Business – IPL set to score $2.2 b in long-term deals
New Delhi, Dec. 19
The cash-rich Indian Premier League (IPL) is set to defy global economic trends.
The combined size of long-term telecast rights deals and the upcoming franchise auction in January is set to exceed $2.2 billion.
The size of deals negotiated by the IPL is unprecedented in the cricketing world.
The International Cricket Council (ICC) could manage to get $1.1 billion from sale of television telecast rights.
The ICC’s deal included telecast rights for three Cricket World Cup’s and four ICC World T20 championships apart from the ICC Champions Trophy.
The year began with a bang for the IPL with a telecast rights deal signed with Multi Screen Media and World Sports for $1.7 billion, almost $400 million more than the deal signed with Sony in IPL’s debut season in 2008.
The nine-year TV deal signed this year was after a hard-fought legal battle that saw Sony’s previous five-year deal being terminated.
According to an analyst, “The television rights were heavily undervalued in the first season of the IPL. The league did well this year to eke out maximum returns from the re-worked deal.
The good news for the existing franchises is that their share of revenues from telecast rights increases.
“This would not only aid in increasing the valuations of the teams looking to go public but also help new teams break even faster,” he added.
The last two seasons of the IPL saw a large number of matches being screened in public places.
The IPL Commissioner, Mr Lalit Modi, leveraged this to rake in almost $70 million (Rs 330 crore) by selling theatrical telecast rights of the tournament.
“Theatrical telecast rights have been unheard of in the world of sports despite many major sporting events being screened in theatres, bars and restaurants.
“This was probably the first time that any sports league is leveraging this aspect of the business in raking in revenues,” said a media and entertainment analyst.
The cash registers of the IPL are yet to close though. The league has already approved the inclusion of two more franchises for the 2011 season. The auctions for the two new franchises would be held in January with a base price of $225 million each. The base price of the franchises alone is more than double the value of the costliest team currently, the Mukesh Ambani owned Mumbai Indians.
With the eight IPL teams already breaking even in Season 2, expectations are rife that the two new franchises would be sold at price much higher than the base price, which could see the IPL raking in another $450-$600 million. This could push the revenues in 2010 for IPL well past $2 billion mark.
Merchandising could be the next big avenue for income for the league. With most of the telecast rights already sealed, analysts believe merchandising could be the next big step from the IPL. Something that Mr Modi also alluded to recently when he said “Licensing and merchandising is a key component of the IPL’s revenue streams and I am happy to report that we have just concluded a licensing deal for the league with a watch company.”
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