The owners of the eight Indian Premier League (IPL) teams are on to a paying proposition as the third season of Indian cricket’s glitziest extravaganza gets underway. This is through the simple expedient of asking the Sony-World Sports Group combine to fork out more for telecast rights. The Rs 720 crore a year the Board of Control for Cricket in India renegotiated with the television network last year should see the teams home. Over and above this, aggressive expansion of revenue streams from the internet, in-stadium advertising, foreign television networks, team sponsorships and merchandising has managed to double the enterprise valuation of every team.
This is clever management and is sure to boost the prospects of the sport as this version of the game takes root. This is quite a turn up for the books after the first two years when things looked a little wobbly. Now flush with funds, the IPL is scoring more than its share of boundaries. Critically, Sony, in turn, is making money from the IPL this season. Last year its prospects were clouded by an economic downturn that had frozen advertising budgets across India, notwithstanding the extra airtime inventory created around matches. Sony has the biggest chips riding on the IPL. It is committed to feeding Rs 7,500 crore into the kitty over 10 years, which will be shared by the cricket board and the teams, frontloaded in favour of the franchisees. The teams, however, cannot hope to survive if the broadcaster keeps bleeding. This is tele-cricket, as the face-off with the government over security brought out in stark detail. The tournament can be played without a single spectator in the stands only because it is reaching 70 million Indian satellite television households. None of the franchisees can expect to do well if the broadcaster is not in robust health.
The evolving template of IPL fund-raising becomes more viable when the matches are played on home grounds. An advertisement-driven show can create a larger buzz, for instance by moving the entire caboodle to South Africa overnight, but it cannot come close to generating the hysteria on display in the home stadiums of local teams. This format of cricket needs both. In its third iteration, IPL seems firmly set on the path carved out by global brands like the English football Premier League in terms of the business model adopted by the teams and the broadcaster. It is difficult to lose money if you tap into national hysteria. One just has to see the hyper buzz on the stands to understand the value addition of this sentiment. The IPL certainly reinforces this view.