With BCCI is about to finalize the media partner for the cash-rich IPL on September 4, the IPL franchises will also be enjoying the windfall of the media rights.
As per the reports, the eight franchises are expected to INR 150 crore at least even before the first ball is bowled. The huge paycheque for the teams would give an expectation of a profitable balance sheet unless the teams spend extravagantly.
According to estimates, the media rights for television and digital coverage of the IPL are expected to be sold for at least INR 12,000-14,000 crore for the next five years (2018-2022). The title sponsor Vivo has already agreed to invest INR 2,199 crore in that pool with three or four official sponsors, expected to husk out INR 700-800 crore in that period as well.
BCCI will start sharing 40% of this INR 3,000 crore – INR 1,200 crore among the eight IPL teams that will be in competition next year. As per the Economic Times, a top IPL official said, “At the given cost structure, all the teams will comfortably break even next year. If the player cost doesn’t increase much, the profits will be upwards of Rs 50 crore.”
However, talking about the same, CEO of KKR, Venky Mysore said, “Yes, the central revenue pool will see an increase, but I don’t want to be presumptuous on what that number will be. It will make a lot of franchises profitable, but the way we see, the health of a franchise has to be independent of central revenue. One has to build a brand and a fan base, which ensures good valuation.”
Each and every IPL franchise spends INR 120-150 crore a year in running the team. It comprises of player costs, franchise fees, and other administrative and operating charges. From 2018 onwards, franchises won’t be paying a fixed franchise fee but will have to pay 20% of their revenue to BCCI.
Describing the same, Mysore said, “The valuation is based on how strong is your brand and how many fans you have. If the brand is strong, other brands will want to associate with you and if the fan base is strong, it will result in increasing the gate revenues and merchandise. If you rely only on central revenue, you are not creating value but subsidising other costs. But yes, the revenue pool increase will make shareholders of all franchises happier.”