Growth in IPL central revenue will boost franchisee profitability: Mohit Burman

MUMBAI: The two central deals done by the BCCI for the cash-rich Indian Premier League (IPL) – Vivo for Title Sponsor and Star India as the broadcast partner – will come as a boon for franchises especially for those who are heavily dependent on the central pool.

Earlier this year, Vivo had won the IPL title sponsorship contract for the next five seasons. There was a 554 percent increase over its previous contract and Vivo had bid Rs 2,199 crore. Meanwhile, Star India had won the IPL media rights with a consolidated bid of Rs 16347.5 crore.

IPL franchise Kings XI Punjab co-owner Mohit Burman noted that the revenues will grow and this will boost profitability. “If the numbers increase obviously the chances of turning profitable are high. Also, it will also help reduce previous losses incurred by the franchisees.”

The amount that each franchise gets just from these two central revenue deals each season is substantially more than the entire central revenue from the previous season that each of them got which was around Rs. 65 crores. However one does not know the extent to which costs will also rise. Costs are expected to rise not just in terms of players’ fees but also in terms of administrative costs.

Reports indicate that the eight IPL franchises are likely to be allowed to retain up to three players each before the player auction in the 2018 pre-season. Such a proposal was discussed by the IPL governing council in Delhi yesterday. Chennai and Rajasthan return next season having served their suspension sentence. They replace Pune and Gujarat. Reports indicate that Chennai and Rajasthan might be able to retain players from Pune and Gujarat if the other six franchises agree to the proposal.

On 14 November a workshop with all the eight franchises will take place. That is when some clarity is expected to emerge on issues like the auction purse, venues. It will not be surprising if the richer franchises like a Mumbai want a larger purse. That would allow them to bid for key players. The auction purse which was around Rs. 50 crores earlier could now rise by over 50 percent which an analyst said is justified given the extraction that the BCCI has managed from the two central revenue deals.

However what is interesting is that Burman feels that despite the rise in revenues franchises are unlikely to get acquired. “Acquisition is unlikely, as we are still carrying last few years losses, but it depends.”

Earlier there had been speculation that the Gujarat and Pune owners might want to continue their association with the IPL possibly through buying a team. Burman, however, reiterated that the promoters of Kings XI Punjab are not open to a partial or a complete stake sale.

The analyst noted that it will be surprising if franchises are not in the green next season given the rise in central revenue so far. But even if parties are interested in doing acquisitions the franchise owners will not be willing to give it away cheap.

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