Indian Super League has no $ hedge

Indian Super League football team franchisees may be stumped by having to pay their foreign players in dollars. They might have to fork out far more than they had expected for five foreign players each team can have.

This was in contrast with the Indian Premier League cricket franchisees because the dollar-rupee ratio had not been capped in ISL, a franchise owner confirmed.

"Unlike the IPL, we have not capped the dollar against rupee. This may turn out to be a benefit at times, but also result in shelling out extra depending on the rupee's fluctuation," said the co-owner of a ISL franchise club.
 

IPL player auctions used to take place in dollars until last year, when bidding was shifted to rupees. Before that, according to the IPL's governing council rules, each dollar was capped at Rs 40, regardless of exchange rate volatility.

MONEY MATTERS

• Foreign players’ payout in dollars could escalate franchise cost for the team
• Dollar has not been capped at any point against rupee for ISL, says a franchise co-owner  
• In IPL, until last year auctions used to take place in dollar where it was capped at Rs 40
• Based on the range of volatility, it could impact the foreign players’ payout by about 10 per cent

On Wednesday, the rupee lost 35 paise to close at a four-week low of 60.95 to the dollar. The rupee closed at 60.94 to a dollar on Thursday.

Exchange rate fluctuations could vary teams' payout to foreign players by about 10 per cent. The average annual franchise cost for ISL teams is about Rs 15 crore in the first edition. A volatile rupee could upset team budgets and the pay parity between Indian and foreign players. The difference would not be much though, the co-owner of the franchise added.

The average franchise cost for a team in the IPL's first edition was over Rs 36 crore, which swelled to about Rs 60 crore by the seventh edition. But in a country where cricket is considered a religion, the interest and money the ISL football tournament has drawn from investors is commendable.

Popular foreign names like Del Piero, David Trezeguet and Michael Chopra have added to the buzz around the tournament that is a month away from kick-off in Kolkata. The football league announced late last year is a joint venture between IMG-Reliance (70 per cent) and Star India (30 per cent). As co-owners of club franchises, sportsmen Sachin Tendulkar and Sourav Ganguly and Bollywood actors John Abraham and Ranbir Kapoor have added a dash of curiosity to the league promising to improve football infrastructure in India.