Cricket

Why money-churning IPL is eminently central to BCCI's immediate fortunes and how the league affects other cricket boards' revenue structure

  • Vedam Jaishankar
  • June 13th, 2020
  • 13:29:58 IST

The IPL is BCCI’s prized cash cow. In a span of only 12 years, it has transformed BCCI from being merely a wealthy sports body to one of the richest in the world.

It is for this very reason that the 2020 edition is eminently central to BCCI’s immediate fortunes. The alternative, of IPL not taking place this year, could leave a trail of pain and hardship for Indian cricket. BCCI itself would be hit by a double whammy – substantial loss in revenue coupled with a pointless increase in expenditure.

File photo of the IPL trophy. Image credits @IPL

File image of the IPL trophy. Image credits @IPL

Tellingly, other countries too could take a hit if IPL does not go through, mainly from a loss of their share of player release fee.

BCCI’s anxiety to get the IPL going is palpable. It craves the event if only to keep its precarious cash flow going and this is clearly discernible from statements of its president Sourav Ganguly, IPL Chairman Brijesh Patel and other officials. They have hammered home the point that IPL ought to be staged, preferably in India, but even elsewhere, if need be.

Here it must be said that unlike many other countries’ cricket boards, BCCI is not broke. Of course its official balance sheet has not been filed since 2016-17 but as recorded then it has cash reserves of Rs 6000 crores, including fixed deposits of Rs 2011 crore lying around.

However, there are issues galore that could trigger a crisis – the Rs 2000 crore (inclusive of multiple years' 18 per cent interest) Supreme Court-upheld order to pay Kochi Tuskers for wrongful termination from IPL and for having encashed their bank guarantee in 2011 when Shashank Manohar was BCCI president is a millstone around the board’s neck. It needs to sort out that mess at the earliest especially as the 18 per cent interest clause is a killer.

But what is quite interesting is BCCI’s revenue estimates for 2020-21. The board hopes to get Rs 3065 crore from IPL media rights, Rs 618 crore from central sponsors, Rs 520 crore from the eight franchises (20 percent of their revenues), Rs 950 crore from bilateral cricket and Rs 380 crore from their share of ICC revenue.

However, the last two heads, totalling Rs 1330 crore are unlikely to come through in their entirety. Already, the South Africa tour of India had to be aborted owing to the COVID-19 crisis. More recently, tours to Sri Lanka and Zimbabwe were also cancelled. It is likely that some more matches across formats scheduled for this season could be called off. Besides, if the T20 World Cup in Australia does not take place, the ICC will not have the money to pay BCCI.

Other nations too would be in the same boat and thus all of them (barring Pakistan and Bangladesh) would be cheering for IPL to go through in the hope that the player release fee could help them tide over their crisis.

As many as 63 overseas players were bought by the eight franchises in auctions for the 2020 season. Ten per cent of the auction amount of each player is paid to his board by the BCCI and a further 10 per cent by the franchise. Thus Pat Cummins who was bought by KKR for $ 2 million would fetch a tidy sum for Cricket Australia. BCCI would pay them $ 200,000 and KKR an additional $ 200,000.

This 20 per cent release fee is invaluable money for cricket boards of Australia, West Indies, South Africa, England, New Zealand, Sri Lanka, Nepal and Afghanistan.

But what will rankle BCCI is the needless increase in domestic cricket expenditure. The Lodha Commission’s hasty decision to grant affiliation to Arunachal Pradesh, Bihar, Chandigarh, Manipur, Meghalaya, Mizoram, Nagaland, Puducherry and Sikkim has substantially driven up expenditure as each of the nine units had to field seven teams from men, women, boys, girls in various national tournaments. This sent expenses through the roof without bringing in any direct benefit.

There are other expenses. National Cricket Academy budget which was Rs 22 crore a couple of years ago is now over Rs 50 crore. Besides, the new facility in BCCI’s own land on the outskirts of Bengaluru needs to take shape.

BCCI will not be the only one feeling the pain. Its affiliated units too would suffer a huge blow. The BCCI as per its last audited balance sheet distributed infrastructure fund of Rs 1272 crore to the various units. Now, even if that kind of money is made available, the nine new units will also need to get their share of it. That would leave all the old units with a much smaller share of the pie.

The simple truth is that 90 per cent of BCCI’s money comes from staging the IPL and those Rs 4000-odd crore is crucial for its financial well-being. This is the sole reason why BCCI is desperate to stage the IPL anywhere, even overseas and, if need be, even without spectators.

One official stated that IPL franchisees made around Rs 160 crore from ticket sales (RCB made Rs 25 crore, MI Rs 24 crore, DC Rs 22 crore, etc). Thus, if IPL were to be held abroad or without spectators the franchises would lose that ticket money. But considering that they would not have to pay for police bandobast, security, entertainment, transport and a whole lot of other expenditure, that loss from ticket revenue could be minimal.

The biggest drawback for BCCI though is the absence of the financial acumen of many of the old administrators who could drive a hard bargain whether with ICC, broadcasters, other nations or even various stakeholders and service providers. This was clearly obvious when the CoA negotiated with ICC and ended up with a diminished share of the pool money.

In the immediate future though the onus would be on Ganguly and company to carry out tough negotiations with ICC and successfully open a window for staging the IPL. That could well secure BCCI and Indian cricket’s immediate future. Will the ICC play ball?

Updated Date: June 13, 2020 13:29:58 IST

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