IPL 2024: Teams in a tight spot over sponsorships amid funding winter, cut in ad spends

Advertising remains under pressure with many brands slashing their marketing spends.  Despite this, the Indian Premier League's (IPL) franchises have managed to rope in a few sponsors.

"Initially, there was a lukewarm response. But in the last 10 days, we have had a huge response, so much so, that we had to turn down some brands as we did not have deals left. Sponsorship revenue in 2024 is estimated to increase by 10-20 percent," said Punjab Kings CEO Satish Menon.

The team has signed up Dream11 for the front of its team jersey, Kent on the right side, and other sponsors, including Jio, BKT, Astral pipes, Avon cycles and Lava Mobiles. "A few of them got signed recently and most are continuing. More than half of the sponsors have been retained, Menon added.

A couple of associate partnership digital deals are also being signed, said Menon. However, he noted that these are addons and make up only a fraction of jersey sponsorship.

Franchises are busy closing sponsorship deals in the runup to IPL 2024, which begins on March 22. So far, only the schedule for the first two weeks of the IPL has been announced due to the general elections, with polling starting on April 19.

Sponsorship struggle

Raising sponsorship in an election year is a challenge, said team heads, adding that other aspects affected franchise sponsorships this year.

NFTs (non-fungible token), which were a substantial category, are out said Colonel Arvinder Singh, Chief Operating Officer (COO), Gujarat Titans. Singh estimates there will be a 24-25 percent increase in sponsorship this year to Rs 90 crore. The team, which made its debut in 2022, had recorded a 38 percent jump in sponsorship revenue last year.

Sponsorship revenue ranges from Rs 50 crore to Rs 100 crore, depending on the team.

"We don't expect average sponsorship revenues for the teams to jump significantly. There might be a small inflationary adjustment. However, teams that performed well last season and the teams that were able to get good Indian players in the recent auction could get better sponsorship deals and other teams might see some downward adjustments," said Santosh N, managing partner of D&P Advisory, a valuation services provider. "This flattish sort of expectation is largely due to the startup ecosystem still struggling with cash flows and funding. Many large sponsors and advertisers, like Byju's and Paytm, are struggling and may not spend much this season,"

Experts noted that teams cannot always grow at an aggressive rate and that in a difficult year, the IPL continues to resonate as the biggest sponsorship platform in the country.

Long-term deals

Also, this year the inventory for bigger deals has been more than that of smaller ones, which has led to more long-term associations with brands.

"There is a change only in two sponsors. Out of the total 10 sponsorship spots, there are eight renewals. The original eight have done multi-year deals. Even the two new ones are multi-year deals," said Gujarat Titans' Singh. "Dream 11 is the new brand that has come on board, and will be in the front (of the jersey); Lubi Pumps is on the lead side of the trouser. The rest are the same, with Capri Loans on the right chest, BKT on the back, Acko on the leading side of the helmet, Astral Pipes and Simpolo on the non-lead arm, among others."

He said that this year a lot of legacy brands are back in the game. "Look at Tata’s title IPL sponsorship deal. That shows the property (IPL) has something very viable to offer in terms of marketing."

The Tata Group had replaced Vivo as the league's title sponsor when the BCCI (Board of Control for Cricket in India) and the Chinese mobile brand had ended ties following political tensions between India and China in June 2020. The Tatas extended their IPL title sponsorship deal from 2024 to 2028 for Rs 2,500 crore, a  13.7 percent increase over the Rs 2,199 crore that Vivo had paid for the 2018-2022 period.

While there are fewer brands looking to associate with the IPL this year, the value of the sponsorship deals is higher, experts said.

Also, in FY24, brands had the opportunity to market during the Cricket World Cup which accounted for a considerable share of their marketing spends. Many central rights for the IPL as a whole came up this year, including title sponsorship and associate partnerships, which have eaten into the franchise sponsorship. In addition, there are new leagues that have mushroomed, such as the Indian Street Premier League (ISPL), which is trying to drum up brand support.