IPL – Indian Premier League A four part post series

By Sachin Sawant

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Table of ContentsIPL – Are we going to make money? ................................................................................................................. 3

IPL – We have nothing to lose!!! ....................................................................................................................... 6

IPL – Honey its all about money!!! .................................................................................................................... 9

IPL – ‘Manoranjan ka baap' ............................................................................................................................. 12

About the Author .............................................................................................................................................. 14

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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.

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Franchisees Balance sheet - Year One

Entry Expen

se Incom

e

Franchise Fee ( $ 111.9 Million for 10

years) 11.19 0

Players’ salary 4 0

Stadium leasing, coaches and other exp. 1.25 0

Advertisements 1.25

TV rights ( $ 1 Billion for 10 Years )

i.e. $ 100 Million per year, 80% of this

will split in 8 ways)( central) 0 10

Sponsorships ($ 50 Million for 5 years)

i.e. $ 10 Million per year, 60% of this will

split in 8 ways ( Central) 0 0.75

tickets, food and other sales ( local) 0 2

Total 17.69 12.75

Net Losses 4.94

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)

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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

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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.

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• 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?

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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

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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 mindboggling

• 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

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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

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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

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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 (To read the

full post, click here)…

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…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

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About the Author

Who are you?

My name is Sachin Sawant. I like to write, and express my view and opinion on issue’s which I thing are

important, my blog revolves mostly around National and International issue’s, Game’s, Books, & my

experience in life. This Blog was started on the afternoon of February 13, 2008.

I am 22 this year (2008), currently I am working in a Manufacturing company. (It’s a TATA group

company) My aim in life is to become a successful entrepreneur. I love to read, predominantly non-fiction,

biography, investment, Business, history books.

You’re welcome to email me at sawantsachin1985@gmail.com anytime. If you’re interested in what I write

(and other stuff relating to me) you can connect me at:

http://sawantsachin1985.blogspot.com/

twitter/sawantsachin

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