The Board of Control for Cricket in India (BCCI) today said it had got MSM Satellite (Singapore) Pte Ltd, the broadcasters of the Indian Premier League (IPL) matches, to accept an amended media rights agreement. By the new pact, MSM will pay BCCI an additional Rs 425 crore for the broadcasting rights. The money will be divided between the franchisees and the board, based on a revenue share model.
BCCI's decision to amend the media rights agreement brings the curtain down on the “facilitation fee” that MSM was supposed to pay to the World Sports Group (WSG), which had secured the broadcasting rights for the matches in the Indian subcontinent and had later relinquished these rights in favour of MSM.
The facilitation fee had sparked a controversy as the deal was struck by suspended IPL chairman Lalit Modi. On Friday, BCCI officials termed the facilitation fee as an “improper payment.”
“MSM Satellite (Singapore) Pte Ltd, the media rights holder for the sub-continent had agreed, vide an agreement dated March 21, 2010, to pay “facilitation fee” of Rs 425 crore to WSG Mauritius Ltd,” BCCI said in a statement. “On becoming aware of this, BCCI contended that this money belonged to the Board and should have been part of the rights fee. BCCI had also informed MSM Satellite that this was improper payment. MSM has agreed to pay the said amount to BCCI as part of the rights fee,” it said.
“MSM has agreed to pay Rs 300 crore as part of the rights fee to BCCI. MSM is taking steps to recover Rs 125 crore already paid to WSG and on recovery, will pay the same to BCCI,” the statement added.
WSG India had originally bought the worldwide telecast rights of the IPL for 10 years (2008 to 2017) at a cost of over $1 billion (Rs 4,600 crore). Meanwhile MSM had secured the rights to broadcast in India for five years (2008 to 2012) and had the option of securing the rights for the remaining five years (2013-2017) by paying WSG an option fee of $25 million. If MSM chose to exercise its option, WSG would in turn have to pay the BCCI $35 million at the end of the fifth year.
However, the board cancelled the original rights deal in 2009 and negotiated a new deal with WSG Mauritius. On its part, MSM did not want to renegotiate with WSG, and instead asked for a direct contract with BCCI. The result was that MSM negotiated a deal with BCCI for the same price and duration as WSG Mauritius. The nine-year deal was worth Rs 8,200 crore.
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According to some estimates, MSM made Rs 300 crore and Rs 450 crore in advertisement revenues in 2008 and 2009, respectively. It has made over Rs 800 crore in advertisement revenues in 2010.
On Friday, the BCCI Governing Council also reviewed the status of all issues relating to Lalit Modi. “The members were briefed about the three showcause notices issued to Lalit Modi and his replies. Members were briefed in detail about the investigations into IPL and outstanding payment to BCCI from several vendors who were part of the IPL-3. The vendors included Ticketgenie, the ticketing agency,” BCCI said in the statement.
Union minister Farooq Abdullah, who attended the meeting, said: “Various problems related to the IPL were discussed in the meeting. There have been major irregularities by the past chairman. In the meeting on July 3, more such issues will be discussed.”