and No.

According to market projections, the eight franchises collectively earn an approximate sponsorship revenue worth ₹500 crore from their own sponsors and their combined gate revenue is about ₹250 crore. The chief executive of an IPL franchise told The Indian Express that overall sponsorship might decline by 10–15% and also without gate receipts, franchises will lose around ₹20–25 crore each.

Since the IPL is taking place in a foreign country this year, the whole logistics, which includes biosecurity and travel arrangements for overseas players, is going to cost every team a huge amount of money. Also, if BCCI gets less sponsorship amount, it will become highly difficult for it to compensate the franchises.

However, there is another argument that IPL will not be affected by the exit of Vivo. Since most of the people in India are staying inside their homes, IPL viewership is expected to go up this year. When there are more viewers, streaming platforms and broadcast partners charge more for advertising slots. So, it is said that IPL will make revenue this year.

In conclusion, this is just the beginning. After exiting IPL, Vivo has also decided to quit the Pro Kabaddi League (PKL) and the ‘Big Boss’ reality show. So, it is still not clear how much Vivo’s exit will cost the tournament and the franchises but we can clearly expect the India-China tensions to affect more things, from businesses to sports, in the upcoming days.

Head to moneyguru’s Insight section to stay updated on all major financial news updates of the day!

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