Byju's Messi Deal: Liquidity Crunch Puts Education Campaign On Hold?

Edtech firm Byju's has reportedly put its three-year deal with world-famous footballer Lionel Messi on hold. It was originally signed in 2022 amidst backlash, as the company had laid off numerous employees.

According to an anonymous executive mentioned in a report in The Economic Times, Byju's has already fulfilled its financial obligations for the first year of Messi's contract. However, it remains uncertain whether the agreement will be terminated prematurely or if the edtech company will eventually revive the partnership. The executive cited liquidity issues and other significant concerns within the organization as the driving factors behind this decision.

"Bjyu's paid Messi for the first year; it is yet to be decided whether the deal will be terminated before full term, or whether Byju's plans to revive the contract in due course. This is on account of the liquidity crisis and other matters of serious concern within the company," the daily quoted one of the executives as saying.

In a post on his Instagram account, Messi had said in January 2023: "@byjus_app and their world-changing initiative#EducationForAll are helping children from underserved communities with access to world-class educational resources. I believe that this simple initiative has the power to change the world."

In November 2022, the company founded by Byju Raveendran enlisted football legend Lionel Messi as its global ambassador for a three-year term as part of its 'education for all' initiative, with an estimated deal value ranging between $5-7 million annually.

However, the announcement of the campaign faced widespread criticism as the company fired 2,500 employees just a month prior. The juxtaposition of these events stirred controversy, drawing attention to the company's priorities and decisions.

In addition to the scrutiny over the Messi partnership, Byju's chose not to renew its endorsement contract with Bollywood actor Shah Rukh Khan after it concluded in the middle of 2023. Industry executives indicated that the decision was mutual, citing Khan's reluctance to maintain ties with the company amid continuous regulatory scrutiny. This development reflects the challenges faced by Byju's in managing its brand image and associations in the evolving landscape of the edtech industry.

In the recent past, Byju's has been heavily investing in advertising and marketing and had acquired sponsorship of the Fifa World Cup 2022 held in Qatar.

The company is currently facing a big crisis, which involves a dispute over a shareholder agreement. A group of investors in the edtech platform has initiated a campaign to remove the leadership, while Raveendran, the company's representative, has stated that investors do not possess the authority to vote on management changes.