A few months late already, but the Board of Control for Cricket in India (BCCI) has finally invited bids for the sale of media rights for international and domestic matches it will host from September 2023 to March 2027.
Let’s get straight to the numbers: Bids beyond Rs 6,000 crore to Rs 6,500 crore will prove to be lossmaking for any broadcaster that comes on board.
Before delving into the ‘whys’ and ‘hows’ of the matter, it is important to reiterate that the bidding, when it happens, will definitely touch Rs 6,000 crore – for a little over 100 matches – because of a clause in the tender: “The BCCI holds the right to cancel the auction if the per match value of the game does not touch Rs 60 crore.”
That’s the value – actually Rs 60.18 crore, to be specific – that Disney paid the BCCI per bilateral game in the 2018-2023 cycle that ended in March.
Because of the clause, bidding will touch the value stated and then begin to taper off, unless competition drives the numbers a little more. If not for the clause, industry estimates suggest anything beyond Rs 5,000 crore would be a lossmaking proposition.
What’s in play
After waiting for more than six months, the BCCI finally invited bids for the media rights. Commendably, it’s again opted for an e-auction and has set the per-game reserve price at Rs 25 crore for digital and Rs 20 crore for television.
A cluster of 102 matches has been packaged for the auction, based on India’s Future Tours Programme commitments at home. Bidding will be separate for digital and television – no consolidated bidding (TV+digital) will be allowed.
The BCCI brought Ernst & Young (EY) on board for the tender process and it helped draft the Invitation to Tender document, which is available on the BCCI website for a fee of Rs 15 lakh. The cricket board expects to wrap up the process by August end, given that Australia is to tour India in September.
Value erosion
Disney (earlier Star India) paid the BCCI Rs 60.18 crore per game through an approximately Rs 6,138 crore five-year deal for the previous cycle.
However, the new base prices are an indicator of how the overall value of rights has gone down over the years. The overall base price of Rs 45 crore per game is the price Disney (Star India then) paid for the rights in 2014-15.
The erosion in value is the result of bilateral contests lacking context, waning interest in random one-day internationals, the Indian Premier League eating into the business of bilateral cricket, and Test matches ending within three days.
“Quality of cricket has suffered. There’s more context to matches that India plays overseas, like the tour of England and the tour of Australia. Tests in India aren’t attracting eyeballs. The BCCI clearly needs to put in work where its own home season is concerned,” said an industry executive.
Industry estimates suggest that the peak per-match revenue generated by Disney during this rights cycle was between Rs 38 crore and Rs 40 crore. If Disney does not refute this claim (it hasn’t), then the broadcaster clearly incurred a minimum loss of Rs 20 crore to Rs 22 crore per game in the previous cycle.
For about 102 matches across the rights cycle, that’s a minimum loss of Rs 2,000 crore to Rs 2,200 crore that the broadcaster incurred.
How to determine value for the upcoming cycle?
Given Disney’s massive television reach across languages, its streaming platform Hotstar and a huge bouquet of pan-India entertainment channels, it would’ve been able to further cut those losses through ad-distribution arrangements across its properties. Yet, the point firmly remains that at Rs 60.18 crore per game, Disney’s rights business with the BCCI over the past five years was a lossmaking one.
The only encouraging factor for the BCCI is that digital – as a platform – has grown by leaps and bounds over the past four to five years. The pandemic spurred the rapid advance of streaming and threatened to wipe out television from urban Indian homes. One specific area where this stride clearly showed up was in the IPL media rights auction, when digital’s value turned out to be more than that of television.
In the recent IPL auction, the per-match digital value exceeded the per-match television value, thereby encouraging the cricket board to set higher expectations with the more futuristic platform.
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