Whopping rights bid to see franchisees out of RED

Henceforth, the Indian Premier League will be a lucrative business for all the franchisees. Gestation period is over, time for profits to flow in. The balance sheets will be out of red. On two counts, straight from the BCCI balance sheet. First, there is no franchisee fees to pay from the eleventh season onward. The big jumbo is off each franchisees back. Second, share from the IPL central revenues becomes good enough to write off any threat of operational losses.

The whopping  INR 16,347.5 crore IPL media rights bid comes as comes a financial windfall for the franchisees, too. Add to this an unprecedented INR 2,199 crore Vivo had committed for the IPL title sponsorship. Another INR 200 crore are expected from associate sponsorship sales for the next season.

Star and Vivo have changed the dynamics of IPL rate cards. These will also reflect on the associate sponsorship sales for the 2018 IPL season. A base price of up to INR 50 crore is expected for each of the four associated sponsor categories, including the strategic break partner.

Put the media rights and sponsorship sales together and the BCCI is assured of an INR 3,909.3 crore gross revenue per annum.

The franchisees collectively gain a net 40% from revenues in BCCI’s IPL account. “It (the revenue distribution) is 50-50 between the BCCI and the franchisees. However, at the same time the board also has a 20% share in franchisees’ respective revenues. Hence, after taking that into account, it becomes 40% for the franchisees and 60% to the BCCI,” clarifies BCCI’s officiating treasurer Anirudh Chaudhary.

That ensures a revenue of INR 175 to INR 215 crore per annum for each of the eight franchisees. The break up is simple. Of the INR 3,909 crore, the IPL balance sheet will reflect in the revenue column, INR 1,563.7 crore is franchisees’ gross share.

The variation in each franchisees net gain is a reflection of their respective pie in the central pool revenue share, which varies from 45% to 55% from franchisee to franchisee. Even if it takes a season or two for some of the franchisees to write off their cumulative losses incurred in the past, harvest season in IPL has now set in for each team owner in cricket’s most lucrative business property.