Marketing

IPL brand value doubles from previous year

Brand Finance which has released its 2010 financial valuation of the IPL eco-system and the individual franchises has announced that the value of the IPL brand has doubled over that of the previous year.

The value has increased from US$ 2.01 billion in 2009, to US$ 4.13 billion in 2010 providing significant economic value to the owners the BCCI.

Brand Finance UK Managing Director David Haigh said, "In comparison to international benchmarks for sporting businesses such as the English Football Premier League which has a value of US$ 12 billion, the IPL is in its infancy with just three years of operations under its belt.

However, its only a matter of time before the IPL juggernaut will over take the English Premier League to become the largest sporting franchise outside of the USA. We anticipate this based on the passion for the game and the enormous cricket following in India."

Despite the massive investment, there are still concerns with regards to its business viability. While the general consensus is that the IPL tournament has been a huge marketing success, whether the property will actually deliver returns to investors, stakeholders and advertisers still remains under a cloud.

It is in this context that Brand Finance carried out a valuation of the IPL brand and its franchises to provide an objective view to explain the value of the brands under their control.

In so doing, the franchise owners are able to better manage their brands in a financially more robust way. Commercial success will depend on the individual franchisees aligning all of their stakeholders behind their brand through a structured management process.

An understanding of the value of the brand also enables the clubs to raise finance secured against their brands.

The total value of the franchises also increased from US$ 311 million last year to US$ 333 million in 2010, indicating that the franchises too have gained in value although at a considerably lower level than the main brand.

Brand Finance has used the Royalty Relief methodology to value the brands.

This method is based on the notion that a brand holding company owns the brand and licenses it to the operating company. The notional price paid by the operating company to the brand company is expressed as a royalty rate. The net present value (NPV) of all forecast royalties represent the value of the brand to the business.

The Brand Finance network also includes Brand Finance Lanka which has been present in Sri Lanka for the last five years.