Money woes for OC as Rs 1-cr cheque bounces
Already suffering huge losses because of dismal ticket sales, the beleaguered Games Organising Committee has lost another major source of revenue.delhi Updated: Oct 09, 2010 23:49 IST
Already suffering huge losses because of dismal ticket sales, the beleaguered Games Organising Committee has lost another major source of revenue.
A cheque of Rs 1 crore the OC had earlier received from its lead merchandising licensee as a token amount, has just bounced.
This leaves the committee with no payment from the merchandising company Premiere Brands Limited, which was supposed to be one of the major money-spinners for the OC. The merchandise tie-up was apart from other channels of revenue such as sale of tickets, broadcasting rights and sponsorship.
PBL, which holds the merchandising rights, has now refused to honour the cheque because the police have recently shut down the merchandise outlets at stadiums citing security concerns.
The OC, in the merchandising contract, had promised the company 63 stalls across all Games venues.
“How can we honour the cheque when our contract conditions are not being fulfilled and now has no chance of being fulfilled either?” said Suresh Kumar, chairman of PBL.
Kumar claimed that so far the OC has given them only the shop space at the OC headquarters, which is still running.
It was not as if the police suddenly woke up to the presence of the stalls. Sources said the police had told the OC as many as two months ago that merchandising stalls will not be allowed inside the stadiums.
Lalit Bhanot, Secretary General of the OC, said: “I have no idea about this issue. I will find out.”
However, a section within the OC objected to PBL earning money by sub-leasing the rights to commercially use the “CWG Delhi 2010” logo to companies that use it on their products and advertisements.
A main legal glitch in this episode is that the OC and PBL have not yet signed a proper contract, making the whole arrangement sketchy.
“The contract came to our office only on September 28.
We had asked them not to encash the cheque before the proper contract is signed,” Kumar said.
The OC took Rs 1,620 crore as loan from the government with the promise to reimburse the whole amount through revenue collection, making the Games “revenue neutral”. That revenue model has long gone haywire, as all sources of revenue have yielded almost nothing.