Based on the average costs and revenues of the IPL teams over the past few years, we estimate both Sanjeev Goenka and Intex will approximately lose between Rs 50-80 crores a year. This is primarily because they are not tapping into the central pool. The calculations are given below in detail(approx figures).
Revenue (in Rs crore) per year
a) Central: Nil
Both Intex and Sanjeev Goenka have submitted negative claims on the central pool of IPL revenue which will be divided equally between each team. Last year, the revenue from central pool for each team was Rs 65 crore.
b) Ticket sales: Rs 20 crore over the seven matches they will play before knockouts.
c) Prize money: Negligible.
70 per cent of the prize money is shared with the team’s players. Total prize money is Rs 15 crore for 1st place and Rs 7 crore for coming second.
d) Sponsorships: Rs 30 crore. Between front of the jersey, pads, back of jersey, etc a new team should be able to clock revenues of anywhere between Rs 20-30 crore.
Total Projected Revenue: Approximately Rs 55 crore
Costs (In Rs Crore) per year
a) Player salary cap: Rs 65 crore
b) Stadium management and Infra: Rs 10 crore
c) Franchise fee: Rs 16 Crore for Sanjeev in Pune and 10 Crore for Intex in Rajkot.
d) Travel lodge and boarding: Rs 6 crore
e) Support staff: Rs 4 crore
f) Marketing: estimate Rs 3 to Rs 10 crore
g) Miscellaneous: Rs 10 crore
Total Projected Costs for Pune/Sanjeev Goenka is Rs 136 crore. For Intex it is Rs 125 crore.
Taking these assumptions into account, we are estimating that if these teams were to reach the semi-finals, they are likely to lose upto Rs 80 crore a year.
Understanding the Central Pool
BCCI has a central revenue pool made up of the hefty television rights income and other sponsorship earnings connected to the tournament. From this central kitty, BCCI passes on an equal share to each team. Last year, this was roughly Rs 65 crore for each franchise. Both Goenka and Intex have submitted negative bids thereby forfeiting any claim on the central pool. This means that the existing IPL teams will now have a larger pool to share revenue from.
While it may be possible for the new teams to tap into sources of revenue that other teams haven’t successfully explored so far, these numbers have been put together looking at the financials of other teams over the past few years.