Price wars have forced global sportswear giants to drastically cut down spends on cricket in the world's largest market for the sport. The latest company to throw in the towel is German sportswear giant Adidas, which has stopped making bats and soft cricket equipment such as batting pads and gloves.
Not making money
Adidas's decision to outsource manufacturing of cricket equipment to third party manufacturers comes after rival Nike stopped selling cricket bats in India and pulled out of expensive bat sponsorships for top cricketers. "We made the decision to licence out our cricket hardware and soft goods to JVS," said senior marketing director at Adidas, Sean Van Wyk.
"This is a common business model, used extensively across the world, which allows us to increase our distribution of the cricket category."
Cost of sponsoring
Sponsoring a bat can cost a company anywhere between Rs 50 lakh for a rookie to around Rs 6-8 crore for a top level cricketer such as Indian skipper Virat Kohli. Currently, tyre companies such as MRF and Ceat and local cricket equipment manufacturers, including Meerut-based Sanspareils Greenlands (SG) and Sareen Sports (SS), have taken over bat sponsorships, while international sportswear makers have restricted themselves to sponsoring apparel and footwear for cricketers.
'Ugly price war'
Adidas, which will continue to supply cricket footwear and apparel to the Indian market, only sponsors footwear and apparel for cricketers Rohit Sharma, Rishabh Pant and Kuldeep Yadav. It stopped sponsoring Kohli last year, who subsequently struck a Rs 100 crore deal with sporting goods maker Puma, while cricketer KL Rahul, who used to play with Adidas branded willow, signed up with Puma too for footwear and apparel sponsorship and chose SS for his willow.
"It's an ugly price war," said MD of SS, Jatin Sareen. "First, these global companies overspend and push up the sponsorship limits and later when they realise that it's not sustainable, they pull out."
Running for deals
Managers of top cricketers too have started to look out for separate sponsorship deals for bats and other cricket equipment for their clients as two deals often prove to be more lucrative than one. For instance, Kohli may be weilding an MRF-branded willow but he sports footwear made by Puma.
"There are mainly two reasons why a company would cough up crores of rupees to sponsor a cricket bat," said a senior executive at a global sportswear firm. "First, you would want people to buy that brand of bat and second, you would want to gain general visibility. The latter is why tyre companies spend huge amounts of money to sponsor bats. It doesn't make economic sense for us to compete with them because we cannot sell that many bats in India."
Local companies undercut global firms
These sporting goods makers, however, continue to sell bats in markets such as UK and Australia. "In India, local companies undercut us," said the manager of cricket category at a global sportswear firm. "As vendors, they charge us so much that the end product becomes too expensive. Moreover, they sell their own brands of bats cheaper."