It will be raining money for the Board of Control for Cricket in India (BCCI), the country’s apex cricketing body, as two new team franchises of the Indian Premier League (IPL) go under the hammer on Monday. The new owners will be declared in Dubai by the end of day.
According to estimates, BCCI is expected to rake in an additional Rs 5,000-7,000 crore from the sale of the two new teams, apart from an additional Rs 450 crore plus from its share of broadcasting and sponsorship revenues in 2022. That’s because the number of matches in the tournament will go up from 60 to 74 next year (due to the number of teams going up from eight to 10). Disney+Hotstar has to fork out Rs 54.5 core per match for beaming and streaming the live matches.
But the big bonanza for both BCCI as well as the franchisees – both new and old – will come from 2023, when the media and digital rights of the IPL will be up for grabs again for a period of five years. The auction, which should begin soon, is expected to see participation from top companies across the globe, now that there will be more teams, more matches and, of course, more earnings on offer.
Industry and BCCI executives expect that the winning bid price to double from Rs 16,347.5 crore – Disney+Hotstar’s successful bid for five years – to Rs 32,694 crore this time. If that is achieved, the share of the revenue from only the broadcasting and digital rights for each of the 10 franchisees will shoot up from Rs 201.6 crore currently to as much as Rs 326.9 crore — a staggering rise of 60 per cent annually.
It would also mean another bonanza for the BCCI — doubling its revenues from the rights to Rs 3,269 crore annually. And that does not include its possible share in the increase from IPL sponsorship revenues, which would also go up because more matches will be played.
For the uninitiated, the central revenues of the BCCI, which include the broadcasting and digital rights as well as sponsorships, are shared in such a way that half of it goes to the cricket body and the rest is shared equally amongst the franchisees. Also, the winners of the new franchisees do not have to pay the entire bid money in one go, but only 20 per cent of their revenue (which, apart from a share of central revenues, also includes income from team sponsorship like branding on the team jersey, selling team branded products and so on) to the BCCI each year till they meet the total amount.
Clearly, it’s the huge expected revenue upside that is the reason so many companies have shown interest in acquiring a new team, despite its stiff price.
And BCCI knows that. It has pegged the reserve price at Rs 2,000 crore for each team. Also, companies or individuals that are bidding are required to have a minimum net worth of Rs 3,000 crore. It has also provided various venues for the bid — Ahmedabad, Lucknow, Pune, Nagpur, Visakhapatnam, to name a few.
The list of those who have bought the documents for the bid include all the top guns — from the Adanis to the Glazer family, which owns Manchester United, Torrent and Aurobindo Pharma, RP-Sanjiv Goenka group, Hindustan Times Media, Jindal Steel and Ronnie Screwvala of Unilazer Ventures, amongst others.
However, those in the know say that the financial benefit for franchisees in 2022 is limited as they have to share the central revenues, now it would be divided amongst 10 instead of eight teams.
But what the franchisees are banking on from 2023 is the huge interest in acquiring the broadcasting and digital rights. Apart from Disney+Hotstar and Sony (which lost out to the former the last time), Reliance Industries (expected to announce a sports channel in Viacom 18), Amazon Prime (it has already bought the streaming rights for India-New Zealand cricket matches) and some other global majors are expected to join the fray.
Sources say that Google and Facebook, which had bid for the digital rights separately, but lost out, are unlikely to join the bandwagon.