As Snapdeal continues with its belt tightening measures, the company’s digital payments platform Freecharge has decided to surrender its on-ground sponsorship rights for this year’s Indian Premier League, a year in advance, sources said.
In November 2015, Freecharge had signed a two-year deal with the Board Of Control For Cricket In India (BCCI) to taken on the rights as a grounds sponsor for the IPL. At the time, the wallet company said the sponsorship would cost over Rs 100 crore. Freecharge’s move to bag IPL rights was to counter rival Paytm’s bagging the BCCI’s title sponsorship deal in the same year.
According to report in the Economic Times, Freecharge has handed over the rights to the Kishore Biyani-led Future Group, the retail chain which operated Big Bazaar and other formats across the country. The IPL 2017 will be the tenth season of the tournament which starts on April 5.
This development comes at a time when Freecharge’s parent Snapdeal is trying to conserve cash to deploy that in its core businesses and extend its runway. Earlier this week Snapdeal appointed Jason Kothari as Freecharge’s new CEO filling the vacant position at the firm after former chief executive Govind Rajan quit the company amid ongoing trouble at the firm. Additionally, Snapdeal said it had allocated an investment of $20 million in to the digital payments platform.
After Snapdeal founders admitted to series of mistakes in last two three-years, the company undertook multiple steps starting with mass lay offs along with senior level exits and shutting all non core businesses, as reported by TOI earlier. Snapdeal has been on the deal street to raise fresh funds but hasn’t been successful yet.
When contacted, a Snapdeal spokesperson declined to comment on the matter while Biyani confirmed the development. A BCCI spokesperson also confirmed the development to TOI.
“Freecharge has the right of assignment under their sponsor contract and they have exercised that right to assign it to Future group. BCCI will get the same amount from Freecharge as per the sponsor agreement, the commercials between FreeCharge and Future group is a matter between the two of them and BCCI has nothing to do with their commercials,” a BCCI spokesperson said in an e-mailed response.
Sources added that for such sponsorship deals, full amount is generally not paid upfront in one go but in installments ahead of start of the season. It is believed that about Rs 50 crore will be paid to BCCI for the this year’s on grounds rights in IPL 2017 as part of deal signed in 2015. But this could not be independently verified by TOI.
For BCCI, such a development is not new as PepsiCo had dropped its title sponsorship rights for the IPL two years ahead of its signed agreement. Reports suggested that the beverages giant had taken this call in 2015 as brand IPL was getting tainted due to multiple controversies around the sporting event. Post PepsiCo’s exit, Chinese smartphone maker Vivo had bagged the rights for title sponsorship of IPL.
In the case of Freecharge, the reason for withdrawing are different, sources suggested. The company does not want to spend money on high voltage marketing deals specially when it finds itself in a tight situation financially, a source cited earlier in the report said.