The BCCI is set to get rich by at least Rs 4000 crore with some of the top business houses set to aggressively bid for the five Women's IPL (WIPL) teams to be auctioned on Wednesday.
According to market insiders, the teams are expected to pay in the "range of 500 to 600 crore INR" per team in the gated bid auction.
"WIPL has enormous potential, but most legacy teams would like to mix optimism with pragmatism," an industry insider who previously worked on the IPL men's team bid told PTI ahead of the auction. ''Expect some offers in the range of Rs 500 crore upwards. Rs 800 crore plus might be a bit ambitious but BCCI will not complain,โ he added.
More than 30 odd companies have bought the bidding documents worth Rs 5 lakh including the 10-man IPL team. Well-known corporate houses like Adani group, Torrent group, Haldiram's Prabhuji, Capri Global, Kotak and Aditya Birla Group have also shown interest in buying a team.
Some of these ventures were unsuccessful when BCCI invited bids for two new men's teams in 2021.
Among the traditional IPL teams, Mumbai Indians, Rajasthan Royals, Delhi Capitals, KKR could seriously contemplate adding to the bouquet of its already existing men's teams around the world.
According to market experts, there are two principles on which trading houses place these offers.
The first is the "Return on Investment" (ROI), which is the fundamental principle of any business. It is the benefit of what an entity spends.
The second is not a business principle as such, but in the business community they call it ''Return of Ego''.
This is something some of the biggest business names are ready to shell out any amount for if they have a particular property in mind. Even if it takes five to seven years to break even.
It is about wanting to buy something at any price. An existing IPL franchise with its "steady income stream" can afford to "bleed" a bit more in the early years, which is imperative.
A former IPL franchise official, who once worked in tenders, explained the rationale for the tender.
โLet's say a franchise makes a winning bid of Rs 500 crore for a period of five years. It is now Rs 100 crore committed immediately for each of the next five years,โ the source explained.
Now, what will be the source of income for the franchises? ''BCCI distributes its income through media transmission, which is one of the main earnings. The second is a part of BCCI's core sponsorship group. The third is the franchisee's own pool of sponsorship earnings. The fourth is ticket sales, the money earned from the tickets, โhe explained.
So what could be the profit of a WIPL media income pool franchisee?
โBCCI in the case of the women's IPL will share 80 per cent of the media rights money with the teams (in the case of the men it is 50:50) to help them develop a sustainable model.
''So what will the math be here? JIO has secured media rights for five years at Rs 950 crore (approx), which is roughly Rs 190 crore per year. So 80 percent of 190 crores is 152 crores.
''Let's make it a round figure of Rs 150 crore. That is what each franchise gets over a period of five years, approximately Rs 30 crores per year,โ he explained.
โBCCI will now also distribute a portion of its core sponsorship pool (title sponsor, co-sponsors, various award sponsors) also franchised. Also add it to the franchisee's own income pool. So it could be anything between Rs 15 to Rs 18 crore per year. Door sales are not going to make you a lot of money in the first year,โ he said.
Therefore, the annual profit of a team is expected to be Rs 50 crores.
Now apart from the franchisee fee of Rs 100 crore per year, what will be the other expenses?
โThere is a salary cap of Rs 12 crore for the team. Add another 6 to 8 crores to the support staff salary. Let's do it Rs 20 crore. Add hotel expenses, fees paid to state associations for the stadium, and other operating costs. It could be anything between Rs 6 to 8 crores. The first year in a single city would reduce expenses.
''So the cumulative expenses per year could be 128 to 130 crores. The earnings would be around Rs 50 million. So there is a possibility that for the first few years there will be a loss of Rs 50 crore or more,โ he explained.
Here is the catch.
''The legacy franchises (MIPL) are in a better position to offset these losses as they are already making a profit after 15 years of IPL. They will get their men's and women's teams together and maybe quickly hit the profit zone," the official added.
The five-team WIPL will be played in March in Mumbai at a couple of venues.
(This story has not been edited by Devdiscourse staff and is automatically generated from a syndicated feed.)
