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INDIA
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CURRENT
ISSUE DECEMBER 23, 2002
SPORTS: CRICKET WORLD CUP
Stumped
Off-the-field action hots up with the ICC
taking legal action against companies participating in ambush marketing
against the official sponsors of the World Cup
By Malini GOYAL
So you have just won the gift of your life: an
all-expenses paid five-day holiday to South Africa and-the icing on the
cake-tickets to the cricket World Cup. But before the celebratory cartwheeling,
read the fine print. Check if the company that gave away the prize is
an official sponsor of the World Cup. If not, then the trip of a lifetime
could turn out to be just that in a very different way. The World Cup
ticket could turn you into a criminal offender in South Africa and that
means you may be slapped with a stiff financial penalty or be bundled
out of the country straight from the airport or, worse still, you may
end up in a South African jail.
This is not a doomsday scenario thought up to destroy the World Cup tourist
trade but the possible fallout of a bitter corporate battle that has moved
from the cricket field to the boardroom and into the law courts. The battle
is over the right to carve up the big World Cup marketing pie and is being
fought by companies, lawyers and cricket bodies.
On December 8, the International Cricket Council (ICC) put out advertisements
in leading Indian dailies cautioning companies against ambush marketing.
Companies that are not among its official sponsors but are offering free
tickets to the World Cup, the ICC warned, would be penalised for violation
of copyright. A day earlier, the United Cricket Board of South Africa
issued a press release threatening lengthy jail sentences for individuals
or companies participating in ambush marketing activities. It also said
that the board had the rights to block the entry of unauthorised World
Cup ticket holders.
The ICC has already taken initial legal action against three Indian
companies-Britannia, HPCL and Philips. Legal heavyweights like Ram Jethmalani
and Arun Jaitley took opposing sides in the first of these wrangles and
opened a new chapter in cricket's corporate conflicts.
A free trip to the World Cup-touted as one of the most attractive purchase
incentive for customers for the season-is now under the scanner. Companies
of all shades-Britannia, Visa, ABN-Amro, Sahara India, BPCL, HPCL, Lee
Cooper, Glaxo Smithkline-are offering free tickets for the event. But
the Global Cricket Corporation (GCC) which bought the marketing rights
of the World Cup for $550 million (Rs 2,640 crore) from the ICC is adamant
about protecting its territory. Says Harish Thawani, co-chairman, World
Sports Nimbus Pte, which is a part of the GCC: "World Cup tickets
have two clear conditions-that they are not meant for commercial use and
they are non-transferable. Any violation will be dealt with strongly."
THE
GAME'S NEW RULES The corporatisation of cricket is complete
1999
2002
For the first time the ICC claims title rights
to the World Cup.
But boards signs a list of terms with the host nation, not the ICC.
Sponsor-protection exists but is neither all-pervasive nor strict.
For the first time ICC sells events for seven
years.
ICC member boards consent to the rights sale and its clauses.
This has enabled ICC to enforce its contracts on member nations.
The ICC has had mixed luck. Earlier this month, Britannia won the first
round of legal wrangling with Jethmalani batting for it and Jaitley for
the ICC. The council's objection to the company's sales promos-"Britannia
khao, World Cup jao", giving free tickets to customers-was set aside
by the Delhi High Court. "We will go ahead with our scheme,"
says Sunil Alagh, MD, Britannia Industries Ltd. But Dahlia Sen-Oberoi,
counsel, ICC Development (International) Ltd, clarifies, "Regardless
of the enforceability of anti-ambush laws in India, they will be enforced
in South Africa."
At the moment the Delhi High Court has ruled in favour of the ICC in
its case against HPCL and has reserved judgement in the case between the
ICC and Philips.This could just be the beginning of a protracted battle
that corporate India may have to fight overseas as well. It promises to
be particularly lengthy because the ICC is strongly backed by the country
hosting the World Cup. Just last month, the South African Parliament enacted
a new legislation making ambush marketing a criminal offence. Timed perfectly
for the World Cup, "the Act will give unequalled protection to sponsors
involved with selected events in South Africa", the ICC says in its
quarterly newsletter.
Sen-Oberoi is non-committal about the ICC's next course of action in
South Africa but World Cup sponsors will want to claim their pound of
flesh any which way. One even claims that should a cricketer turn up at
a party hosted by a non-official sponsor as part of a brand-building exercise
during the World Cup, he could be imprisoned.
Ganesh Mahalingam, GM (marketing), LG India, is pleased: "We are
not interested in refunds. We want the ICC to deliver the benefits that
were promised in full."
While official sponsors are unrelenting, almost everyone agrees this
is one of the most restrictive contract agreements ever enforced by a
sports body in the world. Says Sanjay Lal, CEO and executive director,
Percept D Mark: "The soccer World Cup and Olympics are all mature
events and have strict anti-ambush guidelines. But none of them are as
restrictive as the ICC's. The rights have not been packaged well."
Thawani thunders, "Those who seek to derive mileage out of the Cup
without paying for it are intellectual pirates."
CORPORATE CONCERNS
"We'll go ahead with the
'Britannia khao World Cup jao' offer." Sunil Alagh, MD, Britannia Ind
"We can be flexible with
players, not with other companies." Atul Sobti, Sr VP, Hero Honda
The hard talk comes from the $550 million that ICC generated in 2000
by selling all commercial rights to its tournaments for seven years. This
was the first time that the ICC has sold its events in a bunch (see chart)
and at an exceptionally high premium. If Mahalingam is the most aggressive
and vociferous among the official ICC sponsors, he believes he has good
reason. His company shelled out around $28 million to land the seven-year
"global partner" title for nine ICC tournaments. LG was one
of the official sponsors of the 1999 World Cup. But the company's stakes
and investments in the game have risen dramatically, probably five times,
reckons Mahalingam.
That is true for the entire business of cricket in the country. The
industry spend on the game has shot up-from Rs 40-50 crore in 1996 to
an estimated Rs 1,000 crore for the 2003 World Cup. Today, more than 70
per cent of the ICC's income comes from Indian corporates. Atul Sobti,
senior VP, marketing and sales, Hero Honda Motors, another global partner
of the ICC, says, "This is one event that attracts viewers across
region, religion, sex and income categories."
LG, one of the global sponsors, would pump in about Rs 40 crore into
World Cup campaigns and promos. Beginning second week of January, every
LG customer will be guaranteed a gift-which could range from a set of
10 Parker pens with pictures and signatures of 14 captains to sports watches
with World Cup logos. The company is planning to give away two lakh pen
sets and one lakh T-shirts, and will be sending 2,000 people to South
Africa to watch the World Cup.
Hero Honda will invest a chunk of its Rs 120 crore annual marketing
budget on the Cup. Besides sending 300 people to watch the games, it will
unleash a series of on-ground and in-showroom campaigns called Win-the-Cup
India in January . It will have showroom-on-wheels in 35 cities organising
entertainment programmes.
THE ICC'S CONTRACTS CONUNDRUM
Double
Trouble
TOUGH MEET: Ibrahim (left) and Dalmiya
in Kolkata
"The International Cricket Council (ICC)
is fighting fires on many fronts these days. The legal tug of war
between the ICC and unofficial sponsors in the run-up to the World
Cup in South Africa is only one of them. With less than 60 days to
go for the Cup, there is one set of important documents still left
unsigned. Without them the ICC's showpiece event is in danger of becoming
a show that could go to pieces. Indian cricketers have not signed
the ICC's player terms, raising objections to image rights and ambush
marketing clauses.
The last round of the ICC contracts saga before the Champions
Trophy in September pitted the ruling body against Indian players
who refused to sign contracts until some concessions were made.
This time, to add to the ICC's worries, the BCCI has joined ranks
with its players. Of all cricketing nations, only India has not
announced its shortlist of 30 probables for the World Cup.
At the latest meeting between the two sides in Kolkata, Justice
Ahmed Ibrahim and Dave Richardson of the ICC met BCCI President
Jagmohan Dalmiya and players' representative, leg-spinner Anil Kumble.
The ICC was told that its terms continued to remain unacceptable.
In order to contemplate signing them, the Indians would require
that the image-marketing clauses be cut back from six months to
two months after the event and that restrictions on rival advertising
hold only for the duration of the World Cup-that too only on the
cricket channel broadcasting the tournament live. "Significant
progress" was announced after the meeting, with the ICC going
back to its official sponsors to seek their views on the matter.
It will be 10 days before another round of talking takes place but
it would be fair to say that significant progress has definitely
been made in annoying the ICC's official sponsors.
Outside the fortress of official sponsors, others too have stepped in.
Philips is investing Rs 15 crore in marketing and advertising and giving
away prizes worth Rs 10 crore, ranging from projection TVs, VCD players,
portable stereo players and home appliances. Irrespective of their sponsorship
status, companies across industries have loosened their purse strings
to launch aggressive sales promos and mega advertising and marketing blitzkrieg
around the World Cup.
But the ICC and its sponsors may spoil the party even before it begins.
Reeling under the restrictive clauses and even more restrictive interpretations,
a large number of corporates are back to their boardrooms-rethinking and
rejigging their promos and campaigns to abide by the restrictive clauses.
Says Ravinder Zutshi, VP, sales, Samsung India: "Brand-building
is a long-term exercise. Your brand image does not get affected if you
are not there for a month." Philips' contest catch line reads "Philips
ghar lao, South Africa jao," which alludes to the World Cup but doesn't
say so specifically.
For most companies, the ICC's aggressive posturing is a far cry from
the 1996 Cup. Pepsi managed a marketing coup with the "Nothing official
about it" campaign at one-fourth the price of what official sponsors
Coca-Cola shelled out for the sponsorship title.
From that free-for-all era to now where almost everything is under the
exclusive domain of the sponsors, the transition for corporate India has
been sudden and drastic. This entire experience may, however, mark the
emergence of cricket marketing as a professionally-managed business rather
than a laissez faire industry that allowed large corporations to run riot.
While the fallout on the corporate India may be drastic, ICC officials
admit that the number of suitors for the few remaining slots of sponsorship
is growing. The ICC's celebrations have begun even before the World Cup
started.