Border tension forces Vivo to pull out of IPL

Border tension forces Vivo to pull out of IPL

MUMBAI: Vivo India, the Chinese mobile phone manufacturer’s local arm, and

BCCI

have decided to part ways for the 2020 edition of

the Indian Premier League

(IPL).

Vivo India

had entered into a contract with

IPL

in 2017 with a winning bid of Rs 2,199 crore for a period of five years and was paying the board an approximate Rs 440 crore per year for the tournament’s title rights.

TOI understands that Vivo India and BCCI have, for now, decided to part ways for the 13th edition and a call on their future participation and resumption of the existing deal will be taken early next year.

There’s relief in BCCI over Vivo’s exit but the board is also worried about getting a replacement at such short notice.

BCCI was caught in the middle of a political storm after Sunday’s

Governing Council

meeting arrived at a decision to retain all their sponsors for the 13th edition, including the Chinese mobile manufacturing giant, despite the ongoing political upheaval surrounding the recent border standoff with China.

On the other hand, BCCI is rattled because Vivo’s exit will mean getting a replacement on board at a time when Covid-19 has left the markets in distress and there’s hardly any time left because the IPL is scheduled to begin in 45 days from now.

TOI understands that BCCI took the call on Monday night to allow Vivo to exit for this year but have left a window open for renegotiations next year, subject to how things pan out between now and 2021. Vivo India is learnt to have amicably agreed to walk out of the deal, despite an “iron-clad” contract, given the negativity that has enveloped the market and the political spectrum.

“It was a tightly drafted contract to protect all parties concerned and the BCCI has done excellently to ensure that there are no legal repercussions to this right now,” sources said.

BCCI says it takes “the general sentiment of the Indian cricket fans in absolute seriousness” and is in the middle of a series of meetings with its stakeholders and the industry in general to find necessary solutions.

In 2016, the mobile-manufacturer had replaced soft-drink giants PepsiCo to enter the title sponsorship space after the latter walked out of a Rs 396-crore deal in October 2015, allowing IPL to earn an approximate 450% premium on the rights value. Ever since Vivo walked into the deal, industry experts cited the transaction as a “highly over-valued one and close to 40% above what should’ve been a realistic figure”.

Vivo’s exit, nevertheless, has the cricketing ecosystem in a tizzy. BCCI and IPL franchises, post the first 10 years of the league, have been contractually bound to share the central pool revenue on a 50:50 basis. Vivo’s Rs 440 crore sponsorship meant that BCCI would earn Rs 220 cr from the deal every year while the remaining Rs 220 crore would be divided among the eight franchises. “That means, each franchise will be taking a hit of approximately Rs 28 crore each because of Vivo’s exit. Then there won’t be any gate revenue from this year’s IPL because it’s a television-only event. So, that’ll be another Rs 3 to 3.5 cr per game, which means around Rs 21 to 24 cr. The franchises will seek compensation from the IPL,” say those tracking developments.

BCCI does acknowledge that franchises will be losing out on revenue – approximately Rs 50 cr per franchise if Vivo and gate money losses are put together – but insists that the franchises are being “penny-wise and pound-foolish” with their perspective.

“If there was no IPL this year, franchises wouldn’t be making any money. But the tournament is still happening, which means they’re still taking home something as against nothing. Plus, it’s not like the BCCI will not be looking at a replacement for Vivo this year,” BCCI sources said.

While the board doesn’t expect to get a replacement at the same value as what Vivo India was paying, there is a line of thought that “50% of that value can be recovered through either a new title sponsor or by way of bringing in multiple (three to four) official title partners”.

An industry executive said, “E-commerce companies and edu-startups will be keenly eyeing this space as the margins drop and windows open. The next 48 hours will help us understand this better”.

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