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Cricket faces advertising spend cuts
Ashish Sinha in New Delhi | November 10, 2008
Cricket-led advertising on sports channels will take a hit as advertisers are planning to pull back Rs 300-350 crore (Rs 3-3.5 billion), or about 20-24 per cent of their budget for sports, in 2008-09. This is likely to hit the forthcoming India-England one-day series, to be telecast on Neo Cricket, and Champions League, which will be telecast on ESPN & Star Sports, sources say.
Prominent categories that are looking to reduce their cricket budget include some automobile companies, telecom firms, real estate firms and FMCG companies, sources say.
At the beginning of this year, experts had estimated cricket-led advertising on television to generate about Rs 1,500 crore (Rs 15 billion) revenue in 2008-09, up about 30 per cent from 2007-08 due to important cricket fixtures like Indian Premier League and several other international fixtures of the Indian cricket team.
So far, about Rs 900 adverting revenue has been generated by sports channels like Set Max, Neo Cricket, ESPN, Star Sports and Star Cricket, sources say, adding that another Rs 300-350 crore is now under pressure. Media agency sources say only a small percentage of the remaining projected spend may come between November 2008 and March 2009.
According to sources in media planning agencies, several prominent advertisers in automobiles, insurance, beverages, telecom services and retail sectors have directed their media buying firms to be "selective" and "prudent."
"It's less than a month for Champions League to kick off but ESPN has not got its main or associate sponsor. The main reason being detailed negotiations between advertisers and the sports channel on how to get the best returns," says a senior executive of a Gurgaon-based media agency.
"My clients have asked me not to go in for big spending on Champions League. This was not on our radar when cricket-led advertising budgets were sanctioned earlier this year," says a senior executive representing a leading car brand.
A leading telecom company is watching its cricket budget very carefully. "Advertising spends are down by 30 per cent, so while we will like to put money in cricket, the corpus will be much less. There is no choice".
Sources say several key auto and telecom services advertisers are talking to ESPN on a combination deal that includes Champions League as well as other tours in 2009.
ESPN, on its part, maintains that all advertising deals will be finalised in a week or so and it's only a matter of time. Sources say ESPN is waiting for several key advertisers to decide their stand on the India-England one-dayers before entering into the final round of negotiations for Champions League.
A spokesperson of ESPN Software India said, "We are in negotiations right now. We will share the details as soon as things get finalised."
ESPN bagged the telecast and other rights of Champions League Twenty20 tournament from the Board of Control for Cricket in India for the next 10 years for over $900 million recently. A back-of-the-envelope calculation suggest that ESPN has to make more than $90 million from the inaugural Champions League, comprising 15 matches (about $6 million or Rs 28 crore per match), in order to make money from Champions League.
For now, sports channels can only wait and hope for cricket to generate high television ratings so that more money can come for broadcasters.
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