Tata Group bags two-year IPL sponsorship rights for Rs 670 cr
VIVO will be paying almost 454 Crores to the BCCI over and above TATA GROUP’s payments of 670 Crores as Transfer Fee.
The Indian Premier League's (IPL) contract with Vivo, a Chinese smartphone company has been terminated with Tata Group, one of India's largest corporations, replacing the former as the tournament's official sponsor.
The Board of Control for Cricket in India (BCCI) decided to replace Vivo with Tata during the IPL's Governing Council meeting on Tuesday, January 11. The BCCI officials privy to the developments confirmed the news themselves.
At the meeting, the Governing Council agreed to Tata's plan to transfer ownership rights from the Chinese smartphone firm. Vivo's sponsorship deal with the league is up for renewal in a few years and Tata will continue to be the league's primary sponsor until then.
"Yes, Tata group is coming in as IPL title sponsor," IPL chairman Brijesh Patel confirmed the development to PTI.
Vivo’s sponsorship acquisition and exit
Vivo collaborated with the BCCI and joined the league in 2015. The company got to retain the IPL title sponsorship rights in June 2017. It purchased the IPL title sponsorship for Rs 2,199 crore over a five-year period, that is, from 2018-2022. The company’s deal with the BCCI was was worth Rs 440 crore per year.
The Chinese mobile manufacturer, however, pulled out as the T20 league’s title sponsors for the 2020 season due to the rising diplomatic tensions between India and China after the Indian and Chinese Army forces squared off in a combat in the Galwan Valley in 2020. The decision to part ways was mutual and on a temporary basis.
Consequently, the 13th edition of the tournament was sponsored by the India-based fantasy gaming platform, Dream11.
Back then, the BCCI had treated the gap as a moratorium period in hopes of signing a fresh three-year deal with the company if the relations between the two nations improved, that is, from 2021-23.
“We (BCCI and Vivo) sat after the governing council meeting and agreed on a one-year moratorium. We will also see if their contract can be extended by one year after 2023. This issue will be settled amicably,” BCCI had confirmed in 2020.
Vivo did return as the sponsors of the tournament for the 2021 season. As per reports, however, as it stands, the plan of a three-year deal couldn’t come to fruition with the company transferring the sponsorship rights to the Indian conglomerate Tata Group which has a market value of around $242 billion.
The move to quit for good by the Chinese company, after it received backlash amid the tensions between India and China, was approved by the BCCI when the company had started looking for suitable bidders when it was back as the sponsorship title-holders in 2021.
"This was supposed to happen sooner or later as Vivo's presence was bringing bad publicity for both the league as well as the company. With negative sentiment around Chinese products, the company had to pull out of the sponsorship with one season left for the deal to be completed," said a BCCI source.
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Vivo IPL rechristened as TATA IPL
After the one-year concession given to Vivo since it lost a season of sponsorship in 2020, Tata will get to retain the IPL sponsorship rights for one more year, i.e., 2023. The Tata Group is expected to spend roughly Rs 670 crore for two years of championship sponsorship, according to reputable sources. This means that they will remain the sponsorship title for at least until the 2023 season of the tournament.
Since the Tata Group has now bought the sponsorship rights of the cash-rich league, the tournament will now be known as TATA IPL.
"This is indeed a momentous occasion for the BCCI IPL as Tata Group is the epitome of global Indian enterprise with an over 100 year old legacy and operations in more than 100 countries across six continents," BCCI Secretary Jay Shah was quoted as saying in a media release.
BCCI and its profit margins as the outcome of the sponsorship change
The BCCI will be making a staggering profit as a result of this sponsorship transfer. While Tata Group will be paying around Rs 670 crores for the ownership, Rs 335 crore per year. The Rights Charge will be Rs 301 crore, with an extra Rs 34 crore for the incremental fee (for increase of 14 games).
"The BCCI like the Tata Group is keen to promote the spirit of cricket across international borders, and the growing popularity of the IPL as a global sporting franchise bears testimony to the BCCI's efforts," Shah said.
"We are truly happy that India's largest and most trusted business groups has believed in the IPL growth story and together with the Tata Group, we will look to take Indian cricket and the IPL forward to greater heights," he further added.
On the other hand, Vivo would pay a total of roughly over Rs 454 crore for contract cancellation, which amounts to a windfall earning of Rs 1,124 crore in seasons 2022 and 2023 for BCCI. Since, Vivo chose to end the contract, it would be responsible for the difference in both years — Rs 183 crore in 2022 and Rs 211 crore in 2023. Furthermore, Vivo would be required to pay a 6 per cent assignment fee for both years, totaling Rs 29 crore in 2022 and Rs 31 crore in 2023.
As per reliable sources, the national cricket governing body would be minting Rs 547 crore in 2022 and Rs 577 crore in 2023.
Vivo had committed to pay Rs 996 crore over two years (2022 and 2023) for championship sponsorship, including Rs 484 crore in 2022 and Rs 512 crore the following year.
Speaking of earnings and profits, the math is that the BCCI keeps half of the money from the inflow and divides the remainder among the IPL franchises, which have grown to ten this year with the inclusion of two new franchises, the Sanjiv Goenka-led RPSG group owned Lucknow franchise, and CVC Capital acquired Ahmedabad franchise. The number of matches have also shot up from 60 to 74 as a result.
Moreover, apart from paying up to 10-20 per cent of the other sponsorship earnings, the BCCI splits the IPL broadcast revenue 50:50 with the franchises.
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