Despite credibility dent, IPL is on growth path
Leader, M&E, EY India
Farokh Balsara, leader, Media & Entertainment (M&E) sector, at Ernst & Young (EY), was one of the founding members of FICCI-Frames, the M&E sector’s annual jamboree. He also authored the bell-weather FICCI-Frames report for five years. BW Businessworld spoke to Balsara on IPL and its future.
IPL is one of the richest cricketing leagues, and is one of the most valued sport leagues in the world. How do you see it growing from here for all stakeholders over a period of 5-10 years?
It has been a win-win for all concerned, be it the BCCI or the government, with the increased service tax. And because IPL is a winner, it has increased the league’s value too. BCCI’s revenues increased from Rs 662 crore in 2009 to Rs 1,000 crore in 2014. In fact, all stakeholders will see an annual growth of 10 per cent at the very least over the next 5-10 years. As India’s economy grows, we will become a sporting nation. IPL has wonderfully grown that universe and also tapped into the young, female audience in a big way, with its mix of sports and entertainment.
Of the diversified revenue streams (ads, merchandise, digital, gate money and, of course, broadcast) which one has the greatest potential for growth over the next decade?
The broadcast rights should see an increase of 10 per cent, but it is the digital rights which will see a manifold increase over the next five years. Look how IPL has contributed to Hotstar, where it has been one of the drivers within Star’s sports portfolio. Ticket sales though will be tighter because of the added burden of service tax. Some of the stadiums this season have been relatively empty. Teams like Kolkata Knight Riders and Sunrisers Hyderabad have seen a 7-10 per cent increase in their revenues; teams which do well will grow at 10-12 per cent.
Have all the controversies and troubles the IPL has faced over the years dented its overall valuation?
It has definitely impacted the property. The credibility factor is still not there. If you talk to a young person on the street, he does not believe IPL is clean, though he does engage with it. Things have improved this year, with a tighter contest, new teams and players; though building loyalty for the new teams will also take time. It will take some time for credibility to come back but BCCI has been on the right track and right direction.
While digital viewership has grown, the ad-to-pay ratio is still 60:40. Do you see this scenario changing soon?
I don’t agree with the 60:40 ratio for the IPL. Digital viewership has grown but IPL is still largely ad funded. I think the ratio is closer to 75:25 and in the next five years it will move to 55:45.
If IPL were to shift out on India, how would it impact the business?
While it would be less hassle free for the teams, the power of the league to fill stadiums and its strong fan base would be seriously impacted. What IPL could look at is a different window rather than in the peak of summer.