IPL TV ad rates to go up 50%  ( July '18,2008, Business Standard)

In the wake of a hugely successful first season, the television advertisement rates for the second edition of the Indian Premier League (IPL) are expected to increase by 40 to 50 per cent, say analysts.

The inaugural edition of the Indian cricket board-mooted 20-over tournament had attracted over 20 million viewers, of which 8.2 million were women, they say.

The tournament, in which about $2 billion (over Rs 8,400 crore) has been invested already, generated Rs 300 crore in television advertising revenue in its first season.

According to market experts, negotiations have already started for the next season. "Advertisers are willing to pay a 50 per cent premium for the next season," says Yasmin Shah of Alchemy Share and Stock Brokers, a Mumbai-based research firm.

Retail chains, direct-to-home (DTH) service providers and infrastructure companies are expected to be the main advertisers, the market sources say.

FMCG companies like ITC, Mother Dairy and Nestle, insurance companies, Pizza Hut and Cipla were the leading advertisers during the first edition of the tournament, which concluded on June 1.

The increase in number of viewers had also pushed the television advertisement rates during the first season, which featured eight star-studded teams.

The initial spot sales were sold at Rs 2,00,000 for 10 seconds but it was hiked to Rs 3,00,000 to Rs 3,50,000 for semi-finals and for finals it was sold between Rs 7,00,000 to Rs 10,00,000.

It is also learnt that from the next season onwards the franchisees will have one more stream to generate revenues — from the games' rights. These rights have not been sold as yet. Any revenue generated from the sale of such rights will accrue to the central pool and will be shared equally among the franchisees.

The market experts said the franchise amount collected by the Board of Control for Cricket in India (BCCI) is expected to be around $724 million (over 290 crore), with each of the clubs being sold for $67 to $112 million, depending on the city they represent.

Sponsorship rates of the teams are also expected to increase 30 to 40 per cent. Kolkata Knight Riders (KKR), owned by Bollywood actor Shah Rukh Khan's Red Chillies Entertainment, has eight sponsors and the combined revenue from these was around Rs 350 million.

This is expected to increase by 30 to 40 per cent in the coming leagues. The actor bought the team for $75 million.

Aircel, the lead sponsor for India Cements-owned Chennai Super Kings, paid Rs 150 million for sponsorships. This includes cap, leading arm, shirt center and six in–stadia boards out of the total 72 boards.

N Srinivasan, vice-chairman and managing director, India Cements, recently had said that the company was convinced that the franchise has gained value and brand recognition throughout the country through the IPL.

The company has achieved a level of recognition in the last six months that none of its competitors in the cement industry has received.