Sunrisers’ Brand Value Set to See a 15-30% Rise After IPL Triumph
BloombergQuint takes a look at how the top four IPL teams are expected to perform financially in 2016.
advertisement
Leicester City’s English Premier league triumph, Angelique Kerber’s victory over Serena Williams at the Australian Open or Serena’s defeat to Garbine Muguruza in Paris, or the Sunrisers Hyderabad’s Indian Premier League victory - it’s just June and already 2016 is looking like a big year for the underdogs.
But one question that does need to be asked, is if these sporting achievements will translate into financial gains?
The Sunrisers Hyderabad (SRH) brand was valued at $35 million by Duff and Phelps (D&P) in 2015. The valuation and corporate finance advisory firm believe that an IPL win will propel the team into the big leagues, once the rankings for 2016 are out.
BloombergQuint spoke to D&P to find out how the valuations of the teams that finished in the top four positions in the Indian Premier League will change this year.
The Ground Rules
D&P has put together six parameters for arriving at brand values of franchises, keeping in mind viewers preference for “vernacular proclivities, cricketing knowledge and celebrity influence.”
The Six Drivers of IPL Brand Value
- Management strength (translating into on-field performance)
- Marketing strategy
- Celebrity influences
- Geographical location
- Social media influence
- Governance and transparency
Considering all the parameters, here’s how the top four IPL teams are expected to perform from a valuation standpoint in 2016.
1. Sunrisers Hyderabad
The Hyderabad-based team was rank 8/1 underdogs to win this year’s IPL, according to odds offered by reputed UK bookmakers Bet Victor.
But the management’s strategy to invest heavily in a fast bowling quartet, in the batsmen-friendly tournament, paid off. Captain David Warner’s inspirational performance at the top of the batting order also helped.
Despite the on-field heroics, the team did not do well on social media, with just 5.1 million engagements. On the other hand, the Sunrisers received good support for home games, even though there was no local representation in the playing 11 for the majority of the tournament.
The team won $3 million, of which at least 50 percent goes to players, and gave their sponsors maximum exposure by having played the most number of games, thanks to the two qualifiers it had to play to enter the finals.
D&P predicts that the improved performance will spur future revenue expectations, and lead to a 15-30 percent increase in SRH’s brand value to $40-45 million.
2. Royal Challengers Bangalore
D&P valued RCB at $51 million in 2014, and the valuation remained unchanged even in 2015, despite the presence of highly marketable cricketers like Virat Kohli and AB de Villiers.
Apart from the big guns, the team management invested in a blend of foreign and Indian talent, and had local representation in the form of Lokesh Rahul and Stuart Binny. RCB started the tournament as 10/3 odds-on favourites, according to Bet Victor.
RCB played aggressive cricket throughout the tournament, notched up big scores, and kept their fans entertained. With the Kohli-de Villiers duo leading from the front, the Bengaluru-based team finished runner-up, and pocketed around $1.5 million in prize money.
The Royal Challengers also did well on the merchandising front and on social media, with 9.9 million engagements.
D&P estimates that brand RCB will be worth between $58-65 million in 2016, thanks to in large measure due to brand Kohli’s meteoric rise.
3. Kolkata Knight Riders
KKR was the first IPL franchise to report a profit. That too after the very first edition, when they ended sixth out of eight teams. In 2015, KKR topped D&P’s charts for the second straight year, with a valuation of $86 million. The team’s off-field fortunes have been helped in no small measure by co-owner Shah Rukh Khan, who is one of the most marketable men in India.
The Gautam Gambhir-led outfit made it to the playoffs in the 2016 edition. In the social media universe, the team did even better with 16 million engagements, the most for any IPL franchise. The team also has the advantage of representing the cricket crazy city of Kolkata, and their home ground Eden Gardens can accommodate over 65,000 spectators.
However, Harsh Talikoti, an analyst with D&P, feels the valuation will come down in 2016. He cites the falling attendance at KKR’s home games, and the team’s failure to finish in the top two, as some of the factors for the decline.
4. Gujarat Lions
The Gujarat Lions missed out on the chance to make it a fairy tale debut. The Suresh Raina-led team finished the group stages at the top of the table, but failed to make it to the final.
The team made a slow start on the social media space, with only about one million engagements. The team’s marquee players include Dale Steyn, Dwayne Bravo, Brendon McCullum and Ravindra Jadeja.
But the team’s future prospects look uncertain, considering that both the Lions and the Rising Pune Supergiants were inducted into the IPL, to fill the vacuum left by the bans on Chennai Super Kings and Rajasthan Royals.
Harsh Talikoti summed up the conundrum succinctly.
(At The Quint, we question everything. Play an active role in shaping our journalism by becoming a member today.)