Pepsi not interested in becoming prime IPL sponsor anymore

Amid suspension of two IPL teams - Chennai Super Kings (CSK) and Rajasthan Royals (RR) – for two years, the corporate India and PepsiCo might not be interested in any Indian Premier League (IPL) related events or projects.

PepsiCo might not bid again for title sponsorship of the IPL after its five-year contract ends in 2017, three industry insiders told the Economic Times, a day after a Supreme Court panel called for the suspension.

Moreover, top companies will remain cautious if the scandal-ridden ILP decides to auction two new teams to replace suspended teams - CSK and RR.

This could mean the Board of Control for Cricket in India (BCCI) may not get high valuations as it did when the Pune and Kochi teams were sold, a fresh auction may offer some a chance to buy teams and players at lower prices.

A Pepsi executive told ET: “There has been too much controversy in the IPL and the internal thought process is that the company doesn't want to re-bid for the title sponsorship."

He added: "Title sponsorship is a direct association with the brand image, which directly risks getting impacted by controversy."

PepsiCo won the right to attach its name to the tournament with a 396 crore bid for a five-year period that started 2013, the very year in which the spot fixing scandal broke with the arrest of three cricketers.

Pepsi's bid was almost twice what the previous sponsor, real estate firm DLF, had paid the BCCI for the 2008-12 term.

Meanwhile, the Indian cricket board is learnt to be considering running the two franchises by itself. It is also considering the option of asking Kochi team to make a comeback, which will help it save Rs 550 crore.

Earlier, a court-appointed arbitrator has asked the BCCI to pay team Kochi a compensation of Rs 550 crore for terminating the franchise agreement in September 2011.

"The risk around IPL will be discounted in the bids and eventual prices could be lower than 2008 levels," said Venugopal Dhoot, chairman of Videocon.

Dhoot sees this as a great opportunity to buy a team, given the possibility of much lower prices and the fact that top players from the suspended teams such as MS Dhoni, Suresh Raina, R Ashwin, Dwayne Bravo, Brendon McCullum, Ajinkya Rahane and Steve Smith could be up for grabs. Dhoot said he will be more cautious now while assessing and bidding.

The latest IPL franchise, Hyderabad, was bought by the Sun Group for Rs 85 crore a year in 2012, which was half the Rs 170 crore a year that the Sahara Group bid to get the Pune franchise in 2010. The cheapest IPL team, Rajasthan Royals, was originally auctioned in 2008 for about Rs 26.8 crore a year and the most expensive at that time was Mumbai Indians for Rs 44.1 crore a year.

ET spoke to the CEO of a bank, the owner of a large retail chain, and spokespersons for an auto major, a mining firm and a telecom major to assess the prospects of a possible fresh team auction. All said they would not be bidding even though most of them had shown interest in IPL over the past few years.

While some said that it is not their business, others pointed out that even with a possible discount, it is still a very expensive proposition.

"There are too many other sports that have come up in recent times where investments are much lower," said the CEO of a bank.

An executive at the auto major said the company has disassociated itself from sponsorship during IPL and is only an on-air advertiser during the tournament. A spokesperson for Hero MotoCorp said the company does not have any plans to buy an IPL team.

(Image: Reuters)