Event management companies salivate at IPL earnings, but unsure on doing a full job.
A business opportunity has just opened on the events management rights of the remaining eight editions of the Indian Premier League (IPL) Twenty20 format cricket tournament. Around half a dozen local sports and event management companies are keen to offer their services to the Board of Control for Cricket in India (BCCI), the IPL organisers.
These include firms like Wizcraft (organisers of IIFA film awards, among other shows), Globosports (sports and celebrity management firm), DNA Entertainment (events and live concert organisers) and Encompass (specialised event management firm), industry sources said.
Experts say any firm that wins the rights to organise the logistics for future IPLs will earn Rs 80-100 crore over the next eight years. On cash generation, the IPL has been a big success. It was estimated to have generated around Rs 500 crore of revenue for the BCCI in 2008 and an equal amount this year.
The opening for new firms is due to BCCI’s decision to terminate a 10-year memorandum of understanding with sports management company IMG International last week, saying it was paying too much. The latter is a specialised sports management company, with offices in 30 countries. IMG International was behind the conceptualisation and management of the first two editions of IPL in 2008 and 2009.
According to reports, for IPl-1 (2008), BCCI paid Rs 43 crore to IMG as its event management fees, while it will pay Rs 33 crore for IPL-2 (2009). The working committee of BCCI has already raised concerns over high costs in organising IPL. The governing council of IPL is expected to meet on Tuesday to take up the financials of IPL-2. “At least 70 per cent of the revenue generated by the IPL has to be equally divided between the 25 state cricket associations. Therefore, BCCI is looking at ways and means to curtail its necessary outgo to a minimum,” says a source.
Several IPL team owners like Shah Rukh Khan’s Kolkata Knight Riders and Shilpa Shetty’s Rajasthan Royals have expressed concern over the removal of IMG International as the event managers. When asked, Amrit Mathur, chief executive of Delhi Daredevils, the IPL team of Delhi, said: “We too are concerned. We hope the matter is resolved sooner than later, as the event management of a big tournament like IPL is crucial and central to the 35-40 days of non-stop Twenty20 cricket across several venues.”
Local event management companies are keen to fill the post-IMG gap, but unsure if they can handle it entirely.
“We are equipped to handle the event management aspect of IPL for, say, its opening and closing ceremony or some matches played in, say, Mumbai. But overall, it is a specialised job and I do not see any one local agency that can handle an event like IPL all by themselves,” says Roshan Abbas, MD and chairman of Encompass, the event management firm owned by WPP group in India. “At least two to three specialised firms will have to join hands and their respective expertise in order to organise the future IPL tournaments.”
Industry experts say an event management firm gets 10-15 per cent of the overall production cost of an event as its fees. In IPL’s case, the event fees for IMG International has been linked to the revenue (10 per cent) generated by the IPL. “What BCCI is paying to IMG is at least four to five times the fees compared to what an Indian event management firm may charge for organising IPL,” says a senior executive of a leading company in the area.
When asked, top executives of some of the home-grown events’ management company declined to comment. “Nothing is formalised as of now. But informally, some of the event firms have met top BCCI officials,” a top executive of a sports management firm said. Sources in IPL have confirmed that BCCI is actively exploring opportunities to organise the remaining IPL tournaments either on its own or by outsourcing some of the logistics to an Indian firm.
“It should not take more than Rs 7-10 crore for a local events management firm to handle the logistics for IPL-3 (to be held in 2010), almost a third of the cost compared to IPl-2,” says a top executive of an event management firm.
