According to market experts, teams are expected to shell out in the “range of INR 500-600 crore” per team during the closed auction.
“WIPL has huge 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 sale to PTI. auction.
“Expect a few offers in the range of Rs 500 crore upwards. Rs 800 crore more might be a bit ambitious but BCCI won’t complain,” he added.
More than 30 odd companies bought the tender documents worth Rs 5 lakh, including the 10-man IPL team. Well-known companies such as 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 fell through when BCCI issued a tender for two new men’s teams in 2021.
Among the traditional IPL teams, Mumbai Indians, Rajasthan Royals, Delhi Capitals, KKR could seriously consider adding to the roster of their already existing men’s teams around the world.
According to market insiders, there are two principles on which these offers are placed by trading houses.
The first is the “return on investment” (ROI), which is the main principle of any business. It is the profit on 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 where some of the biggest names in business are ready to shell out any amount if they are planning to buy a particular property. Even if it takes five to seven years to break even.
It’s about wanting to buy something at all costs
An existing IPL franchise with its “stable revenue stream” in place can afford to “bleed” a bit more in the first few years, which is imperative.
A former manager of an IPL franchisee, who had previously worked on tenders, explained the logic behind the tender.
“Let’s say a franchise makes a winning bid of Rs 500 crore for a period of five years. Now it’s Rs 100 crore committed immediately for each of the next five years,” the source explained.
Now what will be the source of revenue for the franchises?
“BCCI distributes its media broadcast revenue, which is one of the main revenue. The second is a share of the central sponsorship pool of BCCI. The third is the entire sponsorship revenue of a franchisee. The fourth is door sales, money made on tickets,” he clarified.
So what could a franchisee earn from WIPL’s media revenue pool?
“BCCI in the case of the women’s IPL is going to share 80% of the media rights money with the teams (in the men’s case it’s 50:50) to help them develop a sustainable model.
“So what will the math be here? JIO has brought media rights for five years at Rs 950 crore (approximately), or about Rs 190 crore per year. So 80% of 190 crore is 152 crore.
“Let’s make it a round figure of Rs 150 crore. That’s what each franchise gets over a period of five years, which is around Rs 30 crore per year,” he explained.
“Now BCCI will also distribute part of its central pool of sponsorships (main sponsor, co-sponsors, various prize sponsors) also with franchise. Add to that the franchisee revenue pool as well. So it could be any what between Rs 15 and Rs 18 crore per year. Doorstep sales will not bring you much in the first year,” he said.
Thus, the annual earning of a team is expected to be Rs 50 crore.
Now apart from the franchisee fee Rs 100 crore per year, what will be the other expenses.
“There is a salary cap of Rs 12 crore for the team. Add another 6 to 8 crore on the salaries of support staff. Let’s make it Rs 20 crore. Add hotel costs, fees paid to associations of “State for the stadium and other operational costs. It could be anything between Rs 6 and 8 crore. In the first year, a single city would reduce the expenditure.
“So the cumulative expenditure per year could be Rs 128 to Rs 130 crore. The income would be around Rs 50 crore. more,” he explained.
This is where the trap lies.
“The former franchises (MIPL) are in a better position to make up for these losses as they are already making a profit after 15 years of IPL. They will consolidate their men’s and women’s teams and perhaps make the profit area quickly,” the manager added. .
The five-team WIPL will be played in March in Mumbai in a few venues.
