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IPL teams may lose 40% of revenues if event partly shifted to South Africa
NEW DELHI: Indian Premier League team franchisees say they could lose about 40% of their potential revenues from the Twenty20 tournament this season if half the matches are shifted to South Africa due to Lok Sabha elections, as hinted by the organisers.
"In case 50% of the matches are held outside India the impact of revenue on Delhi Daredevils will be in the range of 40% of the overall revenues. This is because gate receipts contribute a large chunk of our revenues," said Hemant Dua, chief executive officer of GMR Sports, which owns the Delhi Daredevils team.
IPL's season 7 is expected to take place between April 9 and June 3, clashing with Lok Sabha elections during April-May. The Board of Control for Cricket in India (BCCI) has made it clear that if it does not get security clearances from the Union home ministry (MHA) due to the elections, then a part of the tournament will be shifted to South Africa.
If that happens, the team franchises will take a big hit on revenues from ticket sales on their home grounds, which make up for almost 35% of their overall revenues. Their sponsorship and merchandising opportunities, too, will be impacted if matches are shifted out of the country. While television visibility for sponsors will stand as it is, on-ground activation opportunity will be hit.
"There will definitely be a hit on revenues in terms of ticket receipts. Ideally if it happens in India you stand to make more revenue," Raghu Iyer, chief executive officer of Rajasthan Royals, said.
In 2009, when IPL dates clashed with the Lok Sabha elections, the event was shifted to South Africa because MHA refused permission. When the tournament is played in India, teams play a certain number of matches at the home grounds. If matches are moved to a foreign country, there is no home and away concept, an official of an IPL team said, requesting not to be named. Teams will also miss out on revenues from food and soft drink sales. "Sponsorships too will be impacted as some sponsors may shy away from signing due to the movement," Delhi Daredevils' Dua said. No wonder, BCCI is under pressure from its sponsors and teams to hold the tournament in India this time.
A spokesman for PepsiCo India, which won the title sponsorship rights for the IPL in 2013, committing to pay close to Rs 400 crore over the next five years or close to Rs 80 crore a year, said: "We continue to be in dialogue with BCCI and hope that they will arrive at a solution which is in the best interest of all stakeholders." IPL chairman Ranjib Biswal said we will be meeting home ministry officials in the next few days to get clarity and only then will be decide on the venue. "But there is a chance that IPL goes outside India and that would mean some loss to the teams," he said. Biswal, however, hinted at giving compensation for the teams if the tournament moves outside India. "We will give them a good package," he said.
Prakash Mirpuri, vice-president for corporate communications at UB group, which owns the Royal Challengers Bangalore, said there will be the inevitable loss of gate revenue and sponsorship revenue if IPL moves out. "This issue has already been raised before the BCCI who are sympathetic and will consider reimbursing franchisees for any such losses," he said. BCCI made its largest profit from IPL last year, making a surplus of Rs 360 crore. In 2012, its surplus was Rs 152.90 crore. Many of the teams too broke even at least on an operational basis.
In response to an email questionnaire, Venky Mysore, chief executive officer of Kolkata Knight Riders said: "Not in a position to answer yet. We haven't been told anything definitively and we haven't done the analysis either." Email questionnaires sent to Kings XI Punjab, Mumbai Indians, SunRisers Hyderabad and Chennai Super Kings did not elicit any response till late on Tuesday.
According to an economic impact survey conducted by US-based marketing research and analysis firm Sports Economics for the Delhi Daredevils, the six games played on its home ground generated around Rs 96 crore for the Delhi government in direct and indirect taxes. Two of its games last year were played in other venues.
This year, if the tournament happens in India, each team will play seven matches at their home grounds. If half of the matches go out, each of the eight states from where the teams belong could lose revenues of at least Rs 50 crore.
