Tuesday, September 26, 2017

Why unreformed BCCI got a fortune for IPL : By A L I Chougule

Free Press Journal: Tamil Nadu: Tuesday, September 26, 2017.
In most cricket playing nations in the world, it is next to impossible to find viable television audience for domestic cricket. But it’s a different case with Indian Premier League (IPL), a domestic league consumed primarily for its entertainment quotient. Earlier this month, the media rights television and digital of IPL were sold for humongous Rs. 16,347.5 crore ( $2.55 billion) for a period of five years. This is an increase of 158 per cent in value from the previous cycle. What’s more, with Star India paying a fortune to BCCI, the cricket board has also ended up making more money than it has in its entire history.
Interestingly, for five-year media rights Star has paid more than twice the amount Sony Pictures Network (SPN) had paid for 10 years. That’s largely because one property that Star badly missed in its sports portfolio was IPL. Star has a bouquet of 12 sports channels. It sources content from different properties across the world. Currently, it has the rights for Indian cricket, besides owning cricket rights for ICC, ECB (England), Cricket Australia and Asian Cricket Council. Star’s highly aggressive bid for IPL is in line with the network’s aggressive investment in sports properties over the past five years. This will give Star a complete monopoly over cricket in India.
What has stumped media analysts is that IPL is now more valuable than international cricket involving India. For instance, while Star pays Rs. 43 crore to BCCI for every international match played in India, BCCI will earn Rs. 54.49 crore per IPL match or Rs. 3,269.50 per season, against Rs. 820 crore before. That makes IPL a jewel in BCCI’s crown. But it is also a fact that not only IPL has been the most controversial league since its inception, it has also landed BCCI in all sorts of controversies and problems, including its current face-off with the Supreme Court over reforms. Two questions arise. One, has Star paid too much for a domestic league of 300 T-20 matches per season? Two, why star put a Rs. 8,465 crore premium on the consolidated rights over sum of individual property rights?
The price certainly looks stretched, notwithstanding the fact that IPL is the single largest and most impactful media property which has delivered high reach and viewership across demographics. Star’s recklessness can be explained by the fact that it expected aggressive bids from its rivals, both TV and digital networks. The fact that the most aggressive digital bid came from Facebook proves that apart from TV, cricket in India, particularly IPL, is a must-have property for growth of digital business as well. There are three revenue streams – television advertising, subscription (cable and DTH operators) and digital (advertising and digital). Television is the biggest revenue generator, followed by subscription, while digital is a growing business.
The first edition of IPL fetched Rs. 350 crore in advertising revenue for Sony; the last edition in 2017 clocked Rs. 1300 crore. Advertising revenue sees 10 to 15 per cent year-on-year growth. For IPL-10, the average 10-second ad rate was Rs. 6 lakh. Revenue from subscription accounts for about 40 per cent of advertising revenue. This gives a fair indication of how much money Sony must have made from TV rights on its investment of Rs. 8,200 crore. But the challenge for Star is too huge: Rs. 18,000 to 20,000 crore in five years, or about Rs. 3,500 to 4,000 crore a year. This will require increasing ad rates by over 200 to 250 per cent, besides pressuring cable TV and DTH operators to shell out more. It is one thing to say that premium assets are given more premiums for high impact properties like the IPL. But IPL is not an India-Pakistan or India-Australia World Cup match that delivers 10-plus television rating. While IPL is prime time entertainment, average rating for IPL games is around 3 TVR. How many advertisers would be willing to pay Rs. 15 lakh or more for a ten-second spot? Given tepid earnings of corporate India, it would be very challenging for Star to impose more than 200 per cent inflation on ad rates.
Whether Star makes money or not, BCCI has made a fortune. Each IPL franchise also stands to gain an additional Rs. 800 crore over five years. This will improve the financials of most of the struggling franchises. Players also stand to gain as their income will rise. But the bigger question is: what does it mean for the health of Indian cricket? Money has certainly flowed into the pockets of Indian cricketers, representing India at international level. But domestic cricketers remain poor cousins of contracted national players. Most of the domestic cricket is played on placid wickets. Outside of metros and tier-2 cities, cricket facilities in smaller centres and at district level are dismal. If health of domestic cricket remains poor, it will impact both Indian and global cricket.
BCCI is an epitome of opaqueness. It is in a state of mess and does not come under the RTI act. Though it earns thousands of crore, it is also not required to make its balance sheet public. One year after the SC judgement asking BCCI to implement reforms recommended by Lodha Committee, the board has not made any progress in implementing any of the reforms. It has continued to defy the SC order and the SC appointed committee of administrators has also not been able to take the reform agenda forward. BCCI rides on money power, while Indian cricket rides on star players. Not many, including many of the respected former players, speak about conflicts of interests, violations of norms, procedures and malpractices in the board.
Money continues to flow into BCCI coffers, but money alone will not improve the image of Indian cricket as long as the BCCI does not put its house in order. Interestingly, not long ago Star had withdrawn its sponsorship of the national team jersey citing turmoil in BCCI. Meanwhile, with Star India’s rights for BCCI’s bilateral cricket coming to an end on March 31, 2018, it will be interesting to see whether Star will renew its India rights to retain its monopoly on cricket in India and at what price. The bigger question is: when will BCCI fall in line and become a transparent cricket administrator.
The author is a Mumbai-based senior journalist