The Indian Premier League (IPL)

The Indian Premier League is cricket competition created by the BCCI (Board of Control for Cricket in India). According to the IPL format each teams play two times in a round robin system – equal number of home and away matches. The top four ranking team of the league matches will progress to the semi-finals and the winner of the semifinals will play the final match. 18 April 2008, was the starting date of the first season of the Indian Premier League. It lasted for forty-five days and ended on 1 June 2008 with the victory of the Rajasthan Royals in the final at the DY Patil Stadium, Navi Mumbai.

The eight teams which participated in the first season of The Indian Premier League are Kolkata Knight Riders, Chennai Super Kings, Mumbai Indians, Hyderabad Deccan Chargers, Rajasthan Royals, Royal Challengers Bangalore, Delhi Daredevils, and Kings XI Punjab. The Indian Premier League. after the success of the first season, has proposed to add two new franchises based in Ahmedabad and Kanpur. The new franchisee will join the IPL in 2010, increasing the total number of teams to 10.

Television and Sponsorship Rights

BCCI is known as the richest board in world cricket. The IPL has brought the BCCI a sum of US $1 billion, which makes it more powerful and lucrative. The sponsorship revenue is part of the Central Pool. The sponsorship revenue will be divided among IPL, franchisee, and prize money in the ratio of 40:54:6 till 2017.



A consortium of Sony Entertainment Television Network and Singapore based World Sport Group bagged the global broadcasting rights of the Indian Premier League for the period of ten years at a cost of US $1.026 billion. As part of the deal, the consortium will pay the BCCI US $918 million for the television broadcast rights and US $108 million for the promotion of the tournament. The Sony Entertainment Television Network and World Sport Groupthen re-sold parts of the broadcasting rights geographically to other companies. Apart from this deal The IPL negotiated a contract with the Canadian company Live Current Media Inc. to run and operate its portals. The minimum guarantee has been negotiated at US $50 million over the next 10 years. The IPL has different revenue sharing formula for the money it earns from the media rights.

Team Rules

The IPL has defined team rule, and the rules of competition, which offers equal playing field for all the teams. Some of the Team composition rules are:

The IPL teams is constitute of 16 players plus one physiotherapist and a coach. The team can have foreign players, at most four players from the playing XI, minimum of four local players must be part of the team, and not less than four players from the BCCI under-22 pool in each team. Moreover, team can have maximum of eight foreign players. The IPL board has also accorded icon status to five indian players, they are – Sachin Tendulkar, Rahul Dravid, Sourav Ganguly, Yuvraj Singh and Virender Sehwag. Icon players are to be paid 15% more than the highest paid player in their respective teams. The IPL apart from the team structure the franchisee have assigned budget to spend on buying players. The total spending cap for a franchisee in the first player auction was US $5m. Under-22 players are to be remunerated with a minimum annual salary of US $20,000 while for others it is US $50,000.

To know more about the rules please visit http://www.iplt20.com/rules-of-the-competition.htmla

There were a few instances when the teams had difference of opinions; otherwise the IPL was a huge success. All teams played the game well within the defined IPL rules.

Franchises

24th January 2005 The IPL announced the winning bidders for the eight franchises. The official list of franchise owners announced and the winning bids were as follows.

Mumbai Indians:Reliance Industries - $111.9 million
Royal Challengers Bangalore : UB group - $111.6 million
Hyderabad Deccan Chargers : Deccan Chronicle - $107 million
Chennai Super Kings : India Cements and N Srinivasan - $91 million
Delhi Daredevils : GMR Holdings - $84 million
Kings XI Punjab : Preity Zinta, Ness Wadia, Karan Paul, and Mohit Burman - $76 million
Kolkata Knight Riders : Shahrukh Khan, Juhi Chawla Mehta and Jai Mehta - $75.09 million
Rajasthan Royals: Emerging Media(A.R Jha, Lachlan Murdoch, Suresh Chellaram) - $67 million


Franchise Earnings

The first season that concluded on June 1 2008 was a huge success for the IPL. It should be noted that during the first season no one had expected the franchises to break even since most of them had invested huge amounts, but even then the table below shows that some of them are already profitable from Season one. Commenting on the financial performance and success of The Indian Premier League, Lalit Modi, Chairman & League Commissioner says: “I’m no financial analyst, but given the huge success of the league, and its future potential, I would venture to say that franchisees bought assets that were heavily under priced.”



All Figures are in crores
Mumbai Indians - Net Loss - 16 Crores(To be profitable in season 2)
Revenues
a. Broadcasting Rights - 35
b. Team Sponsors - 20
c. Gate Receipts - 14
Total Revenues(a+b+c) - 69
Expenses
a. Franchise Fees - 45
b. Team - 20
c. Advertising & Admin - 20
Total Expenses(a+b+c) – 85

Royal Challengers Bangalore - Net Loss - 43(To be profitable in season 4)
Revenues
a. Broadcasting Rights - 35
b. Team Sponsors - 0
c. Gate Receipts - 10
Total Revenues(a+b+c) - 45
Expenses
a. Franchise Fees - 48
b. Team Expenses - 22
c. Advertising/Admin - 18
Total Expenses(a+b+c) – 88

Hyderabad Deccan Chargers - Net Loss - 18 Crores (To be profitable in season 3)
Revenues
a. Broadcasting Rights - 35
b. Team Sponsors - 17 ;
c. Gate Receipts - 12
Total Revenues(a+b+c) – 64
Expenses
a. Franchise Fees - 45
b. Team Expenses - 24
c. Advertising/Admin - 13
Total Expenses(a+b+c) – 82

Chennai Super Kings
Revenues
a. Broadcasting Rights - 35
b. Team Sponsors - 25
c. Gate Receipts - 12.8
Total Revenues(a+b+c) - 72.8
Expenses
a. Franchise Fees - 36
b. Team Expenses - 24
c. Advertising/Admin - 13
Total Expenses(a+b+c) – 73

Delhi Daredevils - Net Loss - 6.6 Crores (To be profitable in season 2)
Revenues
a. Broadcasting Rights - 35
b. Team Sponsors - 20
c. Gate Receipts - 15.4
Total Revenues(a+b+c) - 70.4
Expenses
a. Franchise Fees - 34
b. Team Expenses - 23
c. Advertising/Admin - 20
Total Expenses(a+b+c) – 77

Kings XI Punjab - Net Loss – 2.4 Crores (To be profitable in season 2)
Revenues
a. Broadcasting Rights - 35
b. Team Sponsors - 22
c. Gate Receipts - 9
Total Revenues(a+b+c) – 66
Expenses
a. Franchise Fees - 30.4
b. Team Expenses - 25
c. Advertising/Admin - 13
Total Expenses(a+b+c) - 68.4

Kolkata Knight Riders - - Net Profit INR 13 Crores
Revenues
a. Broadcasting Rights - 35
b. Team Sponsors - 34
c. Gate Receipts - 20
Total Revenues(a+b+c) - 89
Expenses
a. Franchise Fees - 31
b. Team Expenses - 25
c. Advertising/Admin - 20
Total Expenses(a+b+c) – 76

Rajasthan Royals - Net Profit INR 6 Crores
Revenues
a. Broadcasting Rights – 35
b. Team Sponsors – 16
c. Gate Receipts - 8
Total Revenues(a+b+c) - 59
Expenses
a. Franchise Fees - 27
b. Team Expenses - 13
c. Advertising/Admin - 13
Total Expenses(a+b+c) – 53

This is how the franchises made money in IPL season one, to discover it better please refer to Business Today May 14 -July 03, 2008 Issue. < Will cricket’s new czars make money?, May 14 2008 >

End of Season One

Modeled on English Premier League, The Indian Premier League season one was great success. The over all success of the concept in long run is dependent on the creation of club culture. Creating club culture is not a one day exercise. It will take some time. The Indian Premier League organizers and franchisee are looking forward for the similar success of The Indian Premier League in season two. Lalit Modi, Chairman & League Commissioner, Indian Premier League, with high expectation announced that the tentative dates for the second season of the DLF Indian Premier League. The second season will start from April 10th, 2009. The format of the tournament would remain unchanged from the 2008 season format. The eight franchisees will first play against one another in a league on home-and-away basis. The top four teams will then figure in the two semi-finals and a final.