Profit-making till now, KKR sees loss this season

Even as the seventh edition of the Indian Premier League (IPL) cricket tournament is set to kick off on Wednesday, one of the most popular and profitable IPL franchises has sounded a word of caution, saying there would be “significant losses” this time around.

“We are very close to kick-off for this season and on a cumulative basis, there has not been a sizeable profit. This year, there would be a significant loss as phase-I is taking place outside the country and many other expenses like entertainment tax to states will have an impact,” Venky Mysore, managing director and chief executive of Kolkata Knight Riders (KKR), told Business Standard.

KKR, co-promoted by Bollywood actor Shah Rukh Khan, had recorded a profit of ~10.42 crore in FY12, according to data filed with the corporate affairs ministry. This was a turnaround from a loss of ~11.28 crore in the previous year. The financial details for the FY13 are not available yet. KKR is owned by Knight Riders Sports Pvt Ltd, co-promoted by businessman Jay Mehta.

A major chunk of IPL teams’ revenues comes from the Board of Control for Cricket in India (BCCI) via the central sponsorship, which comprises digital and broadcast rights. On the other hand, revenues from stadium ticket sales and on-the-spot advertising also form a crucial chunk of revenues for the IPL franchises.

Each IPL team franchise has to pay an entertainment tax to its home state, which is a significant part of the total ticket sales during the matches held on the respective home ground of the franchise.

With the Indian government expressing its inability to provide security during election time, the initial matches of the cricketing extravaganza had to be moved to the United Arab Emirates. The tournament will return to India on May 2 as the polls draw to an end.

Mysore said the BCCI had told team franchises about providing subsidies for phase-I of IPL in the event of the franchises facing losses, but there was no clarity on the same. “These things would be crucial for franchises,” he noted.

The BCCI plans to bear some of the logistical expenses for the IPL franchises in the UAE, which would take some pressure off the franchises.

According to Mysore, KKR is yet to take a call whether to increase ticket prices during the India phase of IPL-7 matches.

“Franchises are worried as this substantial revenue source would be absent in the initial phase and, thus, have been trying to find ways to reduce losses as much possible,” said a member of the IPL governing council.