Indian cricket

BCCI sanctions $5 million for IPL teams in 2008 Champions League

Ajay S Shankar

August 17, 2009

Comments: 8 | Text size: A | A

Shane Warne flashes a thumbs-up sign after dismissing Venugopal Rao, Deccan Chargers v Rajasthan Royals, IPL, 40th match, Kimberley, May 11, 2009
A thumbs-up no doubt for Rajasthan Royals © Associated Press
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In an unprecedented financial bailout, the Indian board has sanctioned Rs 22 crore (approximately $5 million) each to the Chennai Super Kings - owned by the BCCI secretary - and Rajasthan Royals, the 2008 IPL finalists, as compensation for cancellation of the Champions League Twenty20 last November.

None of the other six teams invited for the tournament's 2008 edition, which was cancelled due to the Mumbai attacks, has received any compensation from their national boards. The tournament rules are clear that teams are not entitled to compensation from the organisers in the event of cancellation but individual boards are free to take a separate decision in this regard.

Chennai Super Kings is owned by India Cements, which is headed by N Srinivasan, the BCCI secretary, who is also a member of the IPL and Champions League governing councils. Rajasthan Royals is co-owned by Emerging Media, a UK-based consortium, and the Chellarams, the Nigeria-based shipping owners.

The cancellation of the tournament cost each team a guaranteed participation fee of $500,000 and a share of the total prize money of $6 million, apart from potential sponsorship revenue. Chennai and Rajasthan have not qualified for the 2009 edition of the tournament, scheduled to be staged across three Indian venues from October 8.

When contacted, Lalit Modi, chairman of IPL and Champions League, and also a BCCI vice-president, confirmed the IPL compensation amount and told Cricinfo that part of the money has already been paid to the two franchises. Modi declined, however, to comment further on the issue or provide details.

The other teams that were invited for the tournament last year were Victoria and Western Australia, the domestic Twenty20 finalists from Australia, and Titans and Dolphin, the South African toppers, Middlesex, the England champions, and Sialkot Stallions from Pakistan.

Cricket Australia is planning to provide some financial compensation for Victoria and Western Australia from the revenue it hopes to gain from the tournament this year. But these amounts, which will cover advance travel booking, team preparation and lost sponsorship opportunities, are not expected to match the Indian payout. Cricket South Africa declined to comment on the issue but Cassim Docrat, chief executive of Dolphins, confirmed that he has received no information about any compensation.

The BCCI is a founding partner of the Champions League Twenty20, along with Cricket South Africa (CSA) and Cricket Australia (CA), with all three countries enjoying joint decision-making control over the multi-nation, multi-club event. The England and Pakistan boards have no management stake in the tournament.

An official familiar with the decision said there are two opinions within the Indian board on the compensation amount for the IPL teams. "Some feel that the compensation is reasonable considering the money that the franchises would have possibly earned from the tournament," the official said. "But others have expressed concerns that such a move could set a bad precedent. They fear that other IPL franchises may demand similar bailouts if such situations crop up again in the future, even during the IPL."

However, a member of the IPL governing council said the hefty compensation package for the Indian franchises was reasonable given the amount they would have gained from the tournament and loss of the sponsorship money that had been committed to the two teams. The BCCI's original agreement with the IPL franchises included a possible slot in the Champions League for the finalists, and this was factored into most of the major sponsorship agreements the franchises had entered into.

"The IPL's duty and obligation is towards its franchises and a fruitful, long-term relationship," the IPL official said. "The IPL's promise to the franchises was that if you qualify for the Champions League, you will play. But due to unfortunate circumstances, that didn't happen last year and we had to honour that commitment in the best manner possible."

The Champions League Twenty20 was set to start on December 3 last year but was aborted after terrorists attack on Mumbai, one of the main venues, on November 26. The tournament has now been expanded to include 12 teams and invitations have been extended to this year's domestic toppers from seven countries, including three teams from India, two each from Australia, South Africa and England and one each from New Zealand, Sri Lanka and West Indies.

Ajay Shankar is a deputy editor at Cricinfo

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Posted by TwitterJitter on (August 18, 2009, 14:08 GMT)

Although, it is BCCI's prerogative to provide funds to these two clubs or not, I would have hoped that they would have used this money to improve the cricket infrastructure at their major grounds or even build more stadiums. They need to invest massively in the cricket infrastructure and need to build world-class stadiums, cricket academies, and penetrate the game into rural markets in India. This money would well spent in that adventure than funding clubs for games not played or funding other sports in the country etc. I also agree with Copernicus that this reeks of conflict of interest for the BCCI secretary and the organization would do to learn from the other corporates in India like Infosys or from some professionally-run western corporations how to avoid conflicts of interests. If they want to be treated as a world-class body/league like FIFA or English premier league they need to focus more on corporate governance first before other matters.

Posted by vswami on (August 18, 2009, 10:14 GMT)

To characterise anything as bailout is fashonable these days. A tournament was cancelled, and two teams affected were compensated by their board. This is a private transaction between two clubs and their board. Unlike English soccer clubs who are buying and selling players based on massive debt accumulated on their balance sheet from banks, or on the whims and fancies of rich billionaires who have the capacity to take endless losses, IPL clubs are hardly leveraged and are working by and large based on the equity put in by the owners.

Posted by Copernicus on (August 18, 2009, 0:32 GMT)

Well, isn't this a cosy little conflict of interest - handy being the secretary and able to give yourself a nice fat cash handout when things don't go according to plan. Just yet more proof of the corruption and cronyism inherent in Indian cricket administration.

Posted by wanderer1 on (August 17, 2009, 23:33 GMT)

If teams are already needing bailing out for whatever reason and we're barely a couple of years into the IPL, it ain't a good sign. I think in the coming years the IPL can survive but not with the ludicrous sums of money parading around. If you live on the margins you end up dying when those margins disappear, ask any bank on Wall Street. But unfortunately let's be honest Lalit Modi only cares about the money, it may well be the greed which created the league is the one that destroys it. And the cycle of life continues.

Posted by Phantom_XI on (August 17, 2009, 23:00 GMT)

I think most people lose complete perpective whenever money and cricket is mentioned in the same sentence. Don't forget that $5m (USD) in compensation is peanuts compared to other major sports i.e. football(Soccer), golf, tennis etc. And all those cricket lovers are not doing anybody any favour by treating money awarded to cricketers or clubs/teams/boards as financial insanity or commercialising the sport. Don't forget that in cricket, as in any other sports or other endeavours including commercial enterprise, that the more money that is available the more talented individuals are likely to pursue it and in turn make the game richer, exciting, skillfull and pleasure to watch. Cricket, be it BCCI, ICC or any other body, should do all it can to provide adequate financial incentives so that the pool of available talent increases which will no doubt increase the attractiveness of the game, which is inherent in the game, to the most people possible.

Posted by danprolde on (August 17, 2009, 21:30 GMT)

Doesn't seem to be a bailout.

Posted by chintumani on (August 17, 2009, 16:00 GMT)

I dont understand why is cricket commercialised so much. I know cricketers (and even may be some crcricket officials) do not have any other source of income once they are out of the game .Let them do osme commercials. Doesnt mean that all of cricket has to be played only for money. The spirit of cricket will no longer exist after few years where only money and "highly-rated" people will make it a lucrative business rather than a true and enjoyable sport.

Posted by ChinmayD on (August 17, 2009, 15:22 GMT)

Just great.

There is something wrong when a national sports association is allowed to function as a private club (which BCCI is) and not needed to disclose it's finances to public. They can then go on and handout sackful of money to their own secretary.

Farce.

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