 "Profit googly bowls out IPL franchises")
Domestic and foreign players have made fortunes out of the tournament, which is in its seventh season this year. The national cricket board, too, has earned a sizeable amount from the franchises and key sponsors.
For example, IPL sponsors will pay the BCCI about Rs 200 crore in 2014, including Rs 80 crore from Pepsi as the title sponsor. Sports marketing experts believe that, ideally, a sporting property like the IPL should start making profits after the first five years, but that has not happened with most teams.
There are reports of franchises struggling to get key sponsors on board even a week ahead of play-off, suggesting the teams may have to wait longer than anticipated.
Kolkata Knight Riders, one of the few profitable franchises, is already feeling the financial pressure. Venky Mysore, managing director & chief executive officer of Kolkata Knight Riders, said, “On acumulative basis we are yet to make a sizeable profit and the tournament’s move out of the country this year will make us incur extra costs, which will reflect in our books.”
The cricket board has lowered the television rights payout by 20 percentage points to the franchises on every game-day in IPL7 and gate revenues have been sliding at many of the stadiums due to an overdose of cricket and an array of controversies.
Stadium revenues account for about 40 per cent revenue for the team franchises on every game-day. Television ratings, too, have slid from the initial editions of the T20 tournament. While the cost for every franchise has gone up, the dip in advertising rates and sponsorship contracts are squeezing their accounts.
The full squad salary for 2014 is Rs 60 crore and this will rise by five per cent for the next two seasons, according to rules laid out by the IPL governing council.
“Usually, with a property like IPL, it is expected one would make profits after five years, but logistics costs have gone up and recent controversies have infused doubts over the league among many stakeholders. I think the owners may have to wait for another one or two seasons to make any sort of profits,” said Ashesh Jani, partner, Deloitte Haskins & Sells.
Kolkata Knight Riders, co-promoted by Bollywood actor Shah Rukh Khan, had posted a profit of Rs 10.42 crore in 2011-12, according to data filed with the corporate affairs ministry. This was a turnaround from a loss of Rs 11.28 crore in the previous year. The team had won the league in 2012.
Pune Warriors, owned by Sahara Adventure Sports, had a profit of about Rs 2 crore in 2010-11, but the team is not a part of this year’s cricketing extravaganza. Royal Challengers Bangalore, promoted by liquor baron Vijay Mallya, posted a loss of Rs 9.49 crore in 2011-12, widening the previous year’s loss by close to Rs 2 crore.
Film star Preity Zinta’s Kings XI Punjab also lost Rs 1.50 crore in 2011-12. This, however, is a lower figure compared to a loss of Rs 30 crore a year ago.
Trimming losses, some of the franchises were hoping to make it to the other side of the bridge, but these expectations were belied when it was decided that a part of this IPL season will be played in the United Arab Emirates. Due to Lok Sabha elections, the IPL will start from Wednesday in the UAE and will return to India from May 2.
ON A STICKY WICKET
- Despite running into 7th edition, most franchises are yet to make profits
- Costs rose for franchises while flow of revenue from multiple avenues have been impacted
- Gate revenues have been sliding at many of the stadiums and IPL 7 would see lesser home matches for many team owners
- Players — domestic and foreign — have made fortunes, while the national cricketing board has also made big money from the franchises and key sponsors