Professional Documents
Culture Documents
2017
The annual report on the Indian Premier League’s brands
May 2017
Foreword Contents
From the 2009 estimate of US$2 billion, the IPL’s
value doubled in just one year, mostly thanks to the Foreword 2
tournament’s huge success in the initial years as
well as the addition of two extra franchises, Pune Definitions 4
and Kochi. The period between 2010 and 2012 saw
Methodology 6
a significant drop in value as corruption and
governance scandals engulfed the competition, Executive Summary 8
both Pune and Kochi were disbanded and two more
teams, Chennai and Rajasthan, came under the Understand Your Brand’s Value 14
microscope for malpractices by the ownership.
Sponsor and Sponsor Credentials 15
Ajimon Francis, Savio D’Souza,
Managing Director, Associate Director, In 2011, a new governing team was brought into the
Sports Club Services 16
Brand Finance India Brand Finance IPL with a clear agenda: for the game and the event
to take centre stage. They brought in discipline, cut Sponsor Services 17
Welcome to the annual Brand Finance IPL report. down the frills, and consequently the event gradually
Since 2009, Brand Finance has calculated both the gained ground until 2015. After a marginal dip in How We Can Help 18
business value of the Indian Premier League system 2016, largely due to external factors like the drought
and the brand values of each individual franchise in Maharashtra, changes of venues, and viewership Contact Details 19
team, providing a deep understanding of the fatigue post world cup, the value of the IPL System
opportunities and challenges facing the richest goes up again in 2017.
domestic T20 competition in the world.
Understanding the value of brands and branded
With its glitz, glamour, and razzmatazz, the IPL is an businesses is key. As with any asset, without
inspiration to similar competitions around the globe. knowing the precise, financial value, how can you
While there were doubts over the IPL’s sustainability know if you are maximising your returns? If you are
when it began in 2008, the competition has proved negotiating sponsorship of your brand, how do you
a massive hit and is now leading the world of cricket know what is a fair fee? As a sponsor, how do you
towards a bold vision of the future. The huge know which organisations are worth associating
salaries, massive stadium attendances, and litany your brand with? How do you best determine return
of global superstars has made the IPL unrivalled in on investment? Even players should take note. Few
India and beyond. Despite criticisms of the way it will be as commercially successful as MS Dhoni,
commercialized the sport, the determination of the but image rights can be very lucrative and form a
IPL’s founders and current leadership to bring about detailed part of contract negotiations. If you are
a tournament grander than others, probably saved intending to license your personal brand, how can
Indian cricket from the growing competition of other you know the correct price?
disciplines.
Brand Finance has conducted hundreds of brand
But the past ten years were no bed of roses. The and branded-business valuations to help answer
brand had to face court verdicts, team bans, stop- these questions. We have worked with companies
gap new franchises, and last-minute venue changes. of all shapes and sizes, from blue-chip internationals
The flexibility of the IPL ecosystem to evade negative such as Vodafone and Shell, to cricket associations
consequences of those crises and the tournament’s and other sports franchises. Whether you are an
continued appeal among all social groups and ages owner, marketer, director, sponsor, player or a fan,
demonstrate that the IPL brand has stood its test of we hope you enjoy the Brand Finance IPL 2017 and
time. come away with a better understanding of why
brands matter and what they can do for you.
2. Brand Finance Global
Australia
Airlines
IPL May500
30
2017
100
30
February
March
February
2016
2016
2015 Brand Finance IPL May 2017 3.
Definitions
Effect of a Brand on Stakeholders
Definitions
E.g. + Enterprise Value – the value of the
RCB World entire enterprise, made up of
Directors
Potential Middle
‘Branded
‘Branded multiple branded businesses Customers Managers
Enterprise’
Enterprise’
Existing All Other
‘Branded
‘Branded + Branded Business Value – the Customers Employees
Business’ E.g.
Business’ RCB value of a single branded business
operating under the subject brand
‘Brand’
Contribution’ Influencers
E.g.
+ Brand Contribution– The total e.g. Media Brand Production
A brand should be viewed in the context of the The brand values contained in our league tables In the very broadest sense, a brand is the focus Brand Strength is the part of our analysis most
business in which it operates. For this reason are those of the potentially transferable brand for all the expectations and opinions held by directly and easily influenced by those
Brand Finance always conducts a Branded asset only, but for marketers and managers customers, staff and other stakeholders about an responsible for marketing and brand
Business Valuation as part of any brand valuation. alike, an assessment of overall brand contribution organisation and its products and services. management. In order to determine the strength
Where a company has a purely mono-branded to a business provides powerful insights to help However, when looking at brands as business of a brand we have developed the Brand
architecture, the business value is the same as optimise performance. assets that can be bought, sold and licensed, a Strength Index (BSI). We analyse marketing
the overall company value or ‘enterprise value’. more technical definition is required. investment, brand equity (the goodwill
Brand Contribution represents the overall uplift accumulated with customers, staff and other
In the more usual situation where a company in shareholder value that the business derives Brand Finance helped to craft the internationally stakeholders) and finally the impact of those on
owns multiple brands, business value refers to from owning the brand rather than operating a recognised standard on Brand Valuation, ISO business performance.
the value of the assets and revenue stream of the generic brand. 10668. That defines a brand as “a marketing-
business line attached to that brand specifically. related intangible asset including, but not limited Following this analysis, each brand is assigned
We evaluate the full brand value chain in order to Brands affect a variety of stakeholders, not just to, names, terms, signs, symbols, logos and a BSI score out of 100, which is fed into the
understand the links between marketing customers but also staff, strategic partners, designs, or a combination of these, intended to brand value calculation. Based on the score,
investment, brand tracking data, stakeholder regulators, investors and more, having a identify goods, services or entities, or a each brand in the league table is assigned a
behaviour and business value to maximise the significant impact on financial value beyond combination of these, creating distinctive images rating between AAA+ and D in a format similar
returns business owners can obtain from their what can be bought or sold in a transaction. and associations in the minds of stakeholders, to a credit rating. AAA+ brands are exceptionally
brands. thereby generating economic benefits/value”. strong and well managed while a failing brand
would be assigned a D grade.
4. Brand Finance IPL May 2017 Brand Finance IPL May 2017 5.
Methodology
League Table Valuation Methodology Brand Finance Typical Project Approach
Brand Finance calculates the values of the 2 Determine the royalty rate range for the respective
brands in its league tables using the ‘Royalty brand sectors. This is done by reviewing comparable
Relief approach’. This approach involves licensing agreements sourced from Brand Finance’s
estimating the likely future sales that are extensive database of license agreements and other
attributable to a brand and calculating a royalty online databases.
Brand Equity Stakeholder Brand
rate that would be charged for the use of the 3 Calculate royalty rate. The brand strength score is Inputs Performance Contribution
Value Drivers Behaviour
brand, i.e. what the owner would have to pay for applied to the royalty rate range to arrive at a royalty
the use of the brand—assuming it were not rate. For example, if the royalty rate range in a brand’s
already owned. sector is 1-5% and a brand has a brand strength
score of 80 out of 100, then an appropriate royalty 1 2 3 4
The steps in this process are as follows:
rate for the use of this brand in the given sector will Brand Audit Trial & Preference Acquisition & Valuation Modelling
be 4.2%. Retention
1 Calculate brand strength on a scale of 0 to 100 based
on a number of attributes such as emotional 4 Determine brand specific revenues estimating a
proportion of parent company revenues attributable Audit the impact Run analytics to Link stakeholder Model the impact of behaviour on
connection, financial performance and sustainability, behaviour with core financial performance and
to a specific brand. of brand understand how
among others. This score is known as the Brand management and perceptions link to key financial isolating the value of the brand
Strength Index, and is calculated using brand data 5 Determine forecast brand specific revenues using a investment on behaviour value drivers contribution
from the BrandAsset® Valuator database, the world’s function of historic revenues, equity analyst forecasts brand equity
largest database of brands, which measures brand and economic growth rates.
equity, consideration and emotional imagery 6 Apply the royalty rate to the forecast revenues to
attributes to assess brand personality in a category derive brand revenues.
agnostic manner. 7 Brand revenues are discounted post tax to a net
present value which equals the brand value.
Brand strength Brand Brand revenues Brand value
index ‘Royalty rate’ How We Help to Maximise Value
(BSI)
IPL
more to convert its unrivalled brand strength into
maximum financial returns and brand value.
1 Rank 2017: 1 2016: 1
BV 2017: $58.6m
BV 2016: $47.2m
+24%
Impressive growth of 23% to a brand value of Brand Rating: AA
US$46.5 million landed Sunrisers Hyderabad
2017
(SRH) in third place, up from the fourth position
last year. In 2017, SRH continued to be the most
balanced team in terms of the ratio between
2 Rank 2017: 2 2016: 2
BV 2017: $54.1m
BV 2016: $46.4m
+17%
overseas stars and high-performing Indian Brand Rating: AA
players, investing especially in young, emerging
talent. The never-say-die attitude of SRH left to
door open to a title win until almost the very end of 3 Rank 2017: 3 2016: 4
BV 2017: $46.5m
BV 2016: $37.8m
+23%
the season. After a change of ownership in the Brand Rating: AA-
recent past, the team now enjoys the benefits of
4
stable management. In the last four years, brand Rank 2017: 4 2016: 3
strength has been maintained by finding new BV 2017: $ 44.4m
+4%
ways to engage with fans, especially thanks to the BV 2016: $ 42.9m
smart use of social media and merchandising. Brand Rating: A+
50
Delhi Daredevils
Brand Value (USDmillions)
40
Royal Challengers Bangalore
30
Sunrisers Hyderabad
20 Mumbai Indians
0
2009 2010 2011 2012 2013 2014 2015 2016 2017
issues have been few and far between. Good local
engagement feeds strongly into the brand’s
strength but DD has been traditionally weak at
leveraging it for marketing purposes.
IPL
IPL System Valuation Over Time
5
IPL Sy
$4.1
4
$3.7
$3.7 $3.8
$3.3 $3.5
2
$2.0
0
2009 2010 2011 2012 2013 2014 2015 2016 2017
entertainers and local cricket celebrities. Cricket Mohammed Siraj, each built their own legend,
Celebrating its 10th season, the Indian Premier the cash flows back to their net present value
enthusiasts who did not get tickets to see the attracting cult following.
League has firmly established itself as the most (NPV). Chennai Super Kings and Rajasthan
games live, could watch the competition in
thrilling and prestigious T20 league in the world. It Royals, banned for both the 2016 and 2017
especially designated Fan Parks in 36 cities acrossOverall, stadium attendance increased 25% from
has delivered financially for the players, seasons, have been excluded from the analysis.
the country. Family-friendly and free to attend for2016 even before the season was over, while last
franchisees, sponsors, and India as a whole, Gujarat Lions and Rising Pune Supergiant have
all, Fan Parks offered music, entertainment, and a year’s television viewership numbers were beaten
prompting a strong desire amongst a range of also been excluded as they served as temporary
range of merchandise stalls, bringing stadium already by Match 43 this year. The first two weeks
stakeholders to know what it is worth as an substitutions for the former two teams.
atmosphere to city centres on a scale larger than of the tournament also saw the digital platform
economic asset.
ever. Hotstar’s audience surpass for the first time that of
After a troubled 2016 season, the value of the IPL
television broadcasts in several key cities. Social
We have treated the IPL as a single commercial System grew 9% in 2017 to US$3.8 billion – an all-
The quality of the game did not disappoint either, media engagement peaked too, with nearly 6
entity, the ‘IPL System’, calculating the combined time high bar the 2010 record of US$4.1 billion.
allowing teams to build up fan loyalty. The million tweets sent over the season’s first five
business values of all parts of the IPL. We have This can be attributed to the stakeholders’ renewed
emergence of strong contenders: Rising Pune weeks.
aggregated the income that both the Board of confidence in the IPL management following the
Supergiant, Sunrisers Hyderabad, Delhi
Control for Cricket in India (BCCI) and the appointment of the BCCI’s Committee of
Daredevils, and Kings XI Punjab, next to the The 10th anniversary year is an inflection point for
franchisees will achieve, and the expenditure that Administrators (CoA), as well as to a number of
traditionally front-running Kolkata Knight Riders the IPL. With the upcoming tender procedure for
each will incur. All cross-charged income/ innovations in fan experience and pure cricketing
and Mumbai Indians, resulted in a seesaw in the television and digital broadcast rights, disbanding
expenditure has therefore been ignored. Our excellence, all driving up the interest and
points table throughout the season, keeping fans of Gujarat Lions and Rising Pune Supergiant,
approach has been to forecast the profits expected participation in the tournament.
uneasy who would make it to the final four. The revival of Chennai Super Kings and Rajasthan
to be made by the IPL System in total, using
emergence of relatively unknown young Indian Royals next season, and unavoidable reshuffling
publicly available data, both in terms of income Celebrating 10 years of the IPL journey, opening
players created further impetus. Young guns such of players, the management is facing a challenging
and expenditure, and to apply a common rate of ceremonies took place at all host stadiums this
as Nitesh Rana, Rahul Tripathi, Washington time if it wants to ensure continued development
tax to these profits (33.99%), and then discount year, attracting fans with a whole array of Bollywood
Sundar, Rishabh Pant, Basil Thampi, and of the IPL.
12. Brand Finance IPL May 2017 Brand Finance IPL May 2017 13.
Understand Your Brand’s Value Sports and Sponsor Credentials
A IPL League Table Report provides a complete breakdown of the English Premiership Club - Brand Co
methodology, data sources and calculations used to arrive at your brand’s
Brand Finance conducted a brand valuation for a major Premier League club to provide
value. a formal independent opinion of the fair market value of the brand. The report helped
this club to consider options relating to the transfer of the asset into a newly
Each report includes expert recommendations for growing brand value to drive business performance incorporated entity (BrandCo) and alternative financing opportunities.
and offers a cost-effective way to gaining a better understanding of your position against competitors.
A full report includes the following sections which can also be purchased individually.
Portuguese Liga Club - Brand Valuation and Royalty Rate Analysis
Brand Valuation Summary Brand Finance carried out a royalty rate analysis for a Portuguese club in order to
Overview of the brand valuation including executive determine the appropriate arm’s length royalty rates that the club should charge group
summary, explanation of changes in brand value and companies for the use of the brand. An indicative valuation was also undertaken on the
historic and peer group comparisons. brand. The study enabled the club to comply with transfer pricing regulations whilst
+ Internal understanding of brand charging an arm’s length royalty rate to other group companies.
Trademark Audit Brand Finance is conducting brand valuation for a leading club from the UAE. The
Analysis of the current level of protection for the valuation involves an analysis of the brand in order to provide strategic
brands word marks and trademark iconography recommendations for growing brand value.
highlighting areas where the marks are in need of
protection. Shell - Sponsorship
+ Highlight unprotected marks
Brand Finance was asked by Shell International Petroleum Company Limited to conduct
+ Spot potential infringement an evaluation of the costs and benefits of the Ferrari sponsorship. The top down
+ Trademark registration strategy approach to sponsorship evaluation thus provides compelling evidence that the Shell
involvement in Formula One, and the link with Ferrari in particular, is an extremely
worthwhile investment.
Royalty Rates
Analysis of competitor royalty rates, industry royalty
Global Insurance Company - Sponsorship
rate ranges and margin analysis used to determine
brand specific royalty rate.
Brand Finance was appointed to conduct an audit on the brand’s rugby sponsorship.
+ Licensing/ franchising negotiation We provided an analysis to determine whether the brand’s existing measurement of
+ International licensing sponsorship effectiveness was in line with best practice and also provided our opinion
on whether the brand should continue its sponsorship. We identified how the brand’s
+ Competitor benchmarking measurement systems could be improved in order to better measure historic
effectiveness, justify future investment and help strategic decision making for
Cost of Capital management.
A breakdown of the cost of capital calculation,
Société Générale – Sponsorship Audit & Positioning Strategy
including risk free rates, brand debt risk premiums
An audit of Asian sponsorship activities, including benchmarking against competitor
and the cost of equity through CAPM.
activities and providing recommendations of sponsorship activities both relevant to
+ Independent view of cost of capital for internal Asian markets and aligned with Soc Gen’s brand promise and culture. The sponsorship
valuations and project appraisal exercises report was used for management reporting and to prioritize marketing investment
allocation.
14. Brand Finance IPL May 2017 Brand Finance IPL May 2017 15.
Sports Club Services Sponsor Services
Revenue maximization
Richard Haigh
• Analysis of current sponsorships and stadium naming rights - what deals are other clubs achieving and does our Managing Director
current deal represent good value T: +44 (0)20 7389 9400
• Negotiating contracts/terms with sponsors E: rd.haigh@brandfinance.com
• Marketing collateral – does the club have compelling materials with which to convince potential sponsors? For more information about www.brandfinance.com
our services and what we can Ajimon Francis
do for you please contact: Managing Director, Brand Finance
India
T: +91 989 2085 951
E: a.francis@brandfinance.com
16. Brand Finance IPL May 2017 Brand Finance IPL May 2017 17.
How we can help Contact details
1. Valuation: What are my intangible assets
worth?
2. Analytics: How can I improve marketing
effectiveness?
Contact us Our offices
Valuations may be conducted for technical purposes Analytical services help to uncover drivers of demand For brand value report
and to set a baseline against which potential strategic and insights. Identifying the factors which drive
enquiries, please contact:
brand scenarios can be evaluated. 2. A consumer behaviour allow an understanding
IO N Alex Haigh
NA of how brands create bottom-line impact.
AT Director of League Tables
LY
AL Brand Finance
T
a.haigh@brandfinance.com
1. V
ICS
• Branded Business Valuation • Trademark Valuation • Market Research Analytics • Brand Audits
• Intangible Asset Valuation • Brand Contribution
Brand & • Brand Scorecard Tracking • Return on Marketing Investment
For media enquiries,
Business Value please contact:
ION
3. S
T
TR
Director Brand Finance
S
18. Brand Finance IPL May 2017 Brand Finance IPL May 2017 19.
Contact us.
The World’s Leading Independent Branded Business Valuation and Strategy Consultancy
T: +44 (0)20 7839 9400
E: enquiries@brandfinance.com
www.brandfinance.com