The BBCI’s plans to reduce the pay differential between domestic cricket player fees and the rewards from playing in the IPL has been put on hold as a result of the financial situation facing the governing body from the corona virus pandemic. BCCI president Souray Ganguly wants domestic players to earn more from playing the domestic game. “This obsession about IPL contracts has to end somewhere. The domestic fees would have to be made lucrative enough to make it worth for the Indian cricketers to continue to play in the domestic circuit,” a top BCCI source told Sportskeeda.
As a result of decisions made by the Supreme Court appointed Committee of Administrators that had been running Indian cricket players until October 2019 players in the domestic game were expecting rises of around 200% from Rs 10,000 (US$140) to Rs 35,000 (US$490) per day. The rise was put back by a decision of the BCCI because of complex tax issues and has now been further postponed as a result of the corona pandemic. The BCCI is eager to increase the pay which the domestic players are currently getting, but its ability to do so depends on the revenues from the IPL which is looking uncertain in the current year.
It also looks as if the BCCI’s cost cutting process announced several weeks ago could have been in anticipation of the current problems faced by the competition as a result of the deepening corona virus crisis according to a report in Sport Business. N. Santosh, of financial advisory service Duff and Phelps, believes that the cost-cutting could have been made in anticipation of the Covid-19 threat. “When the decision was made in early March, the coronavirus was already out there, and concerns were starting to be felt around the country. It is possible that while nobody thought it would impact the IPL, the BCCI anticipated that there would be issues and were thinking ahead.” The 2020 IPL was due to run from March 29 to May 24, but the BCCI has suspended its start until April 15, but the new start date looks unlikely.
The IPL has been a phenomenal success. Central sponsorship revenue has grown from US$14.7m in 2008 to US$82.7m in 2019, and franchise revenues and all eight team franchises produced a profit for the first time in 2018. In 2019, independent value assessors Duff and Phelps estimated that the overall value of the IPL had risen from US$6.3bn in 2018 to US$6.8bn in 2019. The franchises reacted negatively therefore when the Board of Control for Cricket in Indian (BCCI) announced a cost-cutting program on March 4. This included a decrease in prize money (from US$2.72m for the winners to US$1.36m), an end to the opening ceremony and a policy change mandating that officials must fly economy-class on short trips. Franchises fees to state cricket associations for each home match were increased from US$27,197 to US$68,119. At the time the IPL’s chairman, Brijesh Patel, said there was no cause for alarm. “It’s not cost-cutting,” he said. “In 2013-14, to help the franchises, we had agreed to increase the money, but it was not part of the original contract…”
Now the IPL is facing a major financial problem. A report by Business Today magazine estimated the IPL could lose US$521.6m in broadcast revenue and US$80.9m in central sponsorship if there is no tournament. Broadcasters Star Sports had targeted US$445m in advertising revenue around the 2020 edition and had sold 75 per cent of its inventory by the end of January. “With a cancellation, there will be a billion-dollar impact in terms of the league’s value and in terms of financials, there will be a significant impact on the individual stakeholders,” says Santosh of Duff and Phelps. “I would expect that the teams will lose around US$2m to US$3m of their individual income if there is no cricket, though arrangements would have to be made with their sponsors and their insurance companies. “Income from ticket sales can be insured but there are other losses such as those of merchandise sales that will have an effect. Franchises will be able to survive one season. They are all doing reasonably well.”
Brian Sturgess
