Cricket’s IPL generates interest but $50 million tag gives pause

Cricket’s IPL generates interest but $50 million tag gives pause
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First Published: Sun, Nov 18 2007. 11 25 PM IST

Lucrative business: BCCI vice-president Lalit Modi. He says there is a big difference between sponsorship and ownership as a franchisee.
Lucrative business: BCCI vice-president Lalit Modi. He says there is a big difference between sponsorship and ownership as a franchisee.
Updated: Sun, Nov 18 2007. 11 25 PM IST
The Indian Premier League (IPL), the inter-city Twenty20 tournament created by cricket administrators, is expected to change the way sports are managed in India: eight teams will be sold as franchises and run as businesses.
But not everyone is convinced of India’s readiness to accept this model—or its price tag. The non-profit Board of Control for Cricket in India (BCCI) has set a base price of $50 million, or about Rs200 crore, for each team.
Tenders are to be floated in January. BCCI has modelled IPL along the lines of the English Premier League in soccer or the National Basketball Association in the US, where teams are bought and managed by franchisees, free to sell their teams or players.
IPL franchisees will earn revenue through gate money, merchandizing of souvenirs, and ground advertising, apart from receiving a percentage of profits BCCI makes from selling broadcasting rights.
On the condition of anonymity, at least one major company and big sponsor of cricket says the number is unreasonable and aimed at generating hype even though his firm is interested. “Who would pay $50 million to own a team for 10 years?” he says claiming that an IPL team shouldn’t cost more than Rs10 crore. His reasoning: the franchisee has to contend with other expenditure, such as players’ fees, after buying the team.
Lucrative business: BCCI vice-president Lalit Modi. He says there is a big difference between sponsorship and ownership as a franchisee.
Indeed, the teams will also have to bid for players, including a certain number of locals, under-21 and foreigners. Players can then be sold among the franchises. Future Group, which bought the title rights to the recent one-day series between hosts India and Australia and plans to spend up to Rs140 crore over the next three years on cricket-related merchandising, confirmed its interest in owning a team.
“We are in the process of thinking which team to go for,” said chief executive Kishore Biyani while declining to talk about suggested $50 million price tag. Similarly, Sahara India Pariwar, with interests in real estate, life insurance, media, and housing finance, will give the IPL a shot—though everything depends on the final proposals, says communications director Abhijit Sarkar.
Sahara is the Indian national team’s sponsor, having paid the board Rs313 crore in 2005 for a four-year deal. Sarkar said IPL was another marketing avenue, “provided the proposal is interesting”.
Balu Nayar, managing director of the Indian operations of International Management Group, the company that’s assisting BCCI in putting the Twenty20 league in place, declined to comment on the pricing issue.
Last week, several newspapers and television channels said that those interested, apart from major companies, include actors Russell Crowe and Shah Rukh Khan.
BCCI vice-president, Lalit Modi, seen as the brain behind IPL, declined to identify interested buyers and said critics of the suggested floor price, “have misunderstood what we are talking about. There is a big difference between sponsorship and ownership as a franchisee.”
He points to ticket sales, food and beverage sales, local advertising, merchandising and the media, mobile, the Internet, audio visual rights that can be sold as ways to generate revenue from owning a team.
One veteran sports manager remains unconvinced. Leisure Sports Management Pvt. Ltd managing director Sabyasachi Dasgupta, credited with creating a host of sports properties, says the franchise model is “not an easy thing to adopt in a country of such diversity”.
On IPL’s pricing, he said: “Look at the cost for Sahara in sponsoring the Indian team. Why should anyone pay Rs200 crore for an IPL team? It’s always good to dream, but one has to be close to reality as well.”
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First Published: Sun, Nov 18 2007. 11 25 PM IST
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