The IPL Mess June 30, 2010

BCCI cancels IPL rights deal with WSG

The BCCI has terminated all its IPL media license agreements with sports marketing agency World Sports Group (Mauritius) over the payment of the Rs 425 crore-facilitation fee (about US$90m) by the parent company of the tournament's Indian broadcast partner to WSG. The board claimed it was rightfully owed the money as the rights to the tournament were with the BCCI.

In a letter sent to WSG India dated June 28th, a copy of which is with Cricinfo, board secretary N. Srinivasan reiterated that the BCCI knew nothing about the agreement between MSM (Satellite) PTE LTD and WSG and therefore could not be a party to it.

"BCCI was never made aware of any agreement between MSM (Satellite) PTE LTD and your affiliate WSG (Mauritius) Limited for payment of facilitation fee to WSG (Mauritius) Limited," the letter said. "This agreement titled as "Deed for the provision of facilitation services" was brought to our notice by MSM (Satellite) PTE LTD only recently and it was admitted to us by them than an amount of Rs 125 crores has in fact been paid by then to WSG (Mauritius) Limited. These amounts constituting so called facilitation fees are actually amounts due to the BCCI."

The facilitation fee arose out of the restructuring of the television rights deal following the first IPL. WSG India had originally bought the worldwide telecast rights of the IPL for ten years (2008 to 2017) at a cost of over $1 billion. Meanwhile MSM had secured the rights to broadcast in India for five years (2008 to 2012) from WSG and had the option of securing the rights for the remaining five years (2013-2017) by paying WSG an option fee of $25 million.

However, the board cancelled the original rights deal in 2009 and renegotiated with WSG (Mauritius). But MSM did not want to renegotiate with WSG, preferring a direct contract with the board instead. The result was that MSM eventually signed a deal with the BCCI for the India rights at the same price and duration as WSG (Mauritius), in lieu of the latter relinquishing those rights. The eventual nine-year deal was worth Rs 8200 crores (US$1.6b) for both the India and international rights. Under its agreement with the BCCI, WSG still retained the international media rights for the IPL.

Since WSG stepped aside, MSM apparently agreed to pay it a facilitation fee amounting to Rs 425 crores as compensation. It has already paid WSG Rs 125 crores and was to pay the balance over the next seven years.

On discovering the payment, the board called it "improper" and has now reclaimed the IPL media rights originally sold to WSG. Meanwhile MSM agreed last week to pay the BCCI the facilitation fee of Rs 425 crores and has filed a suit in the Bombay High Court to recover the Rs 125 crores it has already paid to WSG.

Tariq Engineer is a senior sub-editor at Cricinfo, Nagraj Gollapudi is an assistant editor at Cricinfo