Beleaguered edtech company BYJU’S has temporarily suspended its three-year deal with football icon Lionel Messi as a global brand ambassador, barely a year after the contract was signed.
BYJU’S has fulfilled its payment obligations to Messi for the initial year; however, the future of the deal remains uncertain, ET reported.
The company is deliberating whether to terminate the contract prematurely or explore options for revival. The decision hinges on internal challenges, including a liquidity crisis and other pressing issues afflicting the company.
The football star was signed for an estimated $5-7 Mn annually.
BYJU’S signed Messi as the brand ambassador for its social impact arm ‘Education For All’ in 2022. However, it faced criticism for the deal with the footballer as it was announced shortly after it revealed its plans to lay off up to 2,500 employees (or 5% of its workforce).
“It is foolish for people to think that we will pay money for Messi after letting people go,” founder Byju Raveendran said. The founders of the edtech giant claimed that the deal was not a sponsorship, but a social impact arrangement.
Apart from Messi, BYJU’S entered into several other sports marketing agreements. The company’s biggest expenditure over the years was its advertising costs. Between FY16 and FY22, the startup’s total advertising cost stood at INR 8,029 Cr, or almost a billion dollars.
BYJU’S accumulated losses of INR 13,229 Cr between FY16 and FY22.
Last year, BYJU’S decided against renewing some branding partnerships with the Board of Control for Cricket in India (BCCI), International Cricket Council (ICC), and Federation Internationale de Football Association (FIFA).
After the jersey sponsorship deal fell apart as BYJU’S exited its deal with the BCCI in December 2022, BCCI had filed a case against the company. Last month, the National Company Law Tribunal (NCLT) issued a notice to the decacorn in connection with the petition filed by the BCCI.
The Bengaluru based company has been fighting on multiple fronts over the last year or so. It continues to be plagued by a host of troubles, including the exit of board members, layoffs, delay in filing financial statements, growing losses, scrutiny of the Enforcement Directorate (ED).
Last month, BYJU’S filed its financial statements for FY22 almost 22 months after the end of the year. Its consolidated net loss surged 81% to INR 8,245.2 Cr in FY22 from INR 4,564.3 Cr in FY21. Operating revenue rose over 120% year-on-year to INR 5,014.6 Cr during the year under review, mostly on the back of improvement in the financial performance of Aakash.
