India’s biggest liquor maker United Spirits Limited earned more than 10 percent of its operating profits in the 2019 financial year thanks to Royal Challengers Bangalore, who made money despite finishing at the bottom of the Indian Premier League, Economic Times reported. RCB was bought by UCL in 2008 and was made a subsidiary of the group.
RCB’s revenue doubled to Rs 313 crore for the financial year ending March 2019. In the previous financial year, the three-time finallists had accounted for only three percent of the operating profits.
“Exponential growth in commercial partnership revenue due to a strategic shift from just monetising jersey real estate to player time cost, and moving from just ticket revenue to match-day income with initiatives aimed at increasing gross margin per seat”, Sanjeev Churiwala, chief financial officer at USL was quoted as saying.
Due to high raw material costs, the liquor business is facing margin pressure, said the ET report. “Apart from high profit, RCB also helps in getting intangible benefits in terms of advertising USL brands,” Abneesh Roy, senior vice-president at Edelweiss Securities said.
The marketability of skipper Virat Kohli has also played a significant role for advertisers and hence, RCB’s poor performances on the field has had little impact on the revenue.
An IPL Brand Valuation Report by Duff & Phelps said: “RCB will command a premium even after not performing well largely because of Virat Kohli and also because Bangalore is a huge market for advertisers. It is their gateway to South India. Hence it is slightly insulated from their on-field performance.”
RCB earned profits for the first time in 2017 with revenues of Rs 162 crore. With just 11 points from 14 games, Virat Kohli’s side finished at the bottom in 2019.