PepsiCo pullout signals IPL's loss of credibility

NEW DELHI: After PepsiCo opted to pullout of IPL's sponsorship two years before they were originally supposed to, the BCCI and the entire country has been left pondering over quite a few questions. Is brand IPL finally showing signs of being hit by controversies one after the other? Has Pepsi prioritized its own interest before that of the BCCI? Will the brand and BCCI come to a solution? Or will the Indian board agree to a lower deal provided Pepsi somehow decides to stick to it?
Pepsi, ever since it took over the deal in 2012, guaranteed the BCCI nearly 400 crore Rs.over five years - 80 crore per year. But when the infamous spot-fixing scandal hit the IPL a year later, where three Rajasthan Royals players were found disrupting the spirit of the game, and one of the side's owners, Raj Kundra of the Rajasthan-based franchise was found guilty of betting by the Supreme Court-appointed Lodha Committee, it left the IPL tarnished. So does Pepsi backing out really come as a surprise?
"Talks are in progress and the relationship between the two parties is very cordial. They are our long-standing partners, so I don't think there will be any problem," IPL chairman Rajiv Shukla told reporters Friday. "We will work it out and whatever solution we are able to find, we will let it known."
PepsiCo bagged the IPL title sponsorship rights in 2012 for five years (2013-17) for 3.97 billion Indian rupees ($61.31 million), almost double that DLF, India's biggest listed property developer, paid for the rights from 2008-12. Around 90 percent of the advertisement money targeted at sports in India goes to cricket, analysts say, and one of the two teams that the court-appointed panel recommended for suspension is owned by India Cements.
"It is the sponsor's prerogative to not only connect with the platform but also the valuation that they think is worth it. PepsiCo has traditionally always been in the same space and considering IPL takes place in summer, they normally vie for the largest possible cricket platform," Latika Khaneja, Director of Collage Sports Management, told Times Now.
"So Pepsi probably wanted to connect with the IPL, but whether they think the valuable is now too much in view of all the scandals that have hit the IPL of late."
While not denying the notice sent, Pepsi confirmed that they were in talks with the BCCI. It is assumed that PepsiCo's decision revolves around the fact that the IPL has garnered attention for all the wrong reasons. From spot-fixing to suspension of Royals and the Chennai Super Kings, the cash-rich league has seen more downs than ups.
"There have been a couple of issues that have been really critical. First, there has been a loss of credibility, which is very important. In the last three years, the virus has really hit IPL and there hasn't been a doctor in the scene," Shailendra Singh, Joint Managing Director of Percept, told Times Now. "Secondly, the contest is being questioned for the last two and a half years, with the spot-fixing scandal."
Over the years, cricket and business experts have called for the IPL to be scrapped. Clearly so, since it's brought enough harm to cricket in India. It may be a game for, of and by the people, but at the same time, IPL has managed to end careers, hand out bans and made people question the integrity of the game. Singh though said that rather than finishing off the IPL, BCCI needs to take up the initiative of cleaning up the mess.
"IPL is a global brand that India has created," Singh added. "Seldom has it happened since independence that India has created intellectual properties which is produced locally but consumed globally. So there's a lot of pride attached to the IPL, but it's been driven way too much by politics.
"So much has transpired in the last three years, yet the BCCI has always been hesitant when it comes to the IPL. Sunder Raman is the COO and he's to be seen nowhere. This is where we need him to hold a press conference and take measures to try and prevent the disaster.
"From day one, IPL was portrayed as more of a commodity. It was driven more by economics and less by emotions or by the sport itself. So everybody who was related with the IPL, came by either either fame and fortunes. The deals have always been restructured because the contest has been questioned - format, governance, players, everything has come under scrutiny."
All this brings us to the question. What lies next for both PepsiCo and the BCCI? Will Pepsi eventually decide to snap ties or will the board figure out a way to prolong this association, be it at the expense of a price-cut, a negotiation to put it in simple words.
"IPL and BCCI, which is run by people, all this has led to the fact that big brands like Pepsi truly cannot believe that they are not getting the bang for the buck. Having said that, the entire credibility of the IPL is being compromised. So, it may be negotiable, but I don't think it's possible," Shailendra added.
"That [revaluation of the deal] is the first thing they [PepsiCo] must have spoken to the BCCI about. For all we know, it might also be a ploy on PepsiCo's part to pull out since a lot of factors are involved here. Nobody knows how many teams are playing - that affects the length of the season and how much exposure the brand gets. And since there's so much on non-clarity, PepsiCo may fancy exiting the deal," Khaneja said.