IPL matches postponed, broadcaster, franchises on a sticky wicket

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March 14, 2020 7:55 AM

IPL’s official broadcaster Star India is staring at big losses after the BCCI on Friday suspended the start of the tournament’s 13th edition this year from March 29 to April 15 in the wake of the COVID-19 pandemic.

There are high chances that after this also the cricket matches would happen behind closed doors without the stadium attendance.

IPL’s official broadcaster Star India and team owners are staring at big losses after the Board of Control for Cricket in India (BCCI) on Friday suspended the start of the tournament’s 13th edition this year from March 29 to April 15 in the wake of the COVID-19 pandemic. There are high chances that after this also the cricket matches would happen behind closed doors without the stadium attendance.

Star India that shelled out a whopping `16,347 crore to acquire IPL broadcasting rights stands the risk of losing out on advertising revenues estimated to be anywhere between `2,800 crore to `3,000 crore in the current year. Experts had pegged Hotstar to earn an additional `500-600 crore in ad revenues. In 2019, Star India had earned over `2,000 crore (and about `350 crore for Hotstar) in advertising revenues.

Advertisement clients typically make payments almost 30 days to 60 days after ad slots are booked. Billing is usually done on the first day of the month post the commencement of the match and payment comes in on the last day, an analyst explained.

There are mounting concerns within the industry whether the gaming schedule for the seven-week-long tournament will be slashed to four or five weeks if the tournament commences on April 15. Reduced time period means two matches could be scheduled for weekends in which case viewership gets impacted substantially. “Viewership for a 3 pm match and a 7.30 pm match varies widely,” said an industry observer.

As many as 462 million viewers watched the 12th edition of IPL on Star network channels last year, about 12% higher compared to previous season, BARC data showed. The IPL governing council will meet on Saturday to discuss the modalities of the tournament. The IPL team owners face the risk of taking a hit on their top-line as bulk of franchises’ revenues are generated from their share of broadcasting rights.

The other avenues of revenue for them include team sponsorships, ticket sales and in-stadium advertising. According to Sandeep Goyal, chairman at Mogae Media, a franchisee rakes in about Rs 50 crore from ticket sales and corporate boxes on an average. For bigger stadiums like Mumbai’s Wankhede, collections from corporate boxes would typically be higher than ticket sales, for smaller stadiums like Mohali or Jaipur, revenue from ticket sales would outnumber that from corporate boxes.

Manish Desai, partner at Deloitte, said in the event of the IPL being a closed-door affair, it may be estimated that approximately 10% of a franchisee owner’s total revenues are likely to get impacted. Given that many IPL franchises are private companies, it is estimated that their total revenues could range between Rs 300 crore-Rs 400 crore, Desai added.

Companies’ filings with RoC sourced from business intelligence platform Tofler showed Chennai Super Kings’ total revenues for the year ended March 2019 stood at Rs 417.83 crore. For Kolkata Knight Riders, FY19 revenues came in at around Rs 448 crore, Delhi Capitals raked in Rs 424 crore in revenues while Mumbai Indians made Rs 393 crore during the year.
According to Duff & Phelps, the IPL ecosystem was estimated to be worth Rs 47,500 crore in 2019, registering a growth of 13.5% over 2018.

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