IPL
– Indian Premier League
A four
part post series By Kawaljit Dhelia
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Table of Contents
IPL
– Are we going to make Money?
IPL
– We have nothing to lose!!!
IPL
– Honey its all about money!!!
IPL
– "Manoranjan ka baap'
IPL
– Are we going to make money?
(Part I
-Franchise prospective)
"The
Indian Premier League is the greatest sport and entertainment venture ever
undertaken in this country," - Lalit Modi, chairman of the IPL
IPL
franchise is not quite the golden goose that the BCCI had led franchisees to
believe. Even before the Indian Premier League's first season draws to a close,
all indicators seem to suggest that most of the franchisees could be, a
write-off as far as the first year goes.
Let us
consider the probable balance sheet of Mukesh Ambani's Mumbai Indians (MI). IPL
team owners have two channels of revenue, central and local.
• •
Central
- Includes Media, sponsorship and suppliers, which BCCI will sells and shares
with the teams. Local - Includes things like stadium ticket sales, local
sponsorship. Concessions, merchandise et al, which franchisees will be
responsible for selling.
Franchisees
Balance sheet - Year One Expense Income
Entry
Franchise Fee ( $ 111.9 Million for 10 years) $11.19 Million for 1st
year.
Players'
salary $4.00 Million.
Stadium
leasing, coaches and other exp. $1.25 Million.
Advertisements
$1.25 Million.
Total
Expenses $17.69 Million For 1st year.
Income
For Franchisees.
TV
rights ( $ 1 Billion for 10 Years ) i.e. $ 100 Million per year, 80% of this
will split in 8 ways in 8 different team) $10.00 Million.
(Central)
Sponsorships ($ 50 Million for 5 years) i.e. $ 10 Million per year, 60% of this
will split in 8 ways that will $2.00 Million
(Local)
tickets, food and other sales $0.75 Million
Total
Net Income $12.75 Million For 1st year
Total
Net Loss - Expenses $17.69 Million – Income $12.75 Million = $4.94 Million
Approximately
$ 5 Million will be the first year losses of MI. Financially, the franchise
seems to have overspent. Moreover, the percentage of central revenue, which
remains 80% for the first two years, will subsequently reduce to 50% in year
11. If the franchise is to make money, they will have to do that from tickets,
food and other sales as well as premium and box seats. (Mainly because the two
major sources of revenue, TV rights and Title sponsorships are not going to
change)
Even
some of the national cricket administrators like, Cricket Australia chief
executive James Sutherland told Sydney radio station 2KY. "It's nice to pay
the players well and get big money from television rights and sponsorships, but
ultimately you've got to provide a return for the owners. "As I understand
it, the franchisees are starting to ask questions already. "As we know,
they're giving away a lot of tickets to these matches. "But gee, it's
going to be a long six weeks for the franchisees if they struggle to sell
tickets. "I think in Hyderabad for the first game they only had a third of
the ground full." It is apparent that until the league picks up a critical
mass and builds equity in its local market, which will take anywhere from 4 to
5 years in an developed market the going seems to be difficult for the owners.
Until then the teams will be heavily reliant on central revenues to sustain
themselves. All the franchisee's will take anywhere between 3 to 5 years to
break-even. Nevertheless, at the end of the day what will make or break this
10-year deal will be the return on investment the team owners get on their
investment Links Media revenues only way to keep IPL profitable Debut season
fiasco runs down IPL's costliest team Understanding the Indian Premier League
IPL
– We have nothing to lose!!!
Part II
(BCCI's prospective) "There's a bit of a concern I guess as to how much
power one nation can have and they're fanatical about cricket, they're only
going to get bigger, they're only going to make more money" - Steve Waugh
The BCCI launched the Indian Premier League (IPL) on the lines of football's
English Premier League and the National Basketball League (NBA) of the US. The
IPL is a professional Twenty20 cricket league created and promoted by the BCCI
and backed by the ICC. The Twenty20 rush, with the IPL at its apex, has
prompted some to deride it as a purely moneymaking exercise that will inevitably
erode cricket's rich fabric.
Money
Matter
Let us
first look at how much money BCCI is making out of this entire deal.
The
auction for the team franchise, which took place on January 24, 2008, and the total
base price for the auction was $400 million. The auction went on to fetch
$723.59 million Television Rights: On January 14 2008, consortium consisting of
India's Sony Television network and Singapore-based World Sports Group secured
the rights of the IPL. The record deal has duration of ten years at a cost of
$1.026 billion.
Title
Sponsorship Rights: On February 13 2008, Indian real estate developer DLF
Universal secured exclusive rights to the IPL title sponsorship worth Rs 200
crore (over $50 million) for five years.
The
major chunk of the revenue will go to BCCI even if we factor in the condition
that some percentage of money generated from the auction of television rights
and Title sponsorship will go to the team owner. BCCI has played the game very
smartly - head I win tail you lose. It stands to win (make money) irrespective
of whether franchisee's make money or not.
Bereavement
of domestic cricket?
Even
before the dawn of T20, the domestic cricket was reeling from a lack of public
support and interest. IPL may act as the final nail in the coffin for the
future of Ranji and Duleep trophy. Historian and cricket writer Ramachandra
Guha, feels "There is a clear conflict of interest, and the first casualty
will be the decentralized domestic game, the Ranji Trophy." If this is to
happen, then in the long term India may find it difficult to bring up quality
players on the international arena. Australia is the best team because their
domestic structure is robust, and their best players are obliged to play from
the knockout stages of these tournaments.
According
to BCCI's point of view, they have done exceedingly well money wise, but the
main apprehension is whether the IPL will prove a cricketing pariah, intent on
devouring Domestic cricket? It will take some time to find out the answer for
such a convoluted issue. As a cricket buff, I will prefer to see the different
formats of the game flourish side by side, with out cutting into each other's
territory. IPL has the potential to take the game to places it has never been
before, hopefully not at the cost of Test and 50-over cricket. Links Waugh
concerned about BCCI's growing money prospects with IPL BCCI ensures nearly $1
bn riskless income from IPL
IPL
– Honey its all about money!!!
Part
III (Players prospective)
It's
show time, folks, on the cricket field. The days of 'white-flannelled fools'
are long over. Cricketers with rock star image have taken over the arena and
nearly 100 international cricketers, commanding unheard of playing fees, have
descended on India for the launch of the world's richest cricket league - the
Indian Premier League (IPL).
It's
raining Money
The
amount of money involved in IPL is mind-blowing
The
overall prize money is US $5 million, with the winners taking home $2 million.
The remaining will be up for grabs in different forms, like man of the match
awards and cash prizes. By contrast, the winners of the 2007 ICC World Cup in
the Caribbean took home $1 million; the Indian team that won the World Twenty20
got half of that.
Top
players are earning minimum 1-2 crores per season. (with highest being Mahendra
Singh Dhoni how is paid 6 crores per season)
It is
not just the Indian players who are making money, if we consider the fact, some
of the foreign players are going to get three times of the amount that they
will get by representing their country for a whole year. From cricketers point
of view it is a win-win situation for them, as Lalit Modi rightly points out,
"It benefits world cricket because it benefits all their players - they are
able to supplement their income by coming to us,"
Fitness
concern
"I
think there is far too much cricket and the schedules they keep up are. I think
it is a lot on the players for them to be able to play, pack up and travel the
next day and then play again"- David Dwyer "It's important to get some
breaks in between. The international calendar is very tight. There is not much
time to go back home and assess things."That is how the calendar is, there
is not much the cricketers can do about it" – Sachin Tendulkar Players
worldwide have regularly grumbled about tight schedules. It is already very
challenging for players to maintain international standard fitness, IPL is only
going to make it even more difficult and the recovery time is going to reduce
considerably. Traditionally April and May was the time when players spend time
recuperating, thanks to IPL now it won't be possible. If we are to talk purely
in terms of money, then players are better off by this phenomenon called "IPL',
(in theses 45 days Dhoni makes more than Mukesh Ambani on an hourly basis.) On
the other hand, one of the major concerns is will IPL shorten the career of new
generation cricketers? Links IPL showers money on players, Dhoni tops charts
Money, money, money is the IPL name game Players' earnings set to go over the
roof in IPL 2nd season
IPL
– "Manoranjan ka baap'
Part IV
(Spectators prospective)
"If all
the development programmes are put in place, it could usher in a new chapter. I
sincerely believe that the IPL is history in the making" [….] "For me, the most
fascinating aspect of Indian cricket is the passion the crowds have for the
sport. It is amazing and it is no wonder [...] - Adam Gilchrist
IPL is
an opportunity to take cricket to new audiences, new frontiers. The emphasis on
innovation and the fan-friendly format have already proven wildly popular at
domestic level in England, South Africa and Australia. BCCI's claims that 76%
of Indian cricket fans favor T20 over one-day matches and five-day Test
matches. This is what one of the blogger has written about the atmosphere and
level of energy in the field …
…It was
simply mind blowing… The atmosphere was charged… big time...There was groovy
music for the audience to tap their feet to; crazy fans with their wacky
banners/placards and loads & loads of energy to go with it! It was a truly
amazing feeling to be a part of this euphoria………..At the end of the day, what
really matters is not just getting your money's worth but something more than
that...something that makes you forget about who you are and something that
lets you go insane and enjoy …….. Then there is other side to it as well, (To
read the post, click here)…
…The
hype of the IPL is almost overflowing at the moment, but I still can't see the
tournament lasting the long haul. Super-powered teams have been forced together
in the past - World XIs and so on - without great success, so why will the IPL
be any different? It's a quick injection of easy money for the players and a
bit of fun for us, but don't expect it to last. He says, desperately hoping he
is right…
Cricket
has not faced a more polarizing issue in recent times. Australia's cricketers,
in a survey commissioned by their own players association, expressed concern
that the Twenty20 game could eventually harm, or even consume, 50-over and Test
cricket. IPL is on the march, a revolution is in the works, and cricket is
entering uncharted territory. It will be interesting to watch. Links Premier
League: The new reality show on Indian TV IPL: Cricket-sangeet is a much
simpler option
The Unkown IPL-T20
IPL T20 The Unknown Part