The Story
The IPL’s brand value has risen 26% in 2017 to $ 5.3 billion from $ 4.2 billion in 2016 after the renewed title sponsorship deal with Vivo according to a report published by Duff & Phelps, a New York-based corporate finance advisory firm last week (26th August).
The same report also suggests that the upcoming auction for the media rights would see a 1.8 billion USD. With such huge numbers in the scheme, the insecurity surrounding fairness and transparency, which has become a legal matter now, seems very legitimate.
The television right, as well as the digital media rights, will be sold for a five-year period starting from 2018 to 2022. The bidding process is expected to close on 28 August and new rights holder will be announced the same day.
However, there is a huge roadblock before the process could be carried out smoothly as the Supreme Court stands in the middle is seeking clarity in the existing process of auctions.
Need a change in mindset
Many believe that BCCI needs to think over the possibility of changing the processes as it continues to fight a legal battle with Rajya Sabha member Subramanium Swamy who wrote to the to the Justice RM Lodha Committee in May, voicing his opinion on introducing e-auctions and then filed a petition in the Supreme Court.
Acting on the application SC has asked the chief of the Committee of Administrators (CoA), Vinod Rai, to file an affidavit on August 28 which explains that the current process is indeed the best process.
Rai has been a supporter of the existing process of inviting closed bids echoing the BCCI’s sentiment that it is the best method for discovering a fair price for the IPL rights.
But, with the call for the introduction of a digital process and an e-auction increasing, Rai and BCCI may be forced to rethink methods to ensure transparency.
“The Prime Minister says we must move to the digital world. Why should the BCCI conduct an auction physically?
“Why should it happen in a closed room? The Supreme Court has also said wherever e-auction is possible, it should be resorted to,” Swamy told TOI.
E-Auction will cause loss to the BCCI
At the August 22 hearing in the Supreme Court, Chief Justice Dipak Misra heard out all parties those (Swamy) insisting on e-auction and those (BCCI) who believe e-auction will not allow a fair price discovery.
In May, the Rothschild Global Advisory showed a presentation to the BCCI to explain the advantage of e-auctions. The presentation referred to the auction of telecom spectrum in India.
The BCCI feels that such sort of auction will under value digital-only rights and pointed out that no sports property anywhere in the world goes through an e-auction, the Board says, “If it’s not going to be an open auction then why to do away with the existing process, which has delivered excellent results”.
At present, SC, after hearing both the parties, seems to be of the opinion that the BCCI should be allowed to what it feels is suitable.
The last two auctions held by the BCCI for team India jersey and IPL title were sold to Chinese mobile companies at whopping prices.
“Cricket is not spectrum or coal. An e-auction will devalue the property and it is only the BCCI that will end up losing,” says the Board.