Sunday, September 28, 2008

Show Me The Money

The India Premier League that took place earlier this year shook the face of the cricketing world. A new era of cricket had dawned upon us and everyone was intrigued at how this would unfold.

Teams were sold to private owners who became franchisees of the BCCI.

Players were sold in an open auction as the free market price rule was applied to cricketers for the first time ever.

Unprecendeted levels of money was spent on some cricketers.

Team owners generously spent money on team launches, advertisements, music videos, and bollywood ambassadors for the teams among a number of other things.

While all this money was being spent on teams and players, there was one question in everyone's mind - how will the team owners make money?

Gate money was one of the most common answers.

Share of sponsorship fee and TV rights was another.

Others suggested a number of other revenue streams such as selling team memorabilia and opening restaurants themed on the teams.

Those who thought that the likes of Mukesh Ambani, Vijay Mallya, and Shahrukh Khan had money to throw away and didn't care about the profits or losses from a cricket team were soon to realise that these men were serious about making money from cricket.

These guys were dead serious about making money that the investment bankers had shown they could.

When the IPL's 1st season ended, no one really knew where the franchises stood.

Had they made money? Had they made huge losses? Will they sell some players to make up for the losses? Will they sell their teams? Will new partners be brought on? These along with numerous other questions were being asked.

The IPL was a success no doubt. For the BCCI and the players, it was a huge success.

But was it for the franchises? Was it for India Cements and Emerging Media? For Ambani and Mallya? for Preity and Shahrukh?

According to BCCI's recently held Annual General Meeting, it definitely was!

At the AGM, the BCCI announced that each franchise owner has recovered 80% of its first year cost through television and sponsorship revenues.

This doesn't mean that any of them are profitable yet but it is still more money than even they thought they would make in the 1st year.

Their 10-year returns have just gone higher than they expected.

Sure they're still a long way away from breaking even, but this wouldn't stop Priety Zinta or Vijay Mallya from smiling their way to the bank.

Make your pitch on this post...



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17 Pitched:

  1. khansahab said...
     

    This is unbelievable. Fawad Alam has scored centuries and a triple century in this tour against the international Kenya side and today in a one-day game he made 83, the highest score and then bowled his full quota of 10 overs and was the most economical bowler. He also grabbed 2 wickets.

    No one should doubt his immense talent now and he needs to be given more chances at international level.

    The answer to the question as to why he didn’t make so many runs at international level is that he is currently batting at no 3 and 4, not at no 7 and 8 which is what he was batting on when playing for the international side.

  2. scorpicity said...
     

    This is incredible... but I seriously wonder how many of this is actually manufactured.

  3. Q said...
     

    Khansahab I have been following Fawad's performance and was going to do a post after his 308* but i thought it would be better to do it after the tour is over. They have 1 more ODI left and then i'll write on him. He's done extremely well.

  4. Q said...
     

    Manufactured Scorpi? U mean the profits?

  5. Naked Cricket said...
     

    Khansahab, your comment was unbelievable too. Enjoy the off topic stuff.

  6. a fan said...
     

    well, the castle of cards did get handled quite successfully!

    Here is a Feb dated article in Outlook Business,The business man's game explaining in detail the Pre IPL plan.

    Infact, India Cements EPS was rerated by few analysts to include the earnings from Chennai Superkings and there were exclusive research reports published with a complete long term 10 year projection.

  7. khansahab said...
     

    Naked cricket

    I was not aware of the policy of this blog to post only topic-related comments. I apologise to Q for breaching the blog rules.

  8. Q said...
     

    a fan - i remember reading those analyst reports by a number of brokerage firms. they even talked about gaining exposure to the IPL teams by buying stocks of India Cements and Reliance.

    I remember seeing the projections and if my memory serves me right break even was somewhere in year 3 and losses were high in the 1st 2 years.

    According to the BCCI annual report, the money made by franchises is way higher than what was expected.

    I'd like to hear what Scorpi has to say regarding the manufacturing.

  9. Q said...
     

    No need for apologies khansahab.. Im sure NC was just pulling ur leg..

  10. Naked Cricket said...
     

    Khansahab, it was a complement. Enjoy gng off topic myself. here's to spontaneity!

  11. Wasim said...
     

    Q

    Only two teams have registered profit, they are Kolkata Knight Riders and Rajasthan Royals.

    Kolkata Knight Riders
    FRANCHISE FEE: Rs 300 Cr

    REVENUES: 89
    BCCI, SET MAX: 35
    TEAM SPONSORS: 34
    GATE RECEIPTS: 20

    EXPENSES: 81
    FRANCHISE FEE: 31
    TEAM: 25
    AD, ADMIN: 25

    NET PROFIT: Rs 8 Cr

    Rajasthan Royals
    FRANCHISE FEE: Rs 268 Cr

    REVENUES: 55
    BCCI, SET MAX: 35
    TEAM SPONSORS: 15
    GATE RECEIPTS: 5

    EXPENSES: 50
    FRANCHISE FEE: 27
    TEAM: 13
    AD, ADMIN: 10

    NET PROFIT: Rs 5 Cr



    Kings Punjab
    FRANCHISE FEE: Rs 304 Cr

    REVENUES: 61
    BCCI, SET MAX: 35
    TEAM SPONSORS: 18
    GATE RECEIPTS: 8

    EXPENSES: 64.4
    FRANCHISE FEE: 30.4
    TEAM: 25
    AD, ADMIN: 9

    NET LOSS: Rs 3.4 Cr


    Chennai Super Kings
    FRANCHISE FEE: Rs 364 Cr

    REVENUES: 74
    BCCI, SET MAX: 35
    TEAM SPONSORS: 25
    GATE RECEIPTS: 14

    EXPENSES: 80
    FRANCHISE FEE: 36
    TEAM: 25
    AD, ADMIN: 18

    NET LOSS: Rs 4 Cr



    Delhi Daredevils
    FRANCHISE FEE: Rs 336 Cr

    REVENUES: 71
    BCCI, SET MAX: 35
    TEAM SPONSORS: 20
    GATE RECEIPTS: 16

    EXPENSES: 79
    FRANCHISE FEE: 34
    TEAM: 23
    AD, ADMIN: 22

    NET LOSS: Rs 8 Cr



    Deccan Chronicle
    FRANCHISE FEE: Rs 428 Cr

    REVENUES : 64
    BCCI, SET MAX: 35
    TEAM SPONSORS: 19
    GATE RECEIPTS: 10

    EXPENSES: 84
    FRANCHISE FEE: 45
    TEAM: 24
    AD, ADMIN: 15

    NET LOSS: Rs 20 Cr

    Mumbai Indians
    FRANCHISE FEE: Rs 448 Cr

    REVENUES: 70
    BCCI, SET MAX: 35
    TEAM SPONSORS: 18
    GATE RECEIPTS: 17

    EXPENSES: 91
    FRANCHISE FEE: 45
    TEAM: 20
    AD, ADMIN: 26

    NET LOSS: Rs 21 Cr
    Royal Challengers
    FRANCHISE FEE: Rs 446 Cr

    REVENUES: 50
    BCCI, SET MAX: 35
    TEAM SPONSORS: 0*
    GATE RECEIPTS: 15

    EXPENSES: 95
    FRANCHISE FEE: 48
    TEAM: 22
    AD, ADMIN: 25
    NET LOSS: Rs 45 Cr

  12. Straight Point said...
     

    that's some detail wasim bhai...

    enjoyed the pic along with post Q...very apt... :)

    they all will be registering profits from this season...a lot will change after second season is over...cricketing as well as marketing wise...

    i predict IPL will the THE league to play for...

  13. Wasim said...
     

    Except for KKR and RR the rest of the franchises are projected to make profit after the fifth year, when the local sponsorship rights will be re-negotiated, the revenue streams will remain stagnant until then due to the long term nature of the contracts although the gate money and the sale of merchandise can grow by 10% which will be offset by an increase in player acquisition costs.

  14. scorpicity said...
     

    yup Q, something doesn't seem to add up right... Wasim perhaps hit it perfectly.

  15. Q said...
     

    Thanks SP.

    Thats amazing detail Wasim. Can u guide me to the source please. Or do u have some report that you could mail me. Will appreciate it.

    Thanks.

  16. a fan said...
     

    http://economictimes.indiatimes.com/quickiearticleshow/msid-3095631.cms

    But, not sure to what extent the above is true.

    Wonder how much profit will be made by the franchises due to the Twenty20 Champions League...

    Also any idea what happened to the IPL Prize money? Does it go to franchise or to the team?

  17. Anonymous said...
     

    i love cricket.
    more i most like IPL india so intresting

    regards
    http://www.livetv.pk/setmax_tv.html

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