A corruption scandal surrounding the Indian Premier League cricket tournament over which two teams have been suspended has led to the steel giant JSW Group shelving plans to buy a team.
The match-fixing scandal could prompt other companies to reconsider associating with the event, analysts said.
JSW, an US$11 billion Indian conglomerate, had reportedly been in talks over a $100 million deal to buy United Spirit’s stake in the Royal Challengers Bangalore team.
But Parth Jindal, who manages JSW’s sports business and is the son of Sajjan Jindal, the chairman and managing director of the group, told Reuters that owning an IPL team would be a risk to the company’s brand and there was a “negative aura” surrounding the tournament.
“I think it’s a ‘no’ at this point of time, purely based on the whole negative aura that has been generated,” he said. “We don’t want our brand to be associated with a league that is so tainted at the moment.”
India is well known for its love of cricket and the IPL, the world’s richest cricket tournament, has developed mass appeal because of its format of fast-paced Twenty20 matches and Bollywood glamour, with the actor Shah Rukh Khan among the team owners.
“Companies cannot risk their brand at all at this point in time,” said Sanjay Chakraborty, a marketing communication advisor based in Ahmedabad in Gujarat. “Whether it’s an attachment to a celebrity or an event, if that becomes tainted, then they’ll play it safe. They won’t go forward and get associated with an event that has an image problem.”
He said that companies already involved in IPL “might be reviewing their contract now and whether they should continue or not”.
The IPL has been hugely successful in attracting advertisers, sponsors and team owners over the years, as companies view the tournament as an opportunity to reach a vast number of Indians across the country. This is despite the fact that the event has been plagued with controversies for years. The brand value of the competition was pegged at $3.2bn last year, according to American Appraisal India.
In November 2012 Pepsi bought the title sponsorship rights to the IPL for five years for $71m.
The teams that have been suspended for two years are Chennai Super Kings, owned by Indian Cements, and Rajasthan Royals, owned by a consortium including Bollywood’s Shilpa Shetty.
The IPL launched in 2008, loosely based on the United Kingdom’s Premier League football championship and the NBA in the United States.
Rajiv Shukla, the chairman of the IPL, had his mobile phone switched off and could not be reached for comment.
But in a television interview with CNN-IBN, he said that neither he nor the Board of Control for Cricket in India was responsible for the betting scandal.
“As far as the fate of IPL is concerned, it’s going to continue,” he said. “The show will go on and IPL 9 will be better than IPL 8, so it will be a much bigger product as far as next year is concerned. Nothing is going to happen to IPL.”
Mr Chakraborty said this could give companies an opportunity to buy into IPL at lower rates.
The impact of the scandal might be temporary, if handled correctly by IPL authorities, he added.
“It’s very difficult to take away cricket from Indians,” Mr Chakraborty said. “When all is said and done they’ll want to watch IPL.”
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