If the World Twenty20 and the Indian Premier League matches are moved out of Delhi due to the regional cricket association’s failure to obtain clearances from the state government, it will not just be a loss for the fans but the state exchequer stands to lose a lot in terms of taxes.
Last month, the DDCA failed to obtain NOCs (No Objection Certificates) from government departments and lost the opportunity to host the February 12 T20I between India and Sri Lanka at the Ferozeshah Kotla, forcing the Board to move it to Ranchi. While the DDCA will need to follow procedures, not staging matches in Delhi will also deprive the government of taxes.
In 2013, the Delhi Daredevils conducted a study on the economic impact of IPL on Delhi. It showed the state earned close to Rs 100 crore from the staging of five games. Of this amount, the direct impact on the state’s economy was around Rs 66 crore owing to the entertainment tax paid by them, DD said.
“The study was conducted by a US economist who had done such studies on other games in the US. That study had calculated that the state earned close to Rs 100 crore in 2013, due to direct and indirect impact. But due to inflationary pressures, and additional taxes, our estimate is that the amount will go up to Rs 125 crore in 2016, with the direct component rising to Rs 78 crore. So, if the state government does not provide the clearances to the DDCA, losing IPL will be dear to them as well,” said DD CEO Hemant Dua.
Now that the government has introduced service tax, Dua said government stood to lose that money as well. “We will be paying 14.5 % service tax on tickets. Besides that we are already paying 15% entertainment tax and an additional 15% entertainment tax on sponsorships. If we add all that up, the government’s share (direct and indirect) amounts to nearly 45%. Though this additional entertainment tax is only applicable in Delhi, we as a Delhi franchise want to play in our home state. Moving to Raipur or whichever option the BCCI gives us might be better commercially but we don’t want the fans to miss watching good cricket and their franchise play in front of them.”
A DDCA official said: “In the last World Cup, Delhi hosted four games. And the entertainment tax for each game was between Rs 1.5-2 crore. So, the DDCA owed R12-15 crore as entertainment tax to the exchequer. In IPL, this amount adds up to a bigger sum as the tickets are a bit expensive. So, if the DDCA does not host the World T20 games, the government will lose around R15 crore again.”
Dua said: “The study we conducted, which was also followed by other franchises, lead us to estimate that if Delhi hosts the WT20 and the IPL, the economic impact on the state will be approximately worth R300 crore.” He added: “Every year, we create 250 permanent jobs and train close to 600 volunteers. Then there are vendors, agencies which benefit from the IPL and thus the government earns a lot through taxes levied on the service providers.”
The DDCA is still under process of obtaining permissions from the government. Last week they had paid Land and Development Office (L&DO) a fee of Rs 83 lakh. But the main clearances are awaited from the South Delhi Municipal Corporation (SDMC) and the Delhi Urban Arts Commission (DUAC). “The clearances will be provided to us soon as we are complying with the government by completing whatever has been asked of us in the Ferozeshah Kotla,” said DDCA president Chetan Chauhan.