India’s cricket authorities released terms for owning teams in their proposed Indian Premier League, projecting the franchises as both a profit-making business opportunity as well as platforms for corporate branding. The prospectus, however, doesn’t set any minimum bid price for tenders set to be floated later this month.
Successful bidders will get to keep 80% of revenues in the first two years of operations. Their share gradually goes down to 50% in year 11. Revenues are expected to be generated through television rights, sponsorships, tickets, food and other sales as well as premium and box seats.
BCCI vice-president and chairman of Indian Premier League, Lalit Modi
The 75-page document, which comes with interspersed pictures of cricketers, notes that the league’s format of just 20 overs per team is one that is now most preferred by fans of the game. It claims that 76% of Indian cricket fans favour it over one-day matches and five-day Test matches and notes how it will get high television ad rates.
During the recent India-Pakistan cricket series, Test matches shown on channel Neo Sports attracted Rs3 lakh for a 10-second spot while one-day matches got Rs5.51 lakh for a similar slot.
But, a similar spot during the final of the Twenty20 World Cup in South Africa earned broadcaster ESPN Star Sports Rs800,000, the prospectus notes. The league will be “a must have, prime time content for broadcasters” who will have 12,744 10-second ad spots during a typical season, the prospectus said.
Other than suggesting what ad spots might sell for, the prospectus gives little clues on suggested prices for those aspiring to buy teams. “The bid will require each bidder to state the total franchisee fee they are offering for an initial 10-year period,” it says.
In earlier interviews, the league’s chairman and vice-president of the Board of Control for Cricket in India, Lalit Modi, had said the price would be $50 million (Rs198 crore). The league will take “cricket to a whole new level that once upon a time ago seemed like a fool’s dream,” Modi wrote in the prospectus. “It means we finally revive domestic cricket.” Apart from the franchise fee, a bidder would have to pay player and staff salaries, stadium leases, security, travel and accommodation.
The league will publish an intention to tender (ITT) later this month and the auction of players will follow immediately after the franchises have been awarded. The ITT will name cities and stadium terms with bidders allowed to bid for multiple locations.
The league is scheduled to begin in April at the start of India’s fiscal year when new advertising and marketing budgets kick in. Some major sponsors of cricket had mixed reactions to owning teams. One top official at Pepsico India Holdings Pvt. Ltd, who didn’t want to be named, said his company wasn’t interested and that “our calendar is full.” A Bharti Airtel Ltd spokesperson said it was “premature” to discuss buying a team. Future Group chairman Kishore Biyani said: “There would be a very strong chance we will participate.”