New Delhi: Facing significant opposition to a deal that meant India’s cricket board will end up paying IMG World — the event manager of its hugely successful Indian Premier League (IPL) — some Rs30 crore, or 10% of related net revenues, the Board of Control for Cricket in India (BCCI) is set to revise the agreement for year two onward.
According to several IPL and BCCI members, the board has decided to renegotiate the revenue-sharing terms of the contract with IMG, which produced and managed the hit cricket tournament.
IMG is a powerful global sports, entertainment and media company that operates in some 30 countries, and put a slick on-ground show for IPL that had Indian audiences going ga-ga over a much-hyped cricket tournament designed to shrink playing times and increase excitement in a sport that can last from one to five days.
Eyeballs game: With IPL having been such a hit, the next round is expected to see a lot of brands fighting it out for sponsorships.
According to BCCI secretary Niranjan Shah, the first year of IPL generated around Rs300 crore for the board after making various payments.
Main revenue streams included $75 million (Rs321 crore) in annual franchisee fee, $58 million from the sale of broadcast rights and around $12-13 million from various sponsorships. The board gets 40% of the total sponsorship revenues, with the rest going to the franchisees.
The decision to review the contract follows protests from regional cricketing associations, which contend that the 10% due to IMG should be calculated after the board pays their share of revenues.
Regional associations are eligible for 70% of board’s revenues from franchisee fees. Of the 70%, staging associations, or those whose stadiums were used for the matches, will get 40%, while non-staging associations will get 30%.
“We will be renegotiating the deal,” said Shashank Manohar, vice-president of BCCI. “Regional associations have told us that the payout to IMG should be calculated after their share of the revenue is paid.”
Manohar has been elected to take over as the cricket board’s president from incumbent Sharad Pawar after the BCCI annual general meeting scheduled for September.
Manohar said any revised terms will apply to future tournaments and that IMG will likely get the full payment in the first year.
One member of the IPL governing council, who spoke on condition of anonymity citing the sensitivity of the matter, said BCCI members had opposed the contract with IMG back in September on account of the opaque manner in which it had been signed.
“Lalit (Modi) just signed that contract and then brought it to the finance committee meeting. The members felt 10% revenue share was too much. At that time he said he had consulted Mr Pawar and had signed it on his behalf. At the next meeting, Mr Pawar said he didn’t know about it. Modi, then, said he had signed it himself,” the member said.
The board’s Shah agreed that BCCI norms required large contracts to be awarded following a transparent competitive bidding process, which didn’t happen in the case of IMG last year.
Modi is the chairman and commissioner of IPL, of which the governing council is the top decision-making body. “You can write what you want to, I have nothing to say,” Modi said when Mint asked for his comments on the original deal. He also said he was unaware of the board’s decision to review the contract.
Pawar, who is also the Union minister for agriculture, consumer affairs, food and public distribution, said he was unaware of any board decision to review the IMG contract.
Sticky wicket: IPL chairman and commissioner Lalit Modi signed the 10% payout deal with IMG which members felt was too much.
As for the way the original deal was struck, Pawar said: “I don’t think this information is true. Sometimes, be it in the government or the BCCI, you have to take some decisions where you don’t have the time to consult everyone. I have taken many decisions at BCCI without consulting the executive council.” Pawar added that he is “not part of IPL. I’m involved with it only in my capacity as BCCI president.”
Andrew Wildblood, senior vice-president, IMG, declined to comment, saying: “The terms of IMG’s agreement with BCCI are strictly private and confidential as is normal with commercial contracts.”
One BCCI member, speaking on the condition of anonymity, said it was unlikely that the production and management rights will end up with anyone else as not many agencies had the expertise to produce and manage an event of the scale of IPL. “Also, the current broadcast partner, Multi Screen Media Pvt Ltd, doesn’t have its own produciton facilities, so they will require a production partner,” he noted. But, following renegotiations, any payout to IMG is likely to be much smaller, he added.
BCCI comprises 30 cricketing associations—25 state associations as well as the Railways, Services, universities, the Cricket Club of India and the National Cricket Club. Of these, only the state associations are eligible for a share of BCCI revenues, Manohar said.
IMG, headquartered in New York and London, is headed by Theodore J. Forstmann, the founding partner of leveraged buyout firm Forstmann Little and Co.