First-year figures spell success for franchises
The IPL franchise owners have recovered, from central television and sponsorship revenues, close to 80% of the money they paid to the BCCI in the first year of the Twenty20 league, according to figures tabled at the BCCI's annual general meeting.
In total, the franchise owners handed over Rs 289 crore (approximately US$62 million) to the board as the first annual instalment of the amounts they bid to buy the rights to own an IPL team. But as part of the revenue-sharing formula they have earned back Rs 224 crore from the central earnings of the first edition, which was held from April 18 to June 1.
"It shows that the franchises made much more money that many thought they would," Lalit Modi, the IPL chairman, told Cricinfo. "It shows that the IPL has become very profitable, and the franchises can now count themselves lucky. According to my calculation, new franchises will now be valued at anywhere between US$250-300m."
The eight franchises shelled out sums ranging from $67m to $111.9m to own teams for a ten-year period, and the league plans to have three more teams from 2011. The team owners are entitled to 80% of the television rights revenue, which amounted to Rs 236 crore in the first year minus production costs, and 60% of the sponsorship revenues, which netted Rs 117 crore in the first year.
The payment to the BCCI, however, was only part of the spending by the franchises, who forked considerable amounts of money to buy players and spend on their organisation and promotions. But Modi said there were other significant streams of revenue.
"The franchisees, apart from getting revenue from central sponsors, also earn revenue from team sponsorship directly, which is from $7-10m annually," Modi said. "Furthermore, ticketing and hospitality brings in around $3-6m. These numbers are likely to go up. Further, they will all get a share of revenue for them being part of the Champions Twenty20 League. All of this could add quite substantially to all their bottomlines."
The IPL has also provided a cash bonanza for the state associations of the BCCI, which are scheduled to receive an additional Rs 203 crore this year - 70% of the fees paid by the franchises to the BCCI. This payment is above their share from BCCI's television rights revenue, which totalled Rs 371.89 crore in the financial year 2007-08.
The IPL declared a gross income of Rs 645 crore in its inaugural year and a profit of Rs 51 crore after handing over the dues to the franchises and the state associations.