With Vivo’s self-exit, has BCCI dodged a bullet of legal troubles? What’s next for BCCI?

On, 04 August, 2020, the smartphone handset maker, Vivo India, has itself pulled out as the title sponsor of 2020 edition of Indian Premier League (IPL) cricket tournament, following the criticism and the backlash it faced on the social media platforms like, Facebook, Twitter and Instagram, from the Indian cricket fans. 

A couple of days back, on 2nd August, 2020, BCCI (Board of Control for Cricket in India) also found itself at the receiving end of the fans backlash, after it decided to retain Vivo as this season’s title sponsor, with the trends like #BoycottIPL doing the rounds on social media. 

But could BCCI have suspended Vivo from sponsoring this edition of the IPL because of the Anti-China sentiments amongst the cricket fans? Let us understand the legal nuances surrounding this.

IPL Title Sponsorships

• From 2008 to 2012 

For the first five seasons of the tournament, the title sponsor was DLF, India's largest real estate developer, who had secured the rights with a bid of ₹200 Crore. 

• From 2012-2015

Subsequently, PepsiCo bought the title sponsorship rights for ₹397 Crore for the subsequent five seasons. However, the company terminated the deal in October 2015, i.e. two years before the expiry of the contract, reportedly due to the suspension of Chennai and Rajasthan franchises from the IPL. 

• From 2016-2022

Following the termination of the contract deal with PepsiCo, the BCCI transferred the title sponsorship rights for the remaining two seasons of the contract (i.e. from 2016 to 2017) to Chinese smartphone manufacturer Vivo for ₹200 Crore. 

 In June 2017, Vivo retained the rights for the next five seasons as well (i.e. from 2018 to 2022) by a winning a bid of ₹2,199 Crore.

The split of sponsorship money between BCCI and the franchises

• Vivo had a deal of INR 440 Crore for each season with BCCI, and as part of the deal, the INR 440 Crore, had to be split between BCCI and the rest of the franchises. So, this effectively means that out of INR 440 Crore, INR 220 Crore would have gone to BCCI and the remaining INR 220 Crore would be split equally amongst the eight franchises.
• This is the reason why a lot of franchises are saddened by the Vivo’s exit as well. Also, there will not be any gate earnings from this season of IPL, as this is a close-gate tournament and they would be no audience allowed. 
• But what would have these franchises earned had there not been any IPL season this year? At least something is better than nothing, right? That’s exactly what BCCI believes as it termed the cry of the franchises as “penny-wise and pound-foolish”.

Has BCCI dodged a bullet of legal troubles?

• As Vivo and BCCI had entered into a legally enforceable contract, it is extremely difficult for any party to a contract to exit from the deal, without any strong justifiable cause. 
• A commercial contract is drafted, keeping in view the disputes that might arise in the future. In such situations, the terms of the contract play a very vital role. A party cannot simply go against the terms agreed for in the contract. Such contracts do have a termination clause, but the situations under which each party would have a right to terminate the contract is also explicitly mentioned. And these situations are drafted to be very specific, with each party trying to narrow down the scope of such situations, leaving no room for ambiguity. So the parties to a contract are well aware of their termination rights. Like for example, PepsiCo terminated the contract with BCCI, due to a material adverse change, following the suspension of two IPL franchises.
• But could BCCI had terminated the contract with Vivo due to Anti-China sentiments amongst Indians, without drawing legal repercussions? Possibly not. But again, that would have depended on the clauses of the contract, and the way those clauses were drafted.
• But in most likelihood, if BCCI had forcibly suspended the contract with Vivo, the later would most likely have sued the former for a breach of contract and would seek damages, in the form of heavy compensation, from BCCI. 
• So it would not be wrong to presume that BCCI has indeed dodged a bullet of legal troubles, with Vivo’s self-exit.

Will Vivo return for the next seasons of IPL?

• Vivo has the title sponsoring deal with BCCI, till the year 2022. This year, Vivo has made a self-exit from the 2020-edition of Indian Premier League, owing to the present Anti-China sentiments amongst the Indian people. 
• But the contract between the BCCI and Vivo has not been terminated. Therefore, it is extremely likely that Vivo intends to return as the title sponsor for the remaining three years of its contract with BCCI. 
• So, yes, Vivo, which still has three years of the sponsorship deal worth ₹1,320 Crore left, is likely to return to sponsor the Indian Premier League T20 tournament from 2021 to 2023.

Conclusion

So, BCCI might have dodged a bullet of the legal troubles it might have found itself hit with, had it terminated the contract of Vivo, without any due cause, as against the terms of the contract. But, the next equally difficult task for BCCI would be to find a new title sponsor, who would be willing to offer a good deal to BCCI. 

It would be next to impossible to find a sponsor who would be willing to offer a deal as worthy as INR 440 Crore (that it would’ve gotten from Vivo), especially at this time of the pandemic when almost every company is facing funds-crunch. Also, not to forget that BCCI is pushed against the wall, as it has merely 45 days left to find a new sponsor (or sponsors), and its desperation to find one will most definitely negatively impact its bargaining power.