Traditional heavy spenders on cricket properties Vodafone, car maker Hyundai Motors, Reliance Communications and soft drink major Coca-Cola have decided to stay out of the bidding for the sponsorship of the Indian cricket team with the Board of Control for Cricket in India setting a steep base price to Rs 510 crore for a four-year deal for one of cricket's most coveted sponsorships.
The base price is almost double the Rs 313 crore that Sahara paid for the sponsorship in 2005 and 36 per cent more than the Rs 425 crore that the conglomerate finally paid after the number of matches increased beyond contract stipulations.
The Sahara group is uncertain whether it will rebid, though Bharti Airtel, Hero Honda, sports wear giants Puma and Reebok are planning to consider bidding for the sponsorship.The bid submission deadline is November 24.
Sports management companies also say some new telecom companies have also sounded them out for details of the contract, though this could not be verified.
Vodafone is a heavy spender on Indian Premier League Twenty-20 and World Cup Twenty-20, while Bharti was the title sponsor for Champions League and Coke has been team sponsor in IPL for Knight Riders, among others. Hyundai was also a co-sponsor on the air for IPL Twenty-20 League.
A Bharti Airtel spokesperson declined to comment. Reebok Managing Director Subhinder Singh Prem said: "I will talk to my team and consider bidding for the sponsorship." And a Hero Honda spokesperson merely said: "This is an ongoing process at Hero Honda and we always keep looking for opportunities to further build on our long and fruitful association with sports. However, there is nothing specific new for us to announce."
Under the new deal, which runs from January 1, 2010 to December 31, 2013, the reserve price for each match is Rs 3 crore or around Rs 510 crore for 170 matches (including Twenty20 matches which have been added for the first time, but excluding IPL matches). But sponsors have to pay more if the number of matches goes up. The bidder must also have an annual turnover of over Rs 1,000 crore, which is similar to the previous deals.
In the current contract, BCCI had set the floor price at around Rs 90 lakh per one-day international (ODI) and Rs 1 crore per Test match. "By reserving Rs 3 crore as the base price per match, BCCI has ensured that advertisers will stay away," said Shailendar Singh, managing director, Percept Holdings, which advises large companies on sponsorship.
Media buyers also feel such a steep price is unjustified for the mileage a brand gets. "BCCI may have to lower its base price. Most advertisers are still looking at the tender document," added a top executive from Group M.
Under the deal, sponsors get to inscribe the company logo on the team jersey and have access to the team to take some photographs. The deal is only slightly lower than sponsorships for leading European soccer teams which, however, have a far larger global reach than cricket.
Advertisers agree that the deal is too expensive. Says a senior executive of a soft drinks company: "We could put the same money in advertising in cricket matches and buying sponsorship in each of the IPL teams, which would not cost us more than Rs 30 crore. After all, you can get sponsorship of a team in IPL for Rs 3 crore to Rs 5 crore and get consistent TRPs. Why should anyone waste so much money here?"
"The new bid documents say you have to give a bank guarantee upfront for the entire four years. Earlier it was only for a year. Who will give such a guarantee?" added another executive.
There are others, however, who say the deal could be worthwhile even at the high price tag. Says sports management agency KWAN Managing Director Anirban Das Blah: "It will never be a cheap property for the reach it provides. As the sponsor of the Indian team a brand can do a lot that has not been done in the past."