Hyd IPL team will be cash positive in 3 yrs: Sun Group

After winning the bid for the Hyderabad IPL franchise in October, the Sun Group is now betting big on its new catch. The company says the team will become cash flow positive in three years and is banking on revenues from sponsorships to drive growth. Swathi Narayanan of CNBC-TV18 reports.

Kalanithi Maran opened his cricketing innings on the IPL pitch this October with the purchase of the Hyderabad team, earlier called Deccan Chargers.

According to the company, the team will incur a loss of about 30 crore in the first year, near break-even in the second year and turn cash positive in the third year. From the sixth year, the company is confident that the franchise will become a big positive for them.

SL Narayanan, chief financial officer, Sun Group says, "The third year onwards, it moves into cash flow positive, rising till year five and at the end of the fifth year, the fixed fee obligation of Rs 85 crore falls away and then we pay a 20% of all revenue incomes to BCCI. So from year six, it becomes hugely positive."

Sponsorships is what will drive revenues, according to the company. Everything from the jersey to shoes will be marketed in a big way to bring in money, but given the economic slowdown, the fall in IPL TRPs and also the team's unimpressive performance recently, will garnering sponsors be an issue?

"One thing that we were debating is, can the income streams diminish fromIPL? But most recently we saw that the title sponsorship that has been bagged by a very prominent softdrink company and the amount paid is almost double of what was paid by the earlier title sponsor," Narayanan adds.

The Sun Group is confident the IPL team purchase compliments their already big presence in the media and entertainment space. As far as the team goes, the company is planning to retain 20 out of the 33 players from the Deccan Chargers team and will pick up more talent in the IPL auctions on January 19.