Sports

Vivo likely to call off sponsorship deal

Our Bureau. Mumbai | Updated on August 05, 2020 Published on August 04, 2020

Given the severe backlash, the Chinese phone maker may back out of the deal with BCCI

Chinese mobile maker Vivo is set to pull out as the sponsor of this year’s Indian Premier League after facing severe backlash.

While there was no official confirmation by Vivo or the BCCI, sources close to the company said that the deal is being re-evaluated given the overall India-China stand-off.

“Vivo is paying ₹440 crore a year to BCCI for the sponsorship rights but if this not yielding results for the brand then one has to review the rationale for making such huge investments. Ultimately, the brand has to gain public goodwill through such sponsorship deals. But due to the current sentiments against China, there is severe backlash against Vivo,” said a source close to the company adding that discussions with IPL governing council is going on for an amicable exit.

 

Another source said that the Chinese sponsor could resume the sponsorship deal from next year if ties between India and China return to normalcy.

However, experts said that such exits usually come with complications.

 

“Usually there are penalties or compensation associated with sponsors quitting midway. The Vivo-IPL deal was for five years starting in 2018 for ₹2,199 crore so there could be clauses related to encashing bank guarantees if Vivo exits. If it is BCCI which is cancelling the contract then we will have to see if there are any compensation clauses built into the contract,” said a corporate lawyer involved in such sponsorship contracts.

Analysts said that the deal with IPL was proving to be counterproductive for Vivo.

“For China origin brands like Vivo, the outreach is proving counterproductive as there is a lot of backlash in many cases. So, it is a good idea to pause for a moment till things settle down. The fact is we cannot do without these brands. For Make in India these brands are the main contributors and even in our journey towards atmanirbharta, they have an important role to play. So it makes all the sense to pause customer facing outreach activities for a while,” said Faisal Kawooza, Founder of tech researh firm techARC.

CAIT claims victory

The Confederation of All India Traders, which as at the forefront of opposing BCCI’s decision to continue with Vivo, claimed victory at the deal being called off.

CAIT Secretary General Praveen Khandelwal said that the pressure applied by CAIT for boycott of the event and withholding permission for IPL 2020 has played strongly on the mind of the Chinese company.

When contacted, Vivo India spokesperson declined to confirm or deny the development. Nipun Marya, Director, Brand Strategy, Vivo, in a text message, said, “We are not commenting right now. We will share an update once we have something to share.”

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Published on August 04, 2020
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