Taking cricket to whole new league

Now we know why Shahrukh Khan was spending so much time watching cricket because he wanted to buy. The film star and a whole host of who’s who put their money into the BCCI’s league cricket format, the IPL. Except for the Preity Zinta and Ness Wadia led combine, the other owners of the IPL teams were more or less expected. The only surprise, Reliance ADAG which was expected to win at least one of those 8 teams, didn’t quite connect.

The Bentley’s and the Rolls Royce’s were there, so were the Film Stars and the Business Men and their chequebooks and at stay, the chance to take cricket to a whole new league, the Indian Premier League.

And a happy ending for some of the 12 bidders ranging from P.E. Firms to Banks, to Infrastructure Companies and all economy stalwarts, 8 got lucky.

Mukesh Ambani pocketed the Mumbai City team for a cool USD 112 million. Force India Owner, Vijay Mallya took the rights for his hometown Banglore team for USD 111 million. Hyderabad went to Deccan Chronicle, infrastructure company GMR bagged Delhi, SRK got Kolkata, Ness wadia, Preity Zinta, Mohit Burman and Karan Paul together got Mohali. India Cements with BCCI Board Member, M Srinivasan got Chennai and Emerging Media with Lachlan Murdoch and IPL’s Lalit Modi got Jaipur while Future Group, ICICI Ventures and Sahara Group were disqualified because their bids did not make it in time. The winners had this to say.

“I have always watched sports because my kids love it and I love it, I really enjoy it especially the Twenty20 format because it keeps in mind the kind of timeframe we have. We are very busy running around, so you don’t get time. 3 hours is great time to go and entertain yourself,” said Shahrukh Khan

“We are delighted that UB Group got it, it will allow users as an active promotional platform for all our brands and we are much excited” added Vijay Mallya.

The IPL Franchises or the team owners will make good their investment through central and local revenue pools. The former will include for the first 5 years 80% of revenues generated from TV rights which will be split between the 8 franchises and same way the 60% of revenues generated from sponsorship in the first 10 years will be split. Revenues from the local pool will come in typically by gate or ticket sales, shirt sponsorship, merchandising, hospitality and media rights from team website, TV stations and the like and perhaps cashing in on Player’s endorsements

The BCCI has already floated a tender for the title sponsorship of the IPL.  Along with having a title sponsor, there will be 6 associate sponsors in different categories that BCCI will get onboard.

Some of the winners of the IPL city team say that they expect profit to tickle in 4-5 years while they expect to break even by year 3. By the costs side, each of them will start by paying the annual franchise right amount over the next 10 years and a guaranteed USD 3.3 million for the 78 players already contracted by the BCCI. Besides that, each of them will spend on local marketing.

“This business is for our expectations and there is a lot of things to be decided. Now, only the media rights have been decided and there are several other sponsorships to be done. We expect this business to break even in the 3^rd year by our conservative estimates. If everything goes well, it will be in the second year and we see business become profitable from the 4^th year onwards” said Fraser Castelimo.

While the IPL is being touted as a format for profitability, what needs to be seen is whether it can be as successful as international leagues like the EPL and the NFL

‘We know that the IPL for the BCCI has generated a significant broadcast deal with Sony Entertainment and this has provided the BCCI significant funds in order to try to set this tournament up. Through those funds, what they are able to do is obviously provide the money to the franchises to seek money and set up these franchises in different cities” pointed Kenney Hau, Regional Business, GroupM ESP.

With the media rights sold and the Franchisee owners in place. The action will now shift to the player auction scheduled for mid-February.