Given that it is increasing every year, what is the valuation story you see for IPL? Where do we see it headed because it has become so expensive now?
Karan Taurani: I think valuations depend on revenue potential and revenue potential has multiplied for the franchise teams. Plus, the number of teams has also gone up. We had about eight teams, now we have ten. The number of matches has gone up by 20%. I am saying the reasons for valuations growing are these reasons as well.

The bigger reason here is the media rights. What happened last year when the media rights auction came for renewal, the growth was about 2.5 to 3 times. So, on a per match basis, the cost of the media rights went up almost two times as compared to the earlier cycle and this big surge was led by higher content cost on the digital since digital content cost went up by close to four to five times as compared to the earlier cycle on a like-to-like basis.

So, clearly platforms are paying this kind of money. Platforms are bidding aggressively to buy out rights of IPL because they believe that there is a potential to monetise revenues from it and this has been a big contributor in terms of overall property valuation because close to 80% to 90% of the franchise team revenue does come from advertising and media rights which is being shared between the teams. So, this is one very big driver.

Of course, the last was also a scarcity premium. We have got about seven to eight and then went on to ten teams and tomorrow if there are two more teams which are coming, even they could be sold at a very hefty premium. These are potential reasons in terms of why the valuations have been moving up consistently over the last 16-17 years.

Let us just put the spotlight in terms of how ad spends overall generally is shifting and moving more towards the sports side. What was the impact one could see of this moving in the ad spends overall as well?
Karan Taurani: Two things have happened here. Any which way, we are seeing a shift of ad spends towards digital platforms in a very big manner and sports somewhere has been the most resilient. If you look at the TV ADEX number in India, sports was about 10% of the TV ADEX until about five to seven years back. And currently it is about 32-33%. So, there has been a big jump in sports gaining here at the cost of infotainment English and Hindi genres. So, regional news and sports are the genres which are seeing some sort of a growth. Otherwise, all other genres are seeing a decline, so that is one. Secondly, what has happened is that spends have moved from TV to digital in a very big manner. This is specific to sports, because last year what we saw was disruptive in nature because once Jio Cinema started to offer IPL free of cost, a large chunk of these spends were also moved to digital in a very big manner and this also pertains to TV ad spends which actually came up as well. So, if you look at IPL, ad spends on TV last year reported a decline of close to about 25% as per our assessment. Because of IPL being free on Jio Cinema, digital spends grew almost 25% to 30%. The point is that we are consistently seeing a shift wherein ad spends are moving to digital from TV.For example, pre-Covid , 80% of IPL ad revenue was from TV and today that number is about 55 odd percent. As far as TV is concerned, even today, TV is a larger medium, but because of growth in digital, because of constant shift in terms of consumption, because of this content being available free of cost, the traction towards digital will continue over the medium term.

Now moving to the stock market, what will happen to the QSR stocks because of the IPL? We have always seen QSR companies getting more orders during a cricket or any sports event. Then, there is PVR-Inox which could see a slowdown in new movies coming in, how do you see this IPL impacting specific stocks here right now?
Karan Taurani: IPL is a yearly phenomena. On a YoY basis, one may not see a big positive surprise, but on a quarter on quarter basis, there will be traction here. I think there is a big positive impact for Zomato versus the other QSR companies because that is what we saw during the World Cup as well.

A company like Zomato was generally doing a food revenue growth of somewhere close to about 25%, rather than GOV growth of 15% to 18% in that particular quarter of the World Cup. The T20 World Cup is in the month of June and we have IPL as well. So, on a QoQ basis, we will see that delta for Zomato. As far as QSR companies are concerned, there is not much of a big respite because the market is getting fragmented, the QSR companies are seeing pressure in terms of growth and in terms of delivery contribution, only 30-40% percent of their revenues comes from delivery. I think it is a bigger delta for Zomato versus the other QSR companies.