Has IPL lost its appeal among prospective startup sponsors? Exploring what the numbers say
The Indian Premier League (IPL) is here, back in its complete glory. From the heroics of Rinku Singh to MS Dhoni’s last ball sixes, we have seen everything and much more than that already as we approach the halfway mark of the tournament. There is a reason why the IPL is the biggest cricket league in the world, as well as one of the biggest sports leagues.
It isn’t surprising that the IPL's recent media rights auction drew massive figures. The same for the 2023-27 seasons were sold for ₹48,390 crore, which included digital rights won by Viacom for ₹20,500 crore. This was three times the sum that The Walt Disney-Star had paid at Rs 16,347 crore in 2017, making it the second most valued sporting event after the National Football League (NFL).
A look at IPL's sponsorships to explore its appeal in current market
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Beyond the media rights, IPL has the backing of the biggest companies from not just India but from across the world as sponsors, further adding to its riches. According to various reports, the premier franchise T20 tournament of the world made upwards of ₹800 crore from sponsorships, just in 2022. This includes a whopping ₹335 crore deal with title sponsors, Tata.
In recent years, a major chunk of the sponsorship deals has come from startups. Just in 2022, about 60 came onboard the IPL express as official on-ground partners, streaming partners, and team sponsors.
Official broadcaster Star Sports had the backing of eight startup sponsors. Additionally, more than 40 backed various teams, some of which were financing several franchises. While Dream11, Tata Neu, and Byju's are co-presenting sponsors, associate sponsors include startups like CRED, PhonePe, Spotify, Swiggy Instamart, and Meesho.
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But is everything going as smoothly as it seems as far as these startup sponsors are concerned? Where the 2022 IPL season was a festival for startups, the 2023 season has so proven to be a different story. Startups like Meesho and Cars24 are no longer sponsoring the tournament this year, while firms like Byju's, Unacademy, PhonePe, Amazon Prime, Pristyn Care, Zepto, Niyo, and Spotify have also pulled away from the lucrative sponsorship deals.
According to reports, the number of startups taking part in IPL 2023 as partners or sponsors is down around 35% year-on-year (YoY). So, what is the reason behind startups suddenly running away from the IPL when it is getting more and more richer with each passing year?
The first and most obvious answer is the COVID-19 pandemic. During the past two years, the tournament was heavily impacted due to the unfortunate tragedy. Further dampening the firms' enthusiasm for IPL sponsorship and advertising may have been the recent spike in cases in India and the appearance of new strains.
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Adding to that, governments all throughout the world implemented anti-recession measures after the public equities markets crashed in early 2022 under pressure from Russia's invasion of Ukraine. These actions included raising interest rates, making debt more expensive and depleting liquidity from both the public and private equity markets as a result.
The global economic slowdowns and the concerns of the impending recession have certainly added to the dent to the prospects of startups in India. The nation has seen a significant funding winter set in the last year, with venture funding into Indian startups dropping from $35.5 billion in 2021 to $23.9 billion in 2022, according to reported data.
Furthermore, the economic downturn in startups has been more apparent due to large-scale layoffs in the past 12 months. So far, 88 businesses, including unicorns like BYJU'S, Chargebee, Cars24, Dunzo, LEAD, Ola, OYO, Meesho, MPL, LivSpace Innovaccer, Udaan, Unacademy, and Vedantu, have laid off over 25,000 people, including as many as 6,248 job cuts in 2023 alone.
It makes sense that Indian tech startups would desire the enormous visibility that comes with the IPL. The drop in participation in 2023, however, demonstrates how priorities have changed.
Nevertheless, the 2023 season has attracted a wide range of sponsors and partners despite the general slowdown, building on the success of earlier seasons. The league has been successful in developing a brand image that appeals to a wide spectrum of enterprises, including both global firms and small local businesses.
It is obvious that the IPL offers businesses a successful platform to connect with a sizable audience and promote their brands. With more sponsors and partners willing to be connected with the top T20 cricket league in the globe, the success is anticipated to continue in the years to come.