Ipl econmy presentation

ECONOMICS OF INDIAN PREMIER LEAGUE

PRESENTED BY :SONU KUMARROLL . NO :114CCMA047COLLEGE :

D-DelhiL-LeasingF-FinanceI-IndianP-PremierL-League

Welcome

HISTORYIt was in late June 2007 that two men arranged for a meeting for discussing an interesting but different sporting event. It was Lalit Modi (Vice-President of the Board of Control for Cricket in India with Andrew Wildblood (International Management Group, the sports management ). Then in April 2008, the maiden IPL tournament which Modi had conceptualized and ideated was on the way to come on the forefront. In the month of February in 2008 experienced the hysterical player auction, created the not-so much needed media hype. The most powerful and rich Diaspora of the India community came up in the bidding process. The bigwigs are from the corporate sector to the entertainment industry – who added all the needed lusture to the tournament. Whooping amounts for different players were being seen - $1.5m for Mahendra Singh Dhoni, $1.35m for Andrew Symonds, $950,000 for Ishant Sharma. Cricket could be so costly an affair – nobody could even think of. Everybody was waiting for recreating history in Indian cricket. Bollywood stars like Shah Rukh Khan, Preity Zinta, Shilpa Shetty - owner and co-owners of the Kolkata Knight Riders team; Kings XI Punjab and Rajasthan Royals respectively made this mega sports event all the more a success.

Objectives

Market Entry strategies Personal Selling SWOT Analysis Cost leadership

MARKET ENTRY STRATEGIESYOUNG istan

Meri jaan

Youngsters targetedHuge entertainmentCommercialization

Bollywood Factor

Fan Following Curiosity

OPPortunites

Local Talents Got Exposure.Will be Accepted Globally.New Market Segments

THReats

Early RetirementsIntegrity Towards CountryStrategy Copy

Official Sponsors for IPLTitle SponsorsAmt. $50 mn

Umpire SponsorsAmt. $106 Crore

Beverage SponsorsAmt. $12.5 million

Official PartnerAmt. $25 million

Official PartnerAmt. $22.5 mn

Food Supplier

Broadcaster Amt.$1.026 billion

Official Partner

GROWTHSuccess for2008 Season

“REVENUE MACHINE”Huge growth for BCCI & other corporateNew forms of EntertainmentSpectacular Television Rating Point (TRP) ratingsPlatform for Youngsters

Success For 2009 Seasons

Fourth spot of the Forbes listRecord TV Viewership WorldwideBiggest Tournament after world cupGlobalizing CricketBoost more money

Success for 2010 Seasons

Theatrical rightsIPL On lineIPL Tie up with VROCK Mobile

PR ActivitiesDonation , Charity to South African Schools

TEAM OWNER CAPTION COACH SPONSER AUCTIONED AMOUNT

RoyalsChallengerBangalore

Liquor Barron Vijay Mallya(UB Group)

Anil kumble Rey Jennings(South Africa)

Royal Challenge &Other UB Brands

$ 111.6Million

MumbaiIndians

RelianceIndustriesLtd.(Mukesh Ambani)

Sachin Tendulkar

Robin Singh Idea Cellular,Pepsi

$ 111.9Million

TEAM OWNER CAPTION COACH SPONSERS AUCTIONEDAMOUNT

KolkataKnight Riders

Shahrukh Khan , Juhi Chawla , & jay Mehta

Sourav Ganguly

Dave Whatmore

HDIL , Nokia, Belmonte

$75.9Million

Kings XI Punjab

Preity Zinta, Ness Wadia,Surendra (Dabour Group)

Kumara Sangakara

Tom Moody(Australia)

Spice Telecom, 9X,ProvogueCoca cola

$ 76Million

TEAM OWNER CAPTION COACH SPONSERS AUCTIONED AMOUNT

DelhiDaredevils

GMR Infrastructure

Gautam Gambhir

Gerg Shipperd(Australia)

Hero honda , Kingfisher Airlines, Adidas, 104FM

$ 84 Million

Deccan Chargers

Deccan Chronicle (Venkattram Reddy)

Adam Gilchrist

Darren Lehman(Australia)

Deccan Chronicle,Puma, Mc Dowells,92.7FM,Pepsi,Kingfisher Airlines

$ 107Million

TEAM OWNER CAPTION COACH SPONSERS AUCTIONED AMOUNT

Chennai Super kings

India cements Ltd.

M S Dhoni Stephen Fleming(New Zealand)

India Cement,Aircel, Reebok,peter England Nevia , 9 Cloud

$ 91 Million

Rajasthan Royals

Emerging Media, Shilpa Shetty, Raj Kundra

ShaneWarne

ShaneWarne(Australia)

Kingfisher, Puma, Boost ,Ultratech Cement

$ 67Million

FIRST SEASON 2008 The inaugural season of the tournament started on 18 April 2008  lasted for 46 days with 59 matches scheduled, out of which 58 took place and 1 was washed out due to rain. The final was played in DY Patil Stadium , Nerul , Navi Mumbai. The top four ranking sides progressed to the knockout stage of semi-finals followed by a final.  “Rajasthan Royals” defeated  “Chennai Super Kings”  in a last ball thriller and emerged as the inaugural IPL champions.

SECOND SEASONS 2009

The 2009 season coincided with the general election in India . Owing to concerns regarding players' security, the venue was shifted to South Africa. Finally “Deccan charger “ defeated   “Royal Challengers Bangalore “ in the final. Deccan set a target of 144 with the help of Gibbs(53) and defended it.

THIRD SEASONS 2010 The third [season] opened in January 2010 with the auction for players. 66 players were on offer but only 11 players were sold. In this season, Hyderabad Deccan Chargers did not play at their preferred home location of Hyderabad, India due to the ongoing political crisis in the Telangana region . The new bases for the champions this season were Nagpur , Navi Mumbai and Cuttack. Four teams qualified for the semi-finals. The first semi-final was won by Mumbai Indians who defeated Bangalore Royal Challengers by 35 runs. Chennai Super Kings defeated Hyderabad Deccan Chargers in the second semi-final. The final was played between Chennai Super Kings and Mumbai Indians. Chennai Super Kings won by a margin of 22 runs.

FOURTH SEASONS 2011 On 21 March 2010, it was announced in Chennai that two new teams from Pune and Kochi will be added to the IPL for the fourth season.  Later, Lalit Modi was also removed from IPL chairmanship by BCCI. On 5 December 2010, it was confirmed that Kochi will take part in the fourth season of IPL. Chennai Super Kings won their second consecutive IPL title after defeating Royal Challengers Bangalore by 58 runs in the fourth season of IPL The top four teams namely CSK, RCB, KKR and MI have also qualified for the Champions League. MI are the current Champions League Twenty20 champions by defeating RCB in the finals.

FIFTH SEASONS 2012 The fifth season, this time with 9 teams (after the termination of the Kochi franchise) started on 4 April 2012 in Mumbai, for which the players auction was held on 4 February 2012 in Bangalore. The season saw IPL authority increasing the number of players in each squad to 33 from the previous limit of 30 .  The first match between Champions League 20–20 winners Mumbai Indians and the defending champions Chennai Super Kings was won by Mumbai Indians by eight wickets. Man of the match Richard Levi scored a 35 ball 50 with 6 fours and 3 sixes. The season will comprise of 9 teams, with 76 matches to be played. It began and will end in Chennai with the opening match on April 4 and the final on May 27. It will be played at 11 venues

The Bidding Process

Bid amount need to be specified

Auction of player

4 player under 21 from catchment area

Each squad min. 16 player max.4 international

Awarding of franchisees

Bid for more than 1 city

Potential franchisees submit bids

Announcement of Tender inviting bids

Government Revenue IPL Season 1 : 91 cr. IPL Season 2 : major loss as IPL held in south Africa IPL Season 3 : 200 cr.

Direct Tax : Rs 100 cr. Tax deduction at source TDS for the remuneration Paid to players , umpires, coach and commentators.

Service Tax : Rs 100 cr. Advertising , marketing and consultancy services

Expenses Team franchising costs : A franchisee has to pay 10% of total franchisee costs every year to IPL . Player costs : US $ 4-6 mn. per year this includes cost of manager and coaches. Each franchise has 18-22 players who are tradable after a year . The players have a three year contract with the franchise . Marketing costs : US $ 3-4 mn. By franchise for promoting its team Stadium expenses : franchises have to contract stadium for 7 matches at BCCI agreed rate . On an average , the expenses is Rs 2.5mn.per match . Other expenses : Administration and event management Rs 7 Cr.

Financial Perspective

How they made money :

The media right : itself were sold for a whooping Rs 4104 Cr For 10 years . of this Rs 432 Cr it will have to spend on the Marketing event. The Franchisee cost : The 8 Team’s franchisee auction put Together fetched IPL another Rs 2896 Cr to be collected Over 10 years The Sponsorship : Title and associate sponsorship Fetched another 200 Cr per year The Share of IPL : is the only set to increase with the yr as per the contract .Look like BCCI has hit upon another golden goose of its own.

Earnings

The share of the Broadcastings rights money Rs 25 Cr The share of the central sponsorship Money Rs 15 Cr The Local sponsor they can get supporting Side Rs 25 Cr ApproxThe share of the ticket earnings from the Home grounds Rs 13 Cr F & B Share Rs.3 Cr

Player Revenue Firm v/s Basic Agreement Prize Money : I. For winner Team 4.8 Cr –Increase to 6 Cr in IPL 4II. For Runner up Team 2.4 Cr - Increase to 3 Cr in IPL 4III. Two Semi –Finalist 1.2 Cr – Increase to 1.75 Cr in IPL 4IV. For Rest Its 50 Lakh-80 Lakh – Increase to 1 Cr Bonus w.r.t Position at which the Team Finishes Salaries I. Each year it should not be less the $ 3.3 MillionII. Player Earns about Rs 80 Lakh or more per session on

average Daily Allowance I. $100 per Day

Note * : Today IPL is making Rs 54 Cr by selling 150 seconds airtime on Set Max by carrying ads on the scoreboard during an over.

MRF pays Rs 15 Cr to have its blimp in the sky for 24 matches during this season of IPL .

EARNINGS OF IPL

Central sponsors, YouTube sponsors,theatrical rights: Rs 170 cr

Broadcasting fees: Rs 134 cr

Franchises fees: Rs 330 cr

TOTAL: Rs 634 cr

EXPENSES OF IPLUmpire salary: Rs 6 cr

Prize money: Rs 27 cr

Others including travel,:security and organisation

Rs 50-65 cr

TOTAL: Rs 83-98 cr

World Sport Group Pte Ltd (WSG), a sports marketing company, paid Rs8,200 Cr for the broadcasting rights to IPL until 2017. According to a senior executive from the WPP Group-owned Mindshare, a media buying agency, the network began selling its 10-second advertising spots at Rs4.5 Lakh, which is 200% more than the initial ad rates in the IPL season 1 at Rs1.5 Lakh per 10 seconds and 80% higher than the initial rate of Rs2.5 Lakh in the second season.  the rates increased further to Rs5.25 Lakh for 10 seconds.

Financial Model (For IPLIncomeI . Generation of Incomei. Revenue from Auction of Broadcasting rights :ii. Revenue from Title sponsorship & Co. Sponsorshipiii. Revenue from auction of franchisee rights iv. Revenue From official umpire’s Sponsorship

II. Distribution of Income i . Share of Broadcasting money with Franchisee/sii. Share of sponsorship money with Franchisee/siii. Share of Ticket Money with Franchisee/siv. Inauguration Expenses

I-II = Total Income

Financial Model (For Franchise)Income1) Generation of IncomeI. Share in revenue from broadcasting rightsII. Share in sponsorship MoneyIII. Share in revenue from sale of ticketsIV. Revenue from inside stadium advertisementV. Sale of Players (From one Franchise to another)VI. Revenue from own sponsorship & Co. Sponsorship2) Distribution of IncomeVII. Franchisee fee & player costVIII.Match fees to coaches and supporting staffIX. Rent of stadium & market / Promotional costX. Inauguration expensesXI. Fees of coaches & othersXII. Administrative cost

I –II = Total income

Gambling in Cricket How to Bet ?There are bets for every match. Betting usually begins few hours before the matches. What are Odds ?Odds indicate the $’s that you will win in return of each $ you bet if your predictions comes true Odds in the game may vary while the betting is open depending on many factors . What are Payouts ? payouts is the final amount of $’s which you'll earn if you win the bet. Total IPL betting – 6000 Cr * The Law Says “No” Online betting possible on sites like betfair.com Bookies says its MI this time

Sponsors & Rank

1. The money being put into cricket is harming the development of other sports. ?

Reason for no more gentle game ?

2. The cricketers - Abhinav Bali, TP Sudhindra (Deccan Chargers), Mohnish Mishra (Pune Warriors), Amit Yadav (Kings XI Punjab) and Shalabh Srivastava (Kings XI Punjab)