 "Supreme Court deals a body blow to IPL")
Taking a hard stance over the alleged irregularities in the sixth edition of the Indian Premier League (IPL), the Supreme Court on Thursday proposed N Srinivasan, president of the Board of Control for Cricket in India (BCCI), be replaced by former cricketer Sunil Gavaskar and two of the eight IPL franchises be dropped from this year’s tournament.
According to agency reports, Gavaskar was ready to take the responsibility and said he would be “honoured” and “happy” to adhere to the directives of the highest court of the land.
In what could severely affect the Rs 2,500-crore T20 cricket league, the Court said the Chennai Super Kings (CSK) and Rajasthan Royals (RR) franchises, the executives of which had been found guilty of corruption in the Mudgal committee’s report on spot-fixing in IPL, should be banned from the tournament. It added no employee of India Cements, which owns Chennai Super Kings, should hold any responsibility at BCCI. Srinivasan is vice-chairman and managing director of the cement company.
Meanwhile, the cricket board, which was to hold a press conference in Abu Dhabi to launch IPL 2014, cancelled the event, apparently in view of the Court developments.
If the Court’s proposal to drop the two teams is indeed accepted, the seventh season of IPL will see participation of only six teams and the total number of matches in the tournament will come down to 34 from 60 expected earlier. This would raise serious doubts on viability of the cricket extravaganza, besides causing a substantial financial impact on franchisees, the broadcaster (Multi Screen Media, or MSM), sponsors & advertisers, as well as BCCI, which gets a large chunk of its earnings from this mega event.
In the event of a shortened tournament, MSM, which telecasts the tournament on three channels (SET MAX, Sony Six and Sony Six HD), would find it difficult to earn the Rs 900 crore which it was expecting to make through advertising this year. It has already launched its marketing campaign for the season and is estimated to have spent Rs 30-33 crore on that. According to media planners, it has already sold 40 per cent of its advertising inventory, so it has very little scope to raise rates. But, with fewer matches, its ad inventory according to analysts will come down by more than 40 per cent.
When contacted, MSM refused to comment. “We have had no communication from BCCI on this, so will wait. Since the matter is in Court, we will wait for the court order and see how things pan out,” said Rohit Gupta, chief sales officer, MSM.
Title sponsor PepsiCo, which associated itself with the tournament last year, seems to be having a bad run. While IPL was last year confronted with the betting scandal, this year it faces a new challenge about the future of the tournament. The company said it would not like to comment on the matter, as it was sub judice. A spokesperson for Vodafone, IPL’s on-ground sponsor, said the company would wait for the final verdict. Officials at YES Bank, also an on-ground sponsor, were not available for comment.
However, some regular IPL advertisers were categorical that they would renegotiate their contracts with MSM if the number of matches was reduced. “If ad rates move up because the number of matches is reduced, we will walk out of the tournament,” said B Thiagarajan, president at air-conditioning and refrigeration products group, Blue Star. “We may stay if the rates remain intact or are reduced.”
Nandini Dias, CEO of Lodestar UM, a top media agency that manages the media duties of advertisers like Amul, said: “The point here is that if there are fewer matches, the reach is affected. And, advertisers come on board IPL for the reach factor. Naturally, a decision will have to be taken accordingly,” she said.
Another stream that will be hit is of gate revenues. Both CSK and RR are among popular IPL teams. If they are axed, attendance of the live audience will be affected, say experts. Gate revenues directly affect the franchises, since they stake claim to almost 80 per cent of ticket money collected on their home grounds.
Also, a trouble lurking could be of legal tangles. At present, the franchises have to pay 10 per cent of their total franchisee fees to BCCI annually. Many are pitching for IPL to be suspended this year. “Given the context and the current chain of events, I reckon it’s only right that until the faith of the people in the integrity of the game is restored, the IPL tournament for 2014 should be suspended. Only once we have rid ourselves of the scourge, that is “fixing” of any kind, should we continue. Remember that it is the intense emotional engagement of the fan that complements the technical brilliance of a cricketer and that should never be interrupted or scarred with the corrupt practices of people in charge,” former IPL commissioner Lalit Modi wrote in his blog.
An official associated with a franchise from North India said: “There is a clause that indicates that in case of a overriding situation where the tournament does not take place in a given year, the franchise’s contract will be extended by a year. This means, the teams will not have to pay the fees for the year the tournament is suspended. However, that is the easy part. The tough part will be salvaging the brand IPL. There is already a lot of nervousness around the tournament and that is why franchises and the broadcaster are finding it difficult to rope in sponsors.” This executive says the tournament will not be viable with six teams.
Besides, the initial franchise contracts were signed for an eight-team tournament. There is a confusion over what happens to the players of the teams that face expulsion. CSK and RR spent a combined Rs 110 crore on acquiring players at this year’s auction in February. “It is too short a time to re-allocate the players to other teams. Had this happened before the auctions or even a month ago, there was still scope of doing that. In this case, we will have an IPL where some of the top players won’t be playing. This will impact the television viewership and the attendance at stadiums,” says an official from one of the franchises in the clear.
GOING FOR A TOSS
Who was expected to get what from IPL-7
BCCI
* Rs 200 cr: From IPL sponsors, including Rs 80 crore from title sponsor Pepsi
* Rs 722 cr ($120 mn): Value estimated to come from SET MAX for broadcasting rights
* Rs 475 cr: From the eight franchises
FRANCHISES AND BROADCASTER
* Rs 900-950 cr: Estimated ad revenues for broadcaster SET MAX
* Rs 250 cr: The eight franchises’ estimated earnings from sponsorships and stadia advertising
* Rs 15-20 cr: The amount each franchise expects to earn from gate money
* Rs 390 cr: Franchises’ expected earnings as their 54% share in what SET MAX pays BCCI (apart from Rs 108 cr from what IPL sponsors pay BCCI)
HOW THE EQUATION CHANGES IF TWO TEAMS ARE AXED
* Matches The number of matches drops by 43% from 60 to 34
* Revenues To earn the same revenue as estimated from 60 matches, SET MAX will have to nearly double its ad rates. Alternatively, it could approach BCCI and offer to pay proportionally less broadcasting fees
* Franchisee fees If axed, Chennai Super Kings and Rajasthan Royals could withhold the Rs 95 cr they were to together pay as franchisee fees to BCCI this year
* Players’ fees CSK and RR shelled out Rs 113 cr to buy players in this year’s auction. It’s unclear whether or not they will have to pay the players if they are axed from IPL
* BCCI’s earnings If the board has to compensate teams, broadcaster and sponsors for fewer matches, its earnings from IPL will take a substantial hit
* Gate fees & stadia revenue Besides the fact that many matches are to be played abroad, if the number of ties comes down, franchisees’ gate money and stadia revenue will fall, since sponsors would ask for lower rates4
According to agency reports, Gavaskar was ready to take the responsibility and said he would be “honoured” and “happy” to adhere to the directives of the highest court of the land.
In what could severely affect the Rs 2,500-crore T20 cricket league, the Court said the Chennai Super Kings (CSK) and Rajasthan Royals (RR) franchises, the executives of which had been found guilty of corruption in the Mudgal committee’s report on spot-fixing in IPL, should be banned from the tournament. It added no employee of India Cements, which owns Chennai Super Kings, should hold any responsibility at BCCI. Srinivasan is vice-chairman and managing director of the cement company.
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The Court’s three-point proposal was part of its observations in its hearing on the matter pertaining to allegations of corruption in last year’s IPL series. BCCI was given time until 10.30 am on Friday to respond to these proposals.
Meanwhile, the cricket board, which was to hold a press conference in Abu Dhabi to launch IPL 2014, cancelled the event, apparently in view of the Court developments.
If the Court’s proposal to drop the two teams is indeed accepted, the seventh season of IPL will see participation of only six teams and the total number of matches in the tournament will come down to 34 from 60 expected earlier. This would raise serious doubts on viability of the cricket extravaganza, besides causing a substantial financial impact on franchisees, the broadcaster (Multi Screen Media, or MSM), sponsors & advertisers, as well as BCCI, which gets a large chunk of its earnings from this mega event.
In the event of a shortened tournament, MSM, which telecasts the tournament on three channels (SET MAX, Sony Six and Sony Six HD), would find it difficult to earn the Rs 900 crore which it was expecting to make through advertising this year. It has already launched its marketing campaign for the season and is estimated to have spent Rs 30-33 crore on that. According to media planners, it has already sold 40 per cent of its advertising inventory, so it has very little scope to raise rates. But, with fewer matches, its ad inventory according to analysts will come down by more than 40 per cent.
When contacted, MSM refused to comment. “We have had no communication from BCCI on this, so will wait. Since the matter is in Court, we will wait for the court order and see how things pan out,” said Rohit Gupta, chief sales officer, MSM.
Title sponsor PepsiCo, which associated itself with the tournament last year, seems to be having a bad run. While IPL was last year confronted with the betting scandal, this year it faces a new challenge about the future of the tournament. The company said it would not like to comment on the matter, as it was sub judice. A spokesperson for Vodafone, IPL’s on-ground sponsor, said the company would wait for the final verdict. Officials at YES Bank, also an on-ground sponsor, were not available for comment.
However, some regular IPL advertisers were categorical that they would renegotiate their contracts with MSM if the number of matches was reduced. “If ad rates move up because the number of matches is reduced, we will walk out of the tournament,” said B Thiagarajan, president at air-conditioning and refrigeration products group, Blue Star. “We may stay if the rates remain intact or are reduced.”
Nandini Dias, CEO of Lodestar UM, a top media agency that manages the media duties of advertisers like Amul, said: “The point here is that if there are fewer matches, the reach is affected. And, advertisers come on board IPL for the reach factor. Naturally, a decision will have to be taken accordingly,” she said.
Another stream that will be hit is of gate revenues. Both CSK and RR are among popular IPL teams. If they are axed, attendance of the live audience will be affected, say experts. Gate revenues directly affect the franchises, since they stake claim to almost 80 per cent of ticket money collected on their home grounds.
Also, a trouble lurking could be of legal tangles. At present, the franchises have to pay 10 per cent of their total franchisee fees to BCCI annually. Many are pitching for IPL to be suspended this year. “Given the context and the current chain of events, I reckon it’s only right that until the faith of the people in the integrity of the game is restored, the IPL tournament for 2014 should be suspended. Only once we have rid ourselves of the scourge, that is “fixing” of any kind, should we continue. Remember that it is the intense emotional engagement of the fan that complements the technical brilliance of a cricketer and that should never be interrupted or scarred with the corrupt practices of people in charge,” former IPL commissioner Lalit Modi wrote in his blog.
An official associated with a franchise from North India said: “There is a clause that indicates that in case of a overriding situation where the tournament does not take place in a given year, the franchise’s contract will be extended by a year. This means, the teams will not have to pay the fees for the year the tournament is suspended. However, that is the easy part. The tough part will be salvaging the brand IPL. There is already a lot of nervousness around the tournament and that is why franchises and the broadcaster are finding it difficult to rope in sponsors.” This executive says the tournament will not be viable with six teams.
Besides, the initial franchise contracts were signed for an eight-team tournament. There is a confusion over what happens to the players of the teams that face expulsion. CSK and RR spent a combined Rs 110 crore on acquiring players at this year’s auction in February. “It is too short a time to re-allocate the players to other teams. Had this happened before the auctions or even a month ago, there was still scope of doing that. In this case, we will have an IPL where some of the top players won’t be playing. This will impact the television viewership and the attendance at stadiums,” says an official from one of the franchises in the clear.
GOING FOR A TOSS
Who was expected to get what from IPL-7
BCCI
* Rs 200 cr: From IPL sponsors, including Rs 80 crore from title sponsor Pepsi
* Rs 722 cr ($120 mn): Value estimated to come from SET MAX for broadcasting rights
* Rs 475 cr: From the eight franchises
FRANCHISES AND BROADCASTER
* Rs 900-950 cr: Estimated ad revenues for broadcaster SET MAX
* Rs 250 cr: The eight franchises’ estimated earnings from sponsorships and stadia advertising
* Rs 15-20 cr: The amount each franchise expects to earn from gate money
* Rs 390 cr: Franchises’ expected earnings as their 54% share in what SET MAX pays BCCI (apart from Rs 108 cr from what IPL sponsors pay BCCI)
HOW THE EQUATION CHANGES IF TWO TEAMS ARE AXED
* Matches The number of matches drops by 43% from 60 to 34
* Revenues To earn the same revenue as estimated from 60 matches, SET MAX will have to nearly double its ad rates. Alternatively, it could approach BCCI and offer to pay proportionally less broadcasting fees
* Franchisee fees If axed, Chennai Super Kings and Rajasthan Royals could withhold the Rs 95 cr they were to together pay as franchisee fees to BCCI this year
* Players’ fees CSK and RR shelled out Rs 113 cr to buy players in this year’s auction. It’s unclear whether or not they will have to pay the players if they are axed from IPL
* BCCI’s earnings If the board has to compensate teams, broadcaster and sponsors for fewer matches, its earnings from IPL will take a substantial hit
* Gate fees & stadia revenue Besides the fact that many matches are to be played abroad, if the number of ties comes down, franchisees’ gate money and stadia revenue will fall, since sponsors would ask for lower rates4