BENGALURU: 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.
Freecharge has handed over the rights to the Kishore Biyani-led Future Group, the retail chain which operates Big Bazaar and other formats across the country. The IPL 2017 will be the tenth season of the tournament which starts on April 5.
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 ground 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 taking the BCCI's title sponsorship deal in the same year.
"IPL was a great opportunity for us to create awareness around digital payments last year. With demonetisation, wallets are much more in use and now we want to focus on creating market differentiation through various unique value added services," a spokesperson of Freecharge said. Biyani and BCCI spokespersons also confirmed the development to TOI.
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 a series of mistakes in last two- three years, the company undertook multiple steps starting with mass layoffs 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 for Freecharge separately, but talks with the likes of PayPal haven't been successful.The industry has been abuzz for a long time about a possible merger of Snapdeal and Paytm's commerce business, both of which have Alibaba as a common investor. On Wednesday, business daily Mint reported that
Flipkart is also in discussions with Snapdeal for a possible acquisition.
"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 in the know said for such sponsorship deals, the full amount is generally not paid upfront but is given out in installments ahead of the start of the season. It is believed that about Rs 50 crore will be paid to BCCI for the this year's on-ground rights in IPL 2017 as part of deal signed in 2015. But this could not be independently verified by TOI.
In a similar move,
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 make
r Vivo had bagged the rights for title sponsorship of IPL. In the case of Freecharge, the reasons for withdrawing are different, sources suggested. The company does not want to spend money on high voltage marketing deals especially when it finds itself in a tight situation financially, a source cited earlier in the report said.