Indian Premier League

New franchises will make profits - Lalit Modi

Cricinfo staff

March 22, 2010

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Lalit Modi taps away on his laptop, Mumbai, January 19, 2010
Lalit Modi: "We are aiming to be like the NBA and NFL and the day is not far, considering how we are going." © Getty Images
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Lalit Modi, the IPL commissioner, has expressed surprise at the staggering bid amounts for the two new franchises but was confident the investment in the new teams would yield profits for the respective owners.

The Sahara group, the biggest patron of sports in the country, won the rights to the Pune franchise for US$370m. The other new franchise is a consortium of five companies called Rendezvous Sports World, which bid US$333.33m for Kochi. The cost of the two franchises exceeds the total value of the original eight franchises.

"I was indeed a little bit surprised by the amount. Honestly speaking, I thought the winning bid would be USD 300-320 million. So it was USD 40-50 million higher than my expectation. The bidders must have done their numbers well," Modi was quoted as saying by PTI. "We are just two years old and every team that has been run well must be making a profit. If not, they are probably marginally short of it."

Subrata Roy, the chief of the Sahara group, said the value of his bid for Pune was justified though he wasn't sure when the franchise would break even. "Right from the Indian Premier League's first match this season, the eyeballs it has got is huge worldwide," Roy told The Economic Times. "Naturally, the valuations have risen exponentially from what it was three years ago. So, we believe the bid we placed is justified. While there will be operating profits from year one, there will be no cash flow. It's difficult to say by when we will break even."

Roy had initially planned to bid for Lucknow as a new franchise, but Pune's infrastructure for cricket and the Sahara-built township of Aamby Valley, located in the city, prompted the final decision. "We did want to bid for Lucknow but we were advised by the Indian Premier League to consider bidding for Pune as it made sense in terms of logistics and infrastructure," Roy said. "The new stadium coming up in Pune is one of the world's best. Also we have the advantage of cross-leveraging the resources of Aamby Valley."

Roy also told the Times of India that "a few Indian cricketers had suggested that Sahara should buy an IPL team." "Since we share an emotional bond with these players, we had to buy a team. Soon, we will start planning and by September everything will be in place for sure." He added that Sahara had not bid in the first auction because of stringent clauses in the tender document.

Following the success of the first two seasons, Modi said the IPL brand was gaining popularity across the globe and adding more patrons to its existing fan base. The scope for expansion, he said, was greater given the potential for greater revenue compared to many other sporting leagues. "Sports is one of the leading businesses of the world today. English Premier League, NFL, NBA, Spanish League, Bundesliga -- these capture the imagination of the youth and the people. Build a strong base and your future is defined.

"We already have some pluses. Across the world, the major cost is of infrastructure and players' salary. Here you get the stadium pretty much free and there is a cap on players' salary as well.

"Merchandising and ticketing are two other revenue sources. The ticketing revenue of all teams have gone up six-seven folds. With YouTube and Google in the picture, fan base is increasing across the world."

The IPL, now having expanded to 10 franchises, could feature 94 games next year if it retains its current format. When asked if the increasing workload would exact a heavy toll on the players, Modi said: "See, you have 300 matches in EPL every season. I don't see any fatigue factor. Currently every team plays 14 matches, they will play 18 from next year. We are cutting down on the travelling. It's travelling which is the biggest issue, not playing matches.

"We are aiming to be like the NBA and NFL and the day is not far, considering how we are going."

© ESPN Sports Media Ltd.

Posted by TwitterJitter on (March 23, 2010, 22:08 GMT)

@ Naga Rick- Spoken like a true socialist, always for redistribution of wealth. Since you are privileged enough to be able log on to a website and enter comments and are all right with taxing somebody else like hell to pay for something else, why don't you volunteer 75% of income to charity? Good place to start for someone dictating what should be done with somebody else's money. May be you need start looking at the definition of liberty.

Posted by   on (March 23, 2010, 21:34 GMT)

@dremella ... you forget the one thing different from you examples is that there is no international schedule amidst the season for NFL, MLB, NBA like there is for cricket. These guys play only for the clubs most seasons. So, 162 spread over 9 months is not a big deal. Cricketers need to play internationals, travel long distances, practice, take breaks, handle injuries with that. Hence the high number of matches is the issue.

Posted by   on (March 23, 2010, 19:41 GMT)

Do you think IPL is a big scam - just a money making machine - like Roman Emperors used to keep their citizens in DRUNKEN (DUMB) state by arranging bloody fights of gladiators, to forget their woes and making them not to think about real life? I haven't seen a list of ticket prices (per ground/team/city) at IPL's websi......te. Sports like Hockey, Athletics etc. are in dire straits in India(thanks to all Indians, not IPL). We are becoming so dumb that we can't provide alterenatives of better international sports (Cricket is not Indian game.) like soccer, tennis etc. We are so idiots that we go to last page of newspaper to read cricket news FIRST than reading editorial that explains what is really happening in our country. IPL's money is people money. Put 50% tax (no corruption? may be some.) on IPL revenue and develop other sports in India. Ref: IPL investors look for profits, sports gets lost: P T Usha

Posted by Kunal4 on (March 23, 2010, 19:30 GMT)

Dremella,

Despite the 82 game in NBA, 162 Games in MLB and 82 games in the NHL, each league has an off season. The NBA regular season starts October and is over by April. There is a offseason. Similarly for MLB, where the pitchers work on a 5 day rotation. The season starts in April and finishes at the end of September. Ofcourse there is training camp, but there is an off season. The athletes competing in these leagues play only in these leagues, going on international duty during Olympic years or qualification. IPL is not the be all and end all of cricket. Most other leagues plays games concurrently unlike IPL, which doesn't even show games concurrently. The players playing in the IPL play cricket for their national teams. Either there needs to be windows made for either form of cricket with an offseason or this is going to turn people off of other forms of cricket. Maybe having a ODI competition, an IPL window, with a windows for test and each team getting an offseason. less is more

Posted by   on (March 23, 2010, 9:53 GMT)

Because cricket is essentially an international game. Unlike baseball, basketball, etc the sport revolves around international play, not domestic leagues.

Posted by whisperingdoom on (March 23, 2010, 9:40 GMT)

The IPL will never reach the level of the NBA and NFL because cricket is an INTERNATIONAL sport..people would rather watch countries playing each other not cities competing for something.The only reason the IPL is having success is because of india's population

Posted by redneck on (March 23, 2010, 4:50 GMT)

i love it how he uses the NFL and NBA as leagues to aspire too! both those leagues are sports which have very little international competition! NFL is american football, so no need to worry about a future tours program or anything like that that for them and basketball has a world cup and olympics every 4 years and no other overseas factors to take into account! also both these leagues have very little in the way of forien players and rely mainly on home grown talent! cricket and the IPL are in a very different place to that! we have an international game and the ipl have a lot bigger forign player base. if modi wants the ipl to run as long as the nba season he better kill off team india now as there is no way india can stage the longer ipl, host its home test tours and tour other countries with the ipl taking up half the year! also i dont think australia, england, south africa etc would be happy giving up its players and risk injury to them for such a long tourniment!

Posted by Mahendra_Ishant_Pathan on (March 23, 2010, 3:04 GMT)

Way to go Mr.Modi.......You are the man!! The quality of indian doemstic circuit is remarkably low and hardly produces good cricketers......Most of our cricketers are nurtured in the inetrnational level......look at raina, jadeja, ishant, tyagi etc etc.....Sould spend 3 to 4 years on a cricketer and we should loss them to IPL..... Now, it's even more fun....we loss them to IPL even before they are nurtured.....hahaha I think in the longer run......more IPLmatches will only decerase the standard of indian cricket drastically and eventually loss the interest of the people..........If IPL franchises are smart......they should all come together and raise the level of indian domestic standard (may be like australia).....This way we can afford to loss many and still mantain some standard.....

Posted by K.M. on (March 23, 2010, 2:43 GMT)

@pankajkumarsingh, I appreciate ur reply & noone denying BCCI's financial strength which is absolutely necessary for cricket's future but how many of these billions of dollars have gone into developing better grounds? compare that to MCG or Dallas Cowboys stadium (NFL)? it does not even stand comparison. We always give an excuse that India is a developing country & shouldn't be compared with the developed world but at least BCCI as a sport body is making as much profit as any other in the world but the grass-root investment is almost nil. BCCI can easily build 10 MCG , 10 national talent academy, give better remuneration to 'deserving domestic' players and more. Laughable is the fact that they even dropped prasad & robin singh & are in no hurry to replace them.Compare that to Australia who has professional fielding coach and results are there to see. BCCI are more like a business generating profit rather than a body 'actively' improving cricket and infrastructure.

Posted by amitpat on (March 23, 2010, 2:28 GMT)

modi is all about making money. icc should step in and stop IPL . for all of us .

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