IPL cancellation may cost BCCI a massive Rs 3,869.5 cr
- Updated: March 24, 2020
If the virus doesn’t subside by April 15, there are even talks of holding the IPL matches without spectators. This would mean that the broadcast and streaming revenue of both BCCI and franchisees would remain intact
The Indian Premier League that was supposed to begin on March 29 has been postponed till April 15 due to the outbreak of COVID-19. With the number of COVID-19 cases on the rise, there is also a likelihood of the event being canceled altogether. In fact, PGA Tour has canceled the remainder of its signature event, Players Championship. The English Premier League and NBA have postponed their matches.
If the IPL was to be altogether canceled, it could cost the BCCI Rs 3,869.5 crore, which would include Rs 3,269.5 crore of broadcast and streaming revenue and Rs 200 crore and Rs 400 crore of central sponsorship and title sponsorship revenues respectively. Star India had bagged IPL’s media rights for Rs 16,347.5 crore for five years, while Vivo had bagged the title sponsorship for Rs 2,000 crore for five years.
The erstwhile Nimbus Communication (the company which owned Neo Sports) Chairman, Harish Thawani, says that as per the contract, the risk shifts to the broadcaster from the first ball bowled. “If the IPL isn’t staged at all, and BCCI is not insured, then it could be an issue,” he further explains. However, most teams including the BCCI are expected to be covered by insurance for these kinds of eventualities.
In fact, Star India is known to have sold over 75 percent of its IPL inventory almost two months prior to the commencement of the tournament. The broadcaster is eyeing a revenue of Rs 3,300 crore of broadcast and digital ad revenue this year. If the tournament gets canceled, it would mean huge losses for the broadcaster too.
If the virus doesn’t subside by April 15, there are even talks of holding the IPL matches without spectators. This would mean that the broadcast and streaming revenue of both BCCI and franchisees would remain intact. Star would also be able to keep up to its Rs 3,300 crore ad revenue target. What would get impacted is the gate revenue and the food and beverage revenue of the franchisees. While 85 percent of a franchisee’s revenue comes from broadcast and streaming rights, it on average makes Rs 4 crore per match from ticket sales, while the sale of food and beverage constitutes another Rs 50 lakh-Rs 1 crore per match. “The net loss could be in the region of Rs 2.5 crore per match, but I am sure all of them are insured,” says Thawani.
The question, however, is will a close-door IPL actually help in containing the spread of the virus? Even if the tournament is staged without spectators, the TV crew covering the event would consist of 80-90 people, the service staff would be another 40-50, and an additional 100-odd support. This would mean that there will be a congregation of around 400-500 people per match even if the tournament is staged within closed doors. The government as of now isn’t allowing a congregation of over 10 people.
Source - https://www.businesstoday.in/