A lot that glitters in IPL is red
The Indian Premier League (IPL) is regarded as a tournament awash with cash, but teams are more in the red than in the pink of health since the tournament kicked off in 2008.cricket Updated: Jul 19, 2014 01:26 IST
The Indian Premier League (IPL) is regarded as a tournament awash with cash, but teams are more in the red than in the pink of health since the tournament kicked off in 2008.
A look at the balance sheet till the 2013 season shows that the eight teams currently in the league had collectively incurred losses to the tune of over Rs 330 crore.
The financial statements for 2012-13 submitted to the Ministry of Corporate Affairs show three teams – Mumbai Indians, Royal Challengers Bangalore and Delhi Daredevils – have reported substantial losses.
Three others — Kolkata Knight Riders, Kings XI Punjab and Rajasthan Royals — have finally reported modest profits.
The IPL was launched with fanfare and controversies, including last year's corruption allegations that are being probed by the Supreme Court-appointed Justice Mukul Mudgal panel, have shaken but not stopped the league.
But numbers show the teams do not seem have scored much in financial terms. Since the IPL began, Mumbai Indians' accumulated loss is Rs 96.01 crore, and RCB (Rs 32.2 crore) and Daredevils (Rs 4.9. crore) too are in the red.
Kings XI Punjab, having accumulated losses of Rs 69 crore till 2011-2012, reported a profit of Rs 78 lakh for the year 2012-2013. Current champions Kolkata Knight Riders had reported accumulated losses of Rs 25 crore till 2010-2011.
But in the next two financial years, the Shahrukh Khan co-owned team has registered profits of Rs 10.42 crore and Rs 63.44 lakh respectively.
Rajasthan Royals, winners of the inaugural edition but the main focus in the 2013 spot-fixing scandal, appear to be the biggest gainer.
They suffered losses to the tune of Rs 22.2 crore in the first two editions, but earned a profit of Rs 12.7 crore in 2010. Shilpa Shetty's team also registered profits of Rs 5.27 crore and Rs 11.95 crore in the subsequent two years.
However, at least one senior franchise official feels there is scope for teams to make profit, pointing to his own franchise. Fraser Castellino, chief operating officer of KXIP, has held similar positions with RCB and RR too. It all comes down to smart spending and staying alert to market trends.
"IPL is a great success story, and it gives everyone a chance to earn at least minimal profit," Castellino told HT. "The question is how you run your team. As far as I'm concerned, if you run your franchise properly, you can earn money."
The biggest revenue outgo is on players while the other crucial area is reaching out to fans and giving sponsors bang for their buck. "Punjab did many things right. They bought players sensibly, and saved a lot in the auctions. You must remember that when all other teams spent about Rs 60 crore, we spent only about Rs 46-48 crore."
While managing costs, teams must also maximise returns from certain segments. "Take for example ticketing. That revenue is in our control. We manage our ticketing properly. We played well and matches were sold out and we made good revenue. Finally, prize money is a big element, they are all about (managing) finances," added Castellino.
A team playing well is a big help, which has not been the case with the Daredevils in the last two seasons. "Everybody is making losses," shrugged a senior DD official.
No figures are available for the India Cements-owned CSK and SRH, which belongs to the Sun Group.
Both teams are shown as their companies' asset. India Cements had declared CSK as an 'intangible asset' with franchise revenue mentioned under 'miscellaneous income'.
There is no mention of miscellaneous income in the company's balance sheet.
There are two sets of official figures available to assess the IPL teams' financial health. One was submitted to the Parliament Standing Committee on Finance, 2010-2011, by the BCCI and franchises.
The other set is filed with the Ministry of Corporate Affairs by the teams' auditor.
The standing committee was formed to probe tax assessments and matters related to exemptions for BCCI and IPL.
According to the parliament panel report, after showing no loss or profit in the first season, CSK reported a loss of Rs 19.30 crore in 2009. The now-defunct Deccan Chargers had registered the biggest loss, as per the report — Rs 87.09 crore in 2009-2010.