New Delhi: After a successful first season, the Indian Premier League, or IPL, is set to be scaled up by the Board of Control for Cricket in India, or BCCI. The board is weighing options to boost its revenue, while allowing franchisees to upgrade stadias, build team brands and hire new players.
To begin with, the BCCI-controlled IPL management is looking at raising $21 million (Rs89 crore) by selling on-ground sponsorship rights to three additional entities for $7 million each, said Sundar Raman, IPL chief executive. These rights were sold for $4.5 million in the first season, and the board is estimated to have grossed around $200 million in revenue.
“Having established a successful brand, it’s time now to build on the brand and engage consumers in a much more intimate way,” said Raman, adding that the board was studying ways to market merchandise, which couldn’t take off in the first season. “We are in discussions with some companies for our merchandising initiatives,” he said. “Even the team owners are going to get aggressive in building their brands and viewer loyalties.”
From the third year, team owners will be allowed to raise funds through private placements or public listings, said Raman, who didn’t give more details. Public listings of sports clubs and teams is a common practice in Europe and the US. In Europe, soccer clubs such as Manchester United and Arsenal are listed.
Although the IPL first season, which ran from 18 April to 1 June, was a success in terms of television viewership, spectators and sponsorship, some team owners say their costs far outpaced revenue.
“Team owners, on average, made about Rs10 crore through ticket sales and around Rs20 crore in sponsorships. Investments, however, were much more than this,” said a senior executive at a franchisee, not wanting to be named. All the teams will also get a share of the broadcast revenue raised by BCCI.
Brand building: Sundar Raman, CEO, Indian Premier League. (Photo: Harikrishna Katragadda / Mint)
“The teams need more funds to upgrade stadia and other infrastructure, to invest in their promotions and to hire new and better players from time to time,” the executive said.
In the first season of IPL, “a lot of details were overlooked,” said Darshan M., vice-president of commercial operation with Hyderabad-based Deccan Chargers. “IPL teams need to be run like any other enterprise and for their successful run, they will need funds to operate efficiently and smartly,” he said, adding, “once BCCI issues the guidelines (for raising funds), we will definitely explore the option.”
September onwards, the franchisees will be allowed to trade players or buy new ones. “We will issue guidelines clarifying the process by the end of the current quarter. It should help every franchisee to build a strong team,” said Raman.
Some franchisees are keen to reconstitute their teams. A senior executive at one franchisee, who also didn’t want to be identified, said the auction of players should begin by January, well ahead of the next season. “Now that we have an idea of what works and what doesn’t, we are looking forward to making some amends,” the executive said.
Raman also said two more teams will be added to the existing eight at the end of the third and the fourth year.
The eight teams in the league are the Mumbai Indians of Mukesh Ambani’s Reliance Industries Ltd; Vijay Mallya’s UB Group-owned Bangalore Royal Challengers; Chennai Super Kings of India Cements Ltd; Delhi Daredevils of GMR Group; Deccan Chargers of Deccan Chronicle Holdings Ltd; actors Shah Rukh Khan and Juhi Chawla’s Kolkata Knight Riders; Preity Zinta and Ness Wadia’s Kings XI Punjab; and Emerging Media Group’s Rajasthan Royals, who won the inaugural tournament.