IPL-BUSINESS

AISA PEHLEY KIYU NAHI SOCHA..???

IPL MODEL

^{The multimillion dollar Twenty20 tournament, sanctioned by the International Cricket Council (ICC), featureD eight city teams (in 2008-10)— Mumbai, Delhi, Kolkata, Bangalore, Jaipur, Chennai, Chandigarh and Hyderabad. There were 59 matches on home and away basis, very similar to the football leagues in Europe.}

^{Each team plays each other twice in a round-robin league with the top four teams qualifying for the semi-finals. There are 59 matches, including the semi-finals and final.}

^{The third year of the Indian Premier League (IPL) saw the arrival of two new teams, Pune and Kochi, for a combined $700 million, almost seven times what Mukesh Ambani paid for the Mumbai Indians in 2008.}

^{The introduction of two more teams will lead to more matches, more fun, more hype and obviusly more cash flow}

IPL RULES

The official rules for the tournament are here.

There are five ways that a franchise can acquire a player. In the annual auction, buying domestic players, signing uncapped players through trading and buying replacements. In the trading window the player can only be traded with his consent. The franchise will have to pay the difference between the old contract price and the new contract price. If the new contract is worth more than the older one then the difference will be shared between the player and the franchise selling the player.

Some of the Team composition rules are:

• Minimum squad strength of 16 players plus one physio and a coach.
• No more than 8 foreign players in the squad and at most 4 in the playing XI.For the 2009 edition franchises are allowed 10 foreign players in the squad. The number allowed in the playing XI remains unchanged at 4.
• A minimum of 8 local players must be included in each team.
• A minimum of 2 players from the BCCI under-22 pool in each team.

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.

INTERVIEW WITH BALU NAYAR.

The hype and hoopla over the Indian Premier League cricket continues and only gets more strident. High-profile team owners ranging from liquor baron Vijay Mallya to the country’s top industrialist, Mukesh Ambani; some of the world’s top cricketers to play in the league, and multi-crore rupee bidding has all made for some heady brew. One of the men behind the whole process of the IPL is 42-year-old Balu Nayar, Managing Director of global sports and celebrity management group IMG, who has been calmly strategising behind the scenes.

“IPL is an idea whose time has come, and it will find its rightful position in the cricketing programme,” says Nayar. Nayar, an engineer from IIT, Kharagpur, and an MBA from IIM, Bangalore, was earlier the Regional Director for Yahoo in the Asia-Pacific region, before he took over the reins of IMG from Ravi Krishnan. In this interview to BrandLine over the mail and phone, an excited Nayar expounds on the whole concept of the IPL and how its contours will shape out. Excerpts:

1.What’s the core concept behind the IPL? How did IMG arrive at the structure? How similar or dissimilar is it to such formats the world over?

The IPL was designed after an intensive study of the primary sporting leagues around the world such as the NHL, NBA, NFL and EPL. We had not only examined the theoretical models, but the result and impact of each of these leagues before arriving at the final blueprint. As in most other areas, there were at least as many learnings from the shortcomings and weaknesses as there were in the strengths and benefits — mapped to the individual market contexts. What has finally emerged as the IPL design is one that has been meticulously refined to work for cricket. As importantly, the league structure has been modelled so as to flourish in the uniquely Indian context, and drive the development of grassroots talent in Indian cricket. Any such concept can only be successful if all stakeholders’ interests are safeguarded, and I’d say that we’ve gone to extraordinary depth to address this optimisation exercise.

2.Did you or the BCCI expect this kind of a response to the IPL from the corporate world? Considering that in most cases bidders have bid far in excess of the reserve price, was the response overwhelming?

We did expect to create a revolution, but it has been gratifying to look at the results. While the numbers have got a lot of publicity, what hasn’t got as much mention is the quality of team owners that the IPL has managed to attract. This is a key factor in the long-term success of the IPL, and we believe that we’ve got a powerful dream team to partner with here.

The bids from the eight franchisees for IPL rights across eight cities on the face of it seem quite high — in the revenue model, do team owners stand to make money in a realistic time-frame? Where would the bulk of revenues come from for each team owner? How does this work internationally?

To start with, I think we’ve got to acknowledge the fact that the successful team owners have put in more research and analysis into the bidding process than any external observer. Each team owner has arrived at their own business model after factoring in the unique variables that are relevant to their own business situation — in the context of auction theory, this is linked to the factor of private values. The business model that each individual team owner arrives at could be derived from a number of distinct objectives such as to use a powerful marketing platform, to create an EBITDA-generating financial entity, to build capital appreciation to exit at an attractive valuation — the list continues. If the focus is on the second objective, we believe that team owners can, through intelligent management of resources, get to generating robust profits pretty soon.

The proportion of revenues would depend on the approach and context of each team owner - but in a general sense, local revenue streams can, if managed well, surprise the team owners themselves with their size and growth. The final answer to this question — there have already been two carte blanche offers from interested buyers to the team owners, and that’s an indication of the value perception in the market.

3.Some bidders have said the IPL could be overleveraged and want to wait and see how it delivers before putting down more money – your opinion?

I haven’t heard of this, and will need to understand more before commenting. We have interacted with all the team owners, and have discussed their plans - in a group as well as individually, and we have only seen an overriding enthusiasm to invest and grow their teams.

4.Do you intend to take this league concept to other sports in India as well?

I would tend to rule that out in the short-term.

With IPL is there a danger of cricket oversaturation, both from the audience point of view, TRPs and for advertisers?

IPL will actually help strengthen cricket by growing television audiences — you will see a clear increase in TRPs as the IPL is designed to expand the overall franchise for cricket by attracting younger viewers to the game, as well as the female audience in general. The recent title sponsorship rights value of $10 million per year, far higher than the reserve price, provides an indication of advertiser interest.

5.Why do you have certain ‘iconic’ players play for certain regions only?

The concept has been brought in to help create and preserve team identities, so crucial to building brands. Accordingly, four players, Sachin Tendulkar, Rahul Dravid, Sourav Ganguly and Yuvraj Singh, have been pre-alloted to Mumbai, Bangalore, Kolkata and Mohali respectively. We have put in a mechanism to ensure that they will be valued at a significant premium. This concept is a refinement that we’ve incorporated in view of the Indian psyche, as well as the position of the IPL relative to the life cycle stage of cricket in India

LALIT MODI ON IPL

Modi, known as an aggressive marketing man, was the main brain behind the formation of the IPL and he flooded the cricketing world with dollars and lured all the top stars to be a part of this league. Bindra quietly worked to get ICC sanction for the mega event.

• “The real city centric rivalry between teams can pull the crowd to the IPL matches and players have to show genuine commitment towards their respective teams,”.
• “It’s not going to happen overnight, it will take years; creating emotions and rivalry is a real challenge for us,” he added.
• The present ruling group in the Board of Control for Cricket in India (BCCI) has been advocating a marketable high-profile inter-city tournament for years, but they could not do much as it was in opposition. Once Zee Telefilms launched the rebel Indian Cricket League (ICL), roping in World-Cup-winning India captain Kapil Dev, Lalit Modi and former Board president Inderjit Singh Bindra quickly conceived the IPL concept. Thus the IPL was born.
• “We want the IPL to be one of the icon brands in the world and we are going to push everything that is required to achieve that,” he said.
• “It shows that the franchises made much more money that many thought they would,” Lalit Modi, the IPL chairman, told Cricinfo. “It shows that the IPL has become very profitable, and the franchises can now count themselves lucky. According to my calculation, new franchises will now be valued at anywhere between US$250-300m.”

CASH FACTOR

OFFICIAL MOBILE APPLICATON

DCI Mobile Studios (A division of Dot Com Infoway Limited), in conjunction with Sigma Ventures of Singapore, have jointly acquired the rights to be the exclusive Mobile Application partner and rights holder for the Indian Premier League cricket matches worldwide for the next 8 years (including the 2017 season). Recently, they have released the IPL T20 Mobile applications for iPhone, NokiaSmartphones and Blackberry devices. Soon it will be made available across all other major Mobile platforms including the Android, Windows Mobile, Palm & others

GAMING APPLICATIONS

Indiagames will be launching a series of web and mobile apps throughout the next 45 days. The first app, called IPL Indiagames T20 Fever, is an online game that uses Facebook Connect to allow users to create cricket teams consisting of both Facebook friends and IPL professional cricketers. The game will also include micro-transaction support, allowing users to users to virtually buy IPL players to improve their chances of becoming the IPL Champion.

A second, not yet released online game, called ‘IPL Indiagames 140Cricket’ will be based on a “Cricket Manager” concept and will target Twitter and Facebook users to construct and manage teams. The gaming company will also be rolling out a Facebook game as well. Indiagames partnered with Facebook to develop all three of the games.

Team owners get 80% of broadcast revenues, 60% of sponsorship revenues, 100% of team sponsorship revenues, 80% of ticket revenues, 87.5% of all merchandising revenues, and 100% of all hospitality revenues.

The franchises can generate funds separately through team sponsorships and gate revenues.

The IPL franchise owners have recovered, from central television and sponsorship revenues, close to 80% of the money they paid to the BCCI in the first year of the Twenty20 league, according to figures tabled at the BCCI’s annual general meeting

Dollars paid by individuals and groups at an auction in January 2008 to buy the eight teams-

• Franchise	Owner(s)	Captain	Price (USD)	Price (Rupees)
  Mumbai Indians	Mukesh Ambani (Reliance Industries)	Sachin Tendulkar	$ 111.9 m	Rs. 503.55 Cr
  Royal Challengers Bangalore	Vijay Mallya (UB Group)	Anil Kumble	$ 111.6 m	Rs. 502.20 Cr
  Deccan Chargers	Deccan Chronicle (Venkat Ram Reddy)	Adam Gilchrist	$ 107.0 m	Rs. 481.50 Cr
  Chennai Super Kings	India Cements (N.Srinivasan)	Mahendra Singh Dhoni	$ 91.90 m	Rs. 413.55 Cr
  Delhi Daredevils	GMR Holdings (Grandhi Mallikarjuna Rao)	Gautam Gambhir	$ 84.0 m	Rs. 378.00 Cr
  Kings XI Punjab	Ness Wadia (Bombay Dyeing), Priety Zinta, Mohit Burman (Dabur) and Karan Paul (Apeejay Surendera Group)	Kumar Sangakkara	$ 76.0 m	Rs. 342.00 Cr
  Kolkata Knight Riders	Red Chillies Entertainment (Shahrukh Khan, Gauri Khan, Juhi Chawla and J Mehta)	Saurav Ganguly	$ 75.1 m	Rs. 337.95 Cr
  Rajasthan Royals	Emerging Media (Lachlan Murdoch, A.R Jha and Suresh Chellaram), Ultra tech cements,Shilpa Shetty, Raj Kundra	Shane Warne	$ 67.0 m	Rs. 301.50 Cr

• On March 21, 2010, Pune and Kochi were unveiled as the two new franchises for the fourth edition of the Indian Premier League. While Pune was bought by Sahara Adventure Sports Group for $370 million, the Kochi franchise was snapped up by Rendezvous Sports World Limited for $333.3 million.

  
  

  
  

The team owners have the franchisee of the teams for 10 yrs.(i.e till 2017).

Five Indian stars were given ‘icon’ status and were not put up for auction last year, thereby ensuring they played for their ‘home’ teams. They earned 15 percent more than the highest-paid player in their respective teams

• Sachin Tendulkar (Mumbai Indians) - 1.12 million dollars
• Sourav Ganguly (Kolkata Knight Riders) - 1.09 million dollars
• Yuvraj Singh (Kings XI Punjab) - 1.06 million dollars
• Rahul Dravid (Bangalore Royal Challengers) - 1.03 million dollars
• Virender Sehwag (Delhi Daredevils) - 833,750 dollars

Top IPL earners (per season )

Top bid for Delhi is Gautam Gambhir for $725,000.

Top bid for Jaipur is Mohammad Kaif for $675, 000. (There is no Icon player for Jaipur).

After every three years fresh auction for players will take place and team franchises will be allowed to bid for players so far belonging to another's team.

Note: Players not available for the entire tournament are paid on a pro-rata basis per match.

Prize money

• Winner: 960,000 dollars
• Runners-up: 480,000 dollars
• Losing semi-finalists: 240,000 dollars
• Fifth-placed team: 160,000 dollars
• Sixth–placed team: 140,000 dollars
• Seventh-placed team: 100,000 dollars
• Eighth-placed team: 80,000 dollars

Controversies

The BCCI had found itself in the middle of many conflicts with various cricket boards around the world as a result of the IPL. The main point of contention was that signed players should always be available to their country for international tours, even if it overlaps with the IPL season. To address this, the BCCI officially requested that the ICC institute a time period in the International Future Tours Program solely for the IPL season. This request was not granted at a subsequent meeting held by the ICC.

Conflicts with the England and Wales Cricket Board

Because the inaugural IPL season coincided with the County Championship season as well as New Zealand's tour of England, the ECB and county cricket clubs raised their concerns to the BCCI over players. The ECB made it abundantly clear that they would not sign No Objection Certificates for players—a prerequisite for playing in the IPL. Chairmen of the county clubs also made it clear that players contracted to them were required to fulfill their commitment to their county. As a result of this, Dimitri Mascarenhas was the only English player to have signed with the IPL for the 2008 season.

A result of the ECB’s concerns about players joining the IPL, was a proposed radical response of creating their own Twenty20 tournament that would be similar in structure to the IPL. The league — titled the English Premier League — would feature 21 teams in three groups of seven and would occur towards the end of the summer season. The ECB enlisted the aid of Texas billionaire Allen Stanford to launch the proposed league. Stanford was the brains behind the successful Stanford 20/20, a tournament that has run twice in the West Indies. On 17 February 2009, when news of the fraud investigation against Stanford became public, the ECB and WICB withdrew from talks with Stanford on sponsorship. On February 20 the ECB announced it has severed its ties with Stanford and cancelled all contracts with him.

Conflicts with Cricket Australia

The BCCI also experienced run-ins with Cricket Australia (CA) over player availability for Australia’s 2008 tour of the West Indies and CA’s desire for global protection of their sponsors. CA had feared that sponsors of the IPL (and its teams) that directly competed with their sponsors would jeopardize already existing arrangements. This issue was eventually resolved and it was also agreed upon that Australian players would be fully available for the West Indies tour.

Conflicts with the Pakistan Cricket Board

Many players from the Pakistan Cricket Team who were not offered renewed central contracts (or decided to reject new contracts) decided to join the rival Indian Cricket League (ICL). Two such players—Naved-ul-Hasan and Mushtaq Ahmed also held contracts with English Counties. The PCB decided to issue No Objection Certificates for these players to play with their county teams on the basis that since they were no longer contracted to the PCB, there was no point in not granting them their NOCs. The latter did not sit well with the BCCI, as it went against the hard line stance they had taken on players who joined the ICL.

After the 2008 Mumbai attacks, the Pakistan government deemed it unsafe for its players to travel to India for the IPL. However, when the IPL was shifted to South Africa, the Pakistani players requested the IPL organizers and Lalit Modi to allow them to play but they refused by reasoning that the squads had already been decided and there was no room for Pakistani players.

Recently in the 2010 IPL auction nobody bid on any of the Pakistani cricketers, despite having expressed an interest in them therefore having them put on the auction list. Initially they said that the decision was purely based on cricket implying that the Pakistanis were not up to standard, the Pakistani team had won the 2009 T20 World Cup. There was speculation that the Pakistanis might have been denied visas, so a team would waste money by recruiting them. After questioning, the IPL board members said that the reasoning behind none of the Pakistani players being selected was simply natural and unaffected by any outside influences.

Conflicts with other Boards

Smaller boards like the WICB and NZCB have raised concerns over the impact the IPL will have on their player development and already fragile financial situation. Since players from smaller cricketing nations are not compensated as much, they have more motivation to join the IPL.

Media restrictions

Initially the IPL enforced strict guidelines to media covering Premier League matches, consistent with their desire to use the same model sports leagues in North America use in regards to media coverage. Notable guidelines imposed included the restriction to use images taken during the event unless purchased from cricket.com, owned by Live Current Media Inc (who won the rights to such images) and the prohibition of live coverage from the cricket grounds. Media agencies also had to agree to upload all images taken at IPL matches to the official website. This was deemed unacceptable by print media around the world. Upon the threat of boycott, the IPL eased up on several of the restrictions. On 15 April 2008 a revised set of guidelines offering major concessions to the print media and agencies was issued by the IPL and accepted by the Indian Newspaper Society.

Even with the amended restrictions, specialist cricket websites such as cricinfo and cricket365 continued to be banned from providing live coverage from the grounds and from purchasing match images from press agencies. As a result, on 18 April several major international agencies including Reuters and AFP announced their decision to provide no coverage of the IPL.

Conflict with Cricket Club of India

As per IPL rules, the winner of the previous competition decides the venue for the finals. In 2009, the reigning Champions, Deccan Chargers chose the Brabourne Stadium in Mumbai. However, a dispute regarding use of the pavilion meant that no IPL matches could be held there. The members of the Cricket Club of India that owns the stadium have the sole right to the pavilion on match days, whereas the IPL required the pavilion for its sponsors. The members were offered free seats in the stands, however the club rejected the offer, stating that members could not be moved out of the pavilion.