BCCI is yet to decide on whether it will follow the Supreme Court’s directive, based on the Lodha committee recommendations, which states representatives of the Indian Premier League (IPL) franchises must be allowed in the tournament’s governing council.
While the board is taking the time to decide in this regard, and the apex court getting ready to hear the matter once again on June 29, the franchises are anxiously waiting to see what happens. Like BCCI, they also believe there is a lot at stake for them too.
All existing franchises of the IPL, except the two new teams who have joined the party only for a period of two years – will have to pay the last of their 10-year franchise fee installment this year, after which they will be allowed to own the team for perpetuity. The situation will encourage the entire business model of the cash-rich league to undergo a complete overhaul.
The BCCI will have the chance for a windfall very soon as the media rights of the IPL go up for renewal and so are the franchises next month. The contract between the BCCI and the franchises states that the latter will continue to pocket 48% of the revenue earned from the fresh sale of media rights.
Further, the contract also says franchisees will pay the cricket board 20% of their annual revenue from the tournament, whatever their net profit or loss would be.
Just Consider this: If the media rights grab a 100% boost from their valuation at present and are sold anywhere close to Rs 16,0000 crore, according to current market speculation – for at least five years – BCCI will directly pocket 52% of that money whereas the remaining 48% will be then distributed among the existing franchises.
“At 48%, shouldn’t the franchises be seen as equal stakeholders in the league? It’s only fair that they get to have some say in the decision-making,” says a franchise owner.
If the media rights are sold as per the market speculation, for the amount mentioned above, and if the franchises have to divide 48% of that income for five years, each franchise will have an opportunity to earn Rs 200 crore each year direct from the central revenue pool.
“Add the local revenue to it. Franchisees will have to pay 20% of that collective income to the BCCI each year,” he says.
The 20%, suggest market experts, can be more than the annual installment which the franchises has been paying the last 10 years. “If the BCCI is taking care of its interests, shouldn’t it also take care of the interests of its stakeholders? Isn’t the Supreme Court recommending the same thing?” says a franchise executive.
The franchises also think that BCCI will sell the media rights just for next five years to maximize their income as broadcast giants Star India and Sony Pictures Network India (SPNI) all set to splash out big money.