As is usually the case for a product reeling under controversy, fighting corruption taint, the valuation of the Indian Premier League has taken a huge hit, feel experts and the stakeholders.
There are numerous options being floated after the Supreme Court suspended two of the eight teams. But those in the know of things believe the situation is so complex that the Board of Control for Cricket in India (BCCI) officials have little clue about how to deal with it.
While reacting to the news, Ajay Shirke, member of the IPL governing council, had admitted the BCCI had been left with a very difficult situation. “The IPL brand is going to be affected; it will be difficult to play with six teams, at the same time it will be difficult to accommodate 10 teams,” Shirke told HT.
Six teams is not an option because of the contract with the broadcasters where the airtime will be reduced and the media rights will be drastically affected. And, the other option of adding two new teams by inviting bids is equally complicated.
All about timing
An old hand in the running of an IPL team said the valuation of the team is so low, the price at which the new owners are likely to get a team at, will cause heartburn among the original six owners.
As reported in HT, before hinting at pulling out of the race, a senior member of JSW group had expressed confidence of getting an untainted, star-studded IPL outfit at Rs. 300 crore.
A former top official of an IPL team predicted the figure Rs 500 crore. Both figures will be a terrific buy explained the expert. “It will mean the annual franchisee payment the owners will make will be lesser than the amount they will draw from the central revenue pool that is shared between all the teams as per the original arrangement,” he said.
Last year the share of the central pool ranged Rs 66 crore for the team which topped the league to Rs 57 crore for the bottom-placed team.
Cause for heartburn
For an amount of Rs 300 crore, the annual payment will be less than Rs 35 crore, making the deal a steal. “How will the original franchisees feel after paying a hefty annual sum for eight years?” he wondered.
One of the franchisee members HT spoke to was not optimistic of any solution coming out of Sunday’s governing council meeting.
“The situation is so fluid, I doubt anything will come out of the meeting. However, they can only delay the decision till a certain point. The last day for the teams to decide on the players they are retaining or releasing is December 31 (it’s a three year arrangement, with new auctions in 2017). They will need to know if the CSK and RR players are available for auction.
“If they are, who will not want to go for MS Dhoni, Suresh Raina, Ajinkya Rahane or Steve Smith? The teams then will want to release more players and look to buy at the auction,” he observed.
Even though the IPL is run on the franchisees’ money, with all the organisational work done by IMG, the team owners have no say in decision making. “We are only told by the BCCI, this is what we have decided.”