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IPL franchises still in the red

Chennai/Mumbai, Apr 3 (): Many IPL franchises are yet to make profits, even as they start their sixth season in Kolkata today.

Going by the data on the Registar of Companies, most of the franchises have not made any profits for various reasons. The projected revenue model has not been working as brand value which was to increase every season has only come down and TV viewership ratings are getting smaller. During the start of IPL a few years ago, TV channels used to defer putting on any new show and films especially Bollywood would postpone new releases. This season no such reaction is evident and it is business as usual.

The T20 cricket tournament known as IPL started in 2008 by the Board of Control for Cricket in India (BCCI) that now has nine teams playing from today to May 26. A total of 76 matches will be played to decide the winner.

With no profits logged in by franchise, Hyderabad Sunrisers, a Sun TV network owned franchise has projected a business strategy which would bring profits in the next year, after its debut this year. This year it expects a loss of Rs 30 crore and in 7th season a profit of Rs 45 crore. Sun bought the team by bidding for Rs 425 crores for five seasons which means Rs 85 crore per season.

Adding to this is Rs 25 crore for non- player related expenses and a payment of Rs 40 crore towards salary. The franchise gets share from all India sponsorship income and TV rights through BCCI.

Inside stadium advertising, team sponsorship, ticket sales, merchandise like caps and jersey with team logo sales revenue are added to the team revenue. Payment towards cricket associations for stadium use and security cover are to be borne by the franchise. The Maha High Court asked Mumbai police to start recovery proceedings on the cricket associations who have not paid last year’s bill for security cover.

This season IPL has four associate sponsors who together pay Rs 180 crore. Last year, it got Rs 190 crore from six sponsors. Pepsi,Vodafone, Yes Bank and Star are the associate sponsors. Pepsi paid double of what DLF gave for title sponsorship. This season DLF did not renew the title sponsorship it had been holding since 2008. Pepsi bought it for Rs 397 crore for 5 years.

IPL in 2008 clocked TV ratings of 4.81 and gradually declined to 3.27 last year. The opening show with song ,dance and stars gets a good rating but not all matches. This year Shah Rukh Khan will not be allowed to enter Wankhede Stadium in Mumbai as there is a ban on him.

Brand valuations dropped from $4.13 million in 2010 to $2.92 million last year. After ousting Lalit Modi from IPL Commissioner post, BCCI cancelled media rights worth Rs 450 crore and this year it has awarded it to Times group for Rs 261 crore who has tied up with You Tube and its FM stations.

Sony’s TV rights increased from Rs 7 crore to Rs 10 crore but BCCI which gave 80% of the money from this segment has renegotiated to give only 60%. Ticket sales have gone down and so prices have been kept low due to which revenue share for teams are less. Except for Chennai, no stadium had added seating capacity.

Highest profit-making team was Rajasthan Royals with Rs 22 crore followed by Kolkata Knight Riders with Rs 10 crore and Pune Warriors with a similar amount. The highest loss making team is Royal Challengers with Rs 7 crore. Chennai Super Kings puts the team as part of India Cements promotion.