As controversy surrounds the forthcoming third edition of the Indian Premier League (IPL), the financial results of the second edition held in South Africa will also create another one.
An internal note on the financials of IPL-2, a copy of which is available with FE, shows it claimed a loss of Rs 34 crore, though this did not dent the fortunes of its management or eight franchisees. But the ?book entry? loss will help IPL parent body Board of Control for Cricket in India (BCCI) clip its own earnings. The income-tax department plans to tap the cash-rich board soon and so any loss will help reduce its tax liability.
The note shows the league earned Rs 774 crore in 2009, a 17% rise over the Rs 662 crore it earned the previous year. Interestingly, two-thirds of this was shared with team owners and state associations that comprise the BCCI family.
While the franchisees received a total of Rs 303 crore, against Rs 220 crore in 2008, the associations earned Rs 202 crore (unchanged from the previous year). The losses, according to the note, are mainly due to shifting the venue to South Africa.
IPL apparently spent more than Rs 300 crore on logistics, production and fees towards services, prize money and insurance, among other things. It incurred expenses of Rs 808 crore, thus the Rs 34-crore loss.
?The loss shown by IPL is simply a book entry. The organisers have rewarded themselves and the franchisees by taking away a handsome chunk from the money made by the league,? said a senior member of BCCI, not wanting to be named.
The franchisees? income is part of their 80% share in the fees raised by IPL through the sale of media rights and 60% share of sponsorships. But it is not clear from the accounts what exactly the BCCI associations have been paid for.
People holding top positions on the board also head the associations. BCCI chairman and agriculture minister Sharad Pawar heads the Mumbai Cricket Association. Likewise, board president Shashank Manohar, secretary N Srinivisan, and treasurer MP Pandove hold key positions in the Vidarbha, Chennai and Punjab associations, respectively. Srinivisan also owns one of the IPL teams, Chennai Super Kings.
According to two senior executives associated with a couple of the IPL teams, the franchisees bear a larger part of the cost of organising matches in stadiums owned by the associations. ?(The associations) may be spending some money in firming up the infrastructure for holding the matches. But, largely, it seems like a subsidy given to the associations,? said one of them.
Pandove refused to comment on the issue. ?We have sent the financial details to the governing council members. We will know the final accounts only on March 31,? he said. IPL chairman Lalit Modi did not respond to calls made to his mobile phone.
The note shows the increase in IPL?s income was largely on account of the renegotiated deal with broadcaster Multi Screen Media and sports marketing company World Sports Group. While the former paid IPL Rs 335 crore, the latter forked out Rs 20 crore under a fresh broadcast contract struck for $1.6 billion for nine years. The original deal had been signed for $1.03 billion for ten years. The pair had paid IPL Rs 242 crore in 2008.Besides the media rights, sponsorships comprise the second-largest chunk of revenues and this component rose slightly to Rs 125 crore in 2009, from Rs 111 crore in 2008, says the note. Contributors to the sponsorship kitty last year included DLF (title sponsor), which paid Rs 40 crore, and Kingfisher (Rs 21 crore), Vodafone (Rs 19 crore), Hero Honda (Rs 18 crore) and Citibank (Rs 18 crore).
Web rights fetched the IPL management Rs 8 crore. Franchisees paid Rs 289 crore, the same as in the previous year, as part of the licensing fee.