IPL brand loses US$ 750 million in value

Wednesday, 30 May 2012 00:31 - - {{hitsCtrl.values.hits}}

According to a recently compiled report by Brand Finance, the seemingly never ending series of governance and transparency lapses have contributed to a rapidly declining brand value of IPL. By brand value what is meant is the commercial sustainability of IPL or the value in the long run that this iconic property could deliver for all stakeholders.

As a result of stakeholder relationships between IPL and its partners having got negatively affected, Brand Finance’s latest report shows that 1 billion dollars of cash flows have dried up and it is still diminishing. It will not be too long beforeIPL would have regressed to its benchmark brand value of 2 billion dollars in 2009, putting the whole value creation of the franchisees under intense pressure.

According to Mr.Unni Krishnan, Global Strategy Director, Brand Finance Plc, the IPL branded ecosystem’s long-term sustainability has been compromised from various perspectives. Since 2010, a series of lapses that continue till date have pushed the entire business model into an inflection point eroding substantial long-term value.

From a commercial sustainability perspective, the participation & buy-in of all key stakeholders including the franchisees leaves much to be desired. Whilst the IPL governing body has moved from a one man show to a so-called council based operating model, alignment and cohesion to a win-win relationship among stakeholders can be improved by leaps and bounds.

While the core product asset and its innovative game format continues to draw in record crowds to the ground, IPL’s owner needs to wake up to the larger issues facing them due to the conduct of the organization and its decision making process. It might be tempting for the owners to wish away all the ominous signs and take comfort under the blanket of Business-As-Usual. This is no longer an option as IPL’s value is steadily diminishing and it will not be too long before which it will hit the two billion dollars rock bottom valuation of 2009.

In Brand Finance’s analysis, the commercial sustainability of the pivotal franchisee stakeholders who have already crossed five years of operations is coming under intense pressure. The revenue sharing terms from central pool of IPL will change from the current year progressively decreasing for the next 5 years. With only another five years left to make something of their significant investments, the franchisee owners must proactively choose to salvage the league and ensure that its governance systems are worthy of IPL’s true potential. They must become active participants and shape the governance processes of the league rather than being passive observers as they have the most to lose.

A long-term sustainable roadmap based on win-win relationships among all stakeholders must become the priority for IPL’s next phase of its journey. Avoiding it and falling back on short-term maximization is likely to result in continued erosion of value.

Brand Finance plc, the world’s leading brand valuation consultancy, advises strongly branded organisations on maximising their brand value through effective management of their brands and intangible assets. Founded in 1996, Brand Finance has performed thousands of branded business, brand and intangible asset valuations worth trillions of dollars.