Who benefits the most financially from the Indian Premier League (IPL)?
The biggest gainer, of course, is the sport’s governing body, the Board of Control for Cricket in India (BCCI), which earned $723.69 million (Rs2,851 crore) from the sale of team franchise rights last week.
But those associated with cricket say there’s another: the World Sport Group (WSG), the London-based sports management company that holds the league’s global media rights.
Mum’s the word: WSG South Asia chief executive officer Venu Nair. (Photo: Harikrishna Katragadda/ Mint)
“It’s the BCCI and WSG who are going to make money immediately,” says Jamie Stewart, former global sponsorship manager with the International Cricket Council and now an independent consultant.
WSG has paid BCCI $918 million for 10-year media rights, and even before getting it, had sold the telecast rights for the South Asia region to broadcaster Sony Entertainment Television (SET) for five years at an undisclosed sum.
But while WSG has already begun making sales, Sony has to get the money, Stewart says. In addition to what it paid its partner, Sony is contractually committed to spend $108 million on promoting the league.
“It was a pre-bid arrangement with Sony as the BCCI insisted we have a television partner,” says WSG South Asia chief executive Venu Nair, while declining to say how much Sony paid for the five-year rights. “We’ll work that out along the way.”
Sony declined to comment. Executive vice-president (advertisement sales and revenue management) Rohit Gupta says it is too early to comment on IPL’s value as a sports property. Nair sees no problem; he says WSG’s broadcaster-partner is expected to rake in $1.4 billion from ad revenues.
WSG is now scouting for regional broadcasters. On Thursday, even as franchise bids were being appraised at the BCCI headquarters in Mumbai, Nair was in Singapore, making presentations to television, radio, mobile and Internet operators.
There are many interested parties, he claims, and says WSG could end up partnering another broadcaster for India after the contract with Sony expired after five years. Added to this, it also holds the 10-year media rights for other cricket-playing nations such as Australia.
According to one estimate, the Indian market for mobile content is around $35 million, compared with the $3 billion globally: it’s a huge market for WSG to tap.
The biggest risk is for the teams, and franchisees concede they would need a minimum of three-four years to break even. Smaller players, such as the UK’s Emerging Media Ltd, which acquired the Jaipur team for $67 million, will be losing money, says consultant Stewart. The challenge: these teams have to survive the first few years.
It’s a gamble his company is ready to take, says Emerging Media CEO Fraser Castellino. “We expect to break even in year three,” he adds, identifying creation of a loyal fan base as a key component of the company’s plan.
A spokesperson for Hyderabad-based infrastructure company GMR Holdings Pvt. Ltd, which acquired the Delhi team for $84 million, says while the financials were still being worked out, the company didn’t expect to break even before three years.
It’s a purely business decision to pitch for the Delhi team, he says. The company is building the new airport in New Delhi, and attaching the GMR name to the team would establish it further in the capital. “It’s part of our brand promotion,” he adds.