Advertisers take guard

IS IT time to factor in exit clauses in cricket deals? Indian’s team near-certain exit from the World Cup has brought out into the open what was till now being talked about only in hushed voices. Advertisers, who have sunk in about Rs 350-400 crore just for on-air advertising on Sony Entertainment and another Rs 160 crore on Doordarshan, are now talking tough, and issues such as ensuring returns on investments (RoI), compensations, protection clauses, pay per performance and minimising risks associated with cricket and cricketers are being debated. Media planners say ESPN Star Sports could stand to lose the most – since it has acquired ICC’s exclusive telecast rights for $1.1 billion for the 2007-015 period. “Advertising and sponsorship rates have hit the roof, but uncertainty over cricket too is multiplying. There has to be a way to soften the blow. Some form of safeguards are already being talked about, though executing it will be complex as it will involve matters such as measuring input and output,” said Future Brands head Santosh Desai. “The money invested by sponsors and advertisers has to be protected,” pointed out Percept Holdings joint MD Shailendra Singh. Percept, which handles endorsements of various cricketers, had factored in a performance clause for Yuvraj Singh when it was doing an endorsement deal with Hero Honda. Sources told ET that while Yuvraj agreed, Rahul Dravid and MS Dhoni refused to agree to the clause terms. Group M’s Maxus MD Ajit Varghese pointed out that some levels of protection are already being factored into big-ticket contracts. “It would be naïve to assume that there are no existing clauses when it comes to big contracts. But then, those deals are closely guarded,” he said. However, as Madison Media Plus CEO Basabdatta Chowdhuri pointed out, though World Cup ‘07 has brought out the importance of factoring protection clauses in contracts, it’s something broadcasters would not agree to easily. “Where does the question of exit clauses arise? If India wins, do we charge a premium over and above settled deals from advertisers? We too pay huge amounts to acquire broadcast rights and those costs have to be recovered,” said ESPN Star MD RC Venkateish. SET’s E-VP Rohit Gupta sales added: “Unlike ratings that change every week, deals can’t be changed based on every loss or win. When an advertiser buys into sport, he buys factoring in eventualities associated with the game.”

Courtesy: EconomicTimes
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