Search the Internet          Tips  Sites: Finance, Investment

Cricket: FMCG firms fight to keep rivals off the field

Surajeet Das Gupta and Shuchi Bansal

It has been a hectic week for Ganesh Mahalingam, general manager, marketing, LG Electronics. Usually Mahalingam spends his time trying to boost sales of LG's televisions, washing machines and air-conditioners.

This week he has been fielding questions from television channels and newspaper reporters eager to know LG's stand in the great controversy that has brought the cricketing world to a standstill.

LG is one of half-a-dozen players which will be affected by the behind-the-scenes negotiations that are taking place between the cricketing boards and the star sportsmen who earn crores (millions) from endorsements. LG, for instance, is determined to shut out Samsung, the Korean chaebol, which is its rival around the world.

As the bumpers keep coming down the pitch, it has almost been forgotten how few companies are actually involved in the multi-million dollar marketing scraps.

There is, for instance, the straight fight between Hero Honda, which is a global sponsor of the Champions Trophy taking place in Sri Lanka, and which would like to run its rival TVS off the road.

TVS has, according to industry experts, paid Rs 12 crore (Rs 120 million) to rope in cricketer Sachin Tendulkar as its brand ambassador for three years.

Then, there are the two soft drinks companies. Pepsi thought it had outmanoeuvred Coca-Cola by paying $22 million and becoming a global sponsor of the two World Cups and the ICC tournaments.

But the also-rans who balked at the ICC's $22 million fee weren't planning to abandon their cricketing ambitions. Coke wasn't about to let Pepsi taste the thunder and it made sure of that last year by signing up Virender Sehwag as its brand ambassador.

Similarly, Samsung announced only last week that it had signed on a posse of seven Indian players for a megabucks campaign.

The cricketers may not have known about the terms of the contract, but the key companies in the battle certainly took every step to ensure that their rivals would be shut out of the game. LG, for instance, has played smart in more ways than one.

For the price it has paid to ICC, it has also seized the global sponsorship right to computer and computer peripherals apart from the durables. Consequently, Samsung cannot burst onto the television screen even with its computer peripherals commercials that feature the cricket stars.

Will that stop Samsung from getting its message to cricket lovers? Samsung officials seem unruffled and they may have good reason.

To get around the problem, it is likely to use the cricketers to endorse its cellular phones. Since LG has not booked the mobile phone category for sponsorship, Samsung could make good its absence in the white goods segment.

"As far as we are concerned, we will work according to our scheduled advertising plan. There is no question of reworking our contracts with players," says a Samsung spokesperson.

The company claims that it is in the business for the long term and won't be affected even if the players accept the ICC terms.

"We've identified cricket as a key advertising medium for our brand and are thinking much beyond this World Cup," says the spokesperson. Meanwhile, the company has already started its new campaign with the baseline 'official sponsor of the digital passion.'

There is one other company that could be affected. That's Air Sahara, the airline that launched an aggressive price cutting war. Sahara has faced problems at the ICC tournament because South African Airways is a global sponsor. For a company that has signed on the entire team and paid Rs 100 crore (Rs 1 billion) to put its logo on their shirts that could be quite a loss.

However, Sahara, like the other companies is also trying to wriggle out of its difficulties and says that the contract is between a group company Sahara Housing and Development. "We will not advertise the airline," sources said.

The global sponsors argue that they are paying hefty premiums to prevent what has become known as ambush marketing.

But the marketing experts are divided about what constitutes ambush marketing. Says Hero Honda's Atul Sobti: "Obviously sponsors are keen to prevent ambush marketing in their segment. It is a reasonable demand to make."

Other marketing experts differ. "Ambush marketing targets competition rather than the consumer. It hits out at the rival to kill the brand," says Mumbai-based marketing expert Jagdeep Kapoor.

On their part, the sponsors may be worried about the last World Cup where Pepsi upstaged Coke with its "nothing official about it" campaign. "But that was a clever creative campaign rather than ambush marketing," says Kapoor.

Which of these companies will come out the winner depends on how the battle of wits between the cricketers and the ICC turns out. But everyone is keeping their fingers crossed. One way or another there could be big winners and losers both on the pitch and off it.

On a turning pitch

A chronological look at the twists and turns of cricket's contract controversy:

• December 10, 1999: ICC invites tenders for the World Cup cricket rights. The bid documents do not contain the restrictive clause on players.
• January 20, 2000: WSG Ltd submits bid. Does not seek an exclusivity clause from players.
• February 9-10, 2000: The ICC's executive board meets in Singapore, forms consultative group to negotiate with bidders.
• May 22, 2000: Law firm Nicholson Graham and Johnees forwards a draft contract to ICC. There are no restrictive clauses.
• June 24-25, 2000: ICC executive board meets in Paris and accepts WSG offer subject to negotiations being concluded by July 20, 2000. Copies of the contracts are confidential. (The restrictive clauses may have been inserted at this stage).
• July 20, 2000: Agreement signed with WSG.
• May 28, 2001: BCCI signs the "Cricket events agreement", which includes clauses that prohibit players from endorsing competing products one month before and after ICC-sponsored tournaments.
• June 22, 2002: BCCI objects to the clauses. It tells ICC that it can't stop players from endorsing competing brands. ICC turns down these objections. BCCI signs the agreement with a letter of protest.
• July 2002: Players are handed contracts for the ICC Championship. They are reluctant to sign.
• August 16, 2002: BCCI suggests that the players should honour ICC commitments only for the Champions Trophy. It promises to renegotiate with ICC after the Sri Lanka tournament by November 15 at the latest. It writes to the ICC that this arrangement "would not be treated as a precedent or would not be governed by principles of 'estoppel and waiver' for future ICC events after the ICC Champions Trophy". Malcolm Speed, ICC boss, in a handwritten letter agrees to the BCCI proposal and asks for confirmation from the Indian players.
• August 18: BCCI writes again to the players offering three alternatives. The players refuse to give in. They point out there will be problems if they have a contract with one advertiser and a rival uses their image. The sponsors are allowed to use images for six months after the tournament and this is not fair.

Powered by

ALSO READ:
The ICC Contract Row
More Specials
More Money Headlines