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IPL Brand Value Not Impacted – American Appraisal

February 26, 2014 - Mumbai, Maharashtra , India

Following the release of the Mudgal Committee Report on February 10th, 2014, the Indian Premier League (IPL) finds itself once again in the middle of a controversy. In light of this new development, American Appraisal reached out to certain sponsors, advertisers and industry experts to understand if the recent findings and rumors of misappropriation had any impact on their perception of the IPL as a platform to reach out to their customer base. It is important to note that controversies are not new to the IPL and during our recently concluded comprehensive survey on the IPL - summarized in our report “Clearing the fence with brand value” - a significant proportion of respondents had stated that such controversies did not materially affect their decision to affiliate with the IPL.
Interestingly, our discussions with certain respondents revealed that a majority would be tagging a "wait-and-watch" line on their decisions to advertise on an IPL campaign. However, this was not on account of the Mudgal committee findings but mainly on account of the proposed shifting of the IPL location to South Africa. There was a general sense of negative brand impact, but they agreed that performances of the team drove them when selecting possible sponsorship opportunities. As long as CSK and Rajasthan Royals continued playing in the IPL, it would be unlikely that they would reduce franchise sponsorship rates. The main concern for sponsors now is the possible decision of the Supreme Court. In a situation that the Supreme Court’s order is detrimental to some of the teams under scrutiny, it is likely that instead of negotiating lower rates, the sponsors will include a "material adverse impact" clause which will allow them to walk away if SC indicts the franchise.

However, an overwhelming response from the people we spoke to was their continued support for the platform. All respondents agree that in the absence of a sporting event of the magnitude of IPL, sponsorship rates and advertising spot rates will only continue to increase. Highlighting the fact that in the IPL, “India always plays” whereas in some of the ICC tournaments, there is the risk of India crashing out in the early stages, some of the respondents mentioned that IPL is a less risky investment than an ICC tournament.

Another respondent brought attention to the positive developments around cricketing governance such as BCCI’s increased importance in the ICC, as well as settlement of disputes within state cricket boards. It is likely that the Mudgal Committee findings will only improve transparency and corporate governance practices within existing franchises.

In light of the above, we believe that the Mudgal Committee report has not had a material impact on the brand value of individual franchises or on the value of the IPL as a whole.

About American Appraisal

American Appraisal provides valuation and related advisory services for business, financial, legal or tax purposes. American Appraisal provides clients with accurate, reliable valuations for financial and tax reporting, fixed asset and risk management, consulting and compliance. American Appraisal's valuation expertise encompasses all classifications of tangible and intangible assets. 

Source: Business Wire India


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