Sponsors await clarity on commercial deals

Meenakshi Verma Ambwani New Delhi | Updated on May 06, 2021

BCCI officials have been talking about a September window to hold the rest of the IPL matches.

While stakeholders of Indian Premier League (IPL)agree with BCCI’s decision to postpone the sporting event due to Covid-19, sponsors are awaiting for clarity from the commercial standpoint.

Sources said while broadcast sponsors pay based on the secondages of ads consumed, brands associated with IPL franchises especially for short-term deals pay the sponsorship money upfront. The BCCI officials have been talking about a September window to hold the rest of the IPL matches.

Ambiguities galore

A senior executive with a company associated with IPL said, “As the country is battling with the second pandemic wave, consumers and companies are also not in the right frame of mind to focus on branding activities right now. Broadcast sponsors pay based on the secondages of ads consumed but the bigger challenge will be for brands that are associated with IPL franchises. There is a lot of ambiguity right now on how things will unfold in the coming days.”

“If the balance matches are played out later in the year, depending on the category that they are in, existing broadcast sponsors are likely to continue with their agreements since this is the most watched sporting event in the country,” a media buying executive added.

Contracts & clauses

But if the rest of the matches are not held then a lot will depend on provisions of commercial agreements signed by the sponsors, believe experts.

Investor and business strategist Lloyd Mathias said that commercial contracts usually have clauses of force majeur that kick in the event of unforeseen circumstances.

Sandeep Goyal, Chairman, Mogae Media, said it is unlikely that commercial agreements signed by the sponsors with teams had clauses for a truncated tournament and therefore stakeholders will need to sit down to renegotiate deals.

Rishi Anand, Partner, DSK Legal, said, “Force Majeure as a concept is unlikely to be triggered in case of mere postponement of an event, and therefore the obligations of the parties (BCCI and Sponsors in this case) may continue to remain valid. However, since the time of lockdown in 2020, contracting parties have started to take into account the ‘temporary stoppage’ (like the curfews and lock-downs due to Covid-19 pandemic) and consequences of such stoppages in their contracts.”

Ashish Bhasin's, CEO-APAC and Chairman India, Dentsu, said, “The health and safety of all the players and everyone involved I think is paramount and keeping in mind the situation in the country and the prevailing mood in the nation, in my view postponing the IPL is the right decision. I’m sure the commercial issues will get discussed and resolved in an appropriate manner.”

Published on May 05, 2021

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