Now that the IPL has come to an end, the fever has not subsided. The much awaited T20world cup is just a few days away. The mighty display which left the viewers spellbound is back. However the transition from the last world cup seems to be a little slower than expected. The spinners are doing the job and no high scoring matches. Is the T20 format exciting?
IPL T20, the bubbly business model (Not that model!), has proved to be a money spinning affair. TRP rates have been exceedingly high but what are the benefits to the country? The IPL earns income through media rights and advertisements. Sony Entertainment and World Sports group have acquired the television rights by paying Rs. 8,200 crores for a period of 10 years. Along with this income, all other forms of income like advertisement and sponsorship are pooled. After deducting expenses incurred by BCCI the remaining amount is paid to franchisees in equal proportion. Central Media Rights income and other sponsorship income of approximately Rs.1,000 crores is received by BCCI. It is shared in this proportion:
Media Rights income of Rs. 820 crores is split as follows:
Till 2013:
1) Franchise share (72%) – Rs. 590 crores
2) BCCI share (20%) – Rs. 165 crores
3) Final stand payments (8%) – Rs. 65 crores
From 2013 to 2017 the share would be:
1) Franchise share – 54%
2) BCCI share – 40%
3) Final stand payments – 6%
2018 onwards
1) Franchise share – 45%
2) BCCI share – 50%
3) Final stand payments – 5%
Other Income of approx Rs. 180 crores is split as follows:
Till 2017:
1) Franchise share (54%) – Rs.98 crores
2) BCCI share (40%) – Rs. 72 crores
3) Final stand payments (6%) – Rs. 10 crores
2018 onwards
1) Franchise share – 45%
2) BCCI share – 50%
3) Final stand payments – 5%
The franchise share is further pooled and split between the 8 franchisees. Each franchise should get approximately Rs. 85 crores each. The expense incurred by BCCI is deducted and the remaining amount is paid. It is evident from press releases that each franchise has received approximately Rs. 35 crores from BCCI as their share of rights income. Which means the remaining Rs. 400 crores (50*8) is spent by BCCI. The final stand payments are nothing but prize money which is split among the players.
The Lion
The trend of income sharing over a period of time reveals that BCCI would increase its share of gain. It is further more evident that BCCI is paying the franchisee’s share of rights income only after deducting the expenses. The entire share BCCI approx Rs. 250 crores in a year is in the bucket. (Don’t forget the increasing revenue trend!)
The Goat
The business approach of the franchisees (Indian Companies using share holders money as a sales promotion expense) is as follows:
1) Share from BCCI – Rs. 35 crores
(Statistics explained above)
2) Income from sponsors – Rs. 15 crores approx.
(Like NOKIA for KKR & AIRCEL for CSK)
3) Gate income – Rs. 10 crores approx
(All match ticket collections in their respective states would go to the franchise. For example, Ticket sales income from all matches played in Chennai would go to CSK)
4) Advertisement income – 10 crores approx
(Banners and hoarding around stadiums)
The franchisee does receive around Rs. 70 crores income in a year. However, the expenses are very huge considering the franchise fees, player fees, sales promotion, glamour quotient, advertisement, administration, etc, which would be atleast Rs. 150 crores. The expense is a tax saving for the company and NIL income for the government.
The Grass
We the people:
1) Direct to Home Service charges
2) Lots of time wasted
3) Sleepless nights
4) Ticket charges, if conducted in India
The Ecosystem
After all the revenue generation, degeneration and migration, I’ve decided to enjoy the game of cricket. For the simple fact that the so called legends are under played and youngsters are given an opportunity to exhibit their talent. I am in no mind set to accept the fact that IPL would bring revenue to the company and thereby benefiting the shareholders. The Statement would be something like, ‘Sharukh doesn’t smoke’ or ‘Preity doesn’t jump’ or ‘Shilpa doesn’t pray’ and ‘Mallya doesn’t drink’. The King makers are taking all chances to make the rich richer and the poor poorer.
Trust me! I saw the movie LAGAAN for the 3rd time, just a few hours before the IPL finals. It was still exciting, even after knowing the outcome. The emotion prevailed because in LAGAAN they played to save their LAND, in IPL they play to save their BRAND!
A display of valour was mightier than the display of glamour!
