Pepsi drops sponsorship of scandal-hit Indian cricket league

James Crabtree
Pepsi logo at Citi Field in New York City.
Getty Images

PepsiCo has pulled out of a Rs4 billion ($62 million) sponsorship deal with the Indian Premier League cricket tournament, dealing a further blow to the lucrative but scandal-plagued annual event.

The US-based beverage group signed a five-year title sponsorship arrangement in 2012, but formally ended its association with the event on Sunday after just three seasons.

The Board Of Control For Cricket In India, the sport's governing body and the IPL's owners, said Chinese phonemaker Vivo Electronics would become the IPL's title sponsor for the two remaining seasons of Pepsi's contract.

Neither the BCCI nor PepsiCo commented on the reason for the termination. The BCCI also gave no details of the financial deal struck with Vivo, although in a statement it said the Chinese company would provide a bank guarantee for payment in the "next 10 days".

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However, reports earlier this month in the Indian Express newspaper suggested that PepsiCo had sent a termination notice to the BCCI citing issues relating to the governance of the IPL. The US group declined to comment on the document.

"Losing a global company like Pepsi is obviously a blow," said Ayaz Memon, a Mumbai-based cricket writer and commentator. "They seem to have become fed up with these governance problems, and decided it wasn't worth the reputation problems."

Since launching in 2009, the IPL has attracted huge audiences with its television-friendly shorter cricket format and showbiz razzmatazz, in turn convincing companies such as PepsiCo and UK-based telecommunications group Vodafone to sign up as sponsors as a means to connect with India's sports-mad public.

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But despite its financial successes, the event has also been hit by repeated management bust-ups and corruption allegations. Most seriously a handful of players and administrators were caught up in a betting and match-fixing scandal in 2013.

PepsiCo's pullout is the latest aftershock of that scandal, which ultimately saw two of the tournament's eight teams suspended in July, following an investigation led by a former Indian Supreme Court judge.

On Sunday, the BCCI confirmed that it planned to hold an auction to create temporary teams to replace the banned franchises for the next two years.

In a statement, Vipul Prakash, a vice-president at PepsiCo in India, said that the group's termination decision had been "mutually agreed" with the BCCI. "We will continue to associate with sports and cricket as a platform to connect with our consumers," he said.

Vivo Electronics, which is relatively minor player in India's fast-growing smartphone market, could not be reached for comment.

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However, the Chinese group's decision to become a sponsor makes it the latest in a line of mobile and e-commerce groups to sign up with the IPL as they seek to build brand awareness in India.

Online retailers such as India's Flipkart and US-based Amazon advertised heavily during the most recent season, which ended in May. Indian mobile commerce company Paytm, which is backed by China's Alibaba, has also been exploring potential sponsorship deals with the BCCI.