Who’s Really Winning The IPL?
May 27th, 2008 | By Aditya | Category: Top Stories
From the surface of it, the Rajasthan Royals seem to have clearly dominated the IPL. They’re winning everything, and look unbeatable going into the semi-finals. But behind the close and exciting matches that everyone has been watching, another sort of game is being played in the background, and who’s winning that game may surprise you!
What I’m referring to, of course, is the money game. Which team is really breaking even? Who is making the profit? Who is bleeding money? Which team is going to turn in a profit right in the first year? The answer is going to surprise you.
Shahrukh Khan seems to have gotten the better of established businessmen like Mallya and Ambani over here. It looks like the Kolkata KnightRiders are going to turn in a modest profit right in year one! Many people were skeptical whether owners would be able to make money after bidding exorbitantly for the teams, but the dramatic sucess of the IPL both on TV and in the stadiums are surprised everyone. The KnightRiders have done especially well, earning about Rs 20 Crores from just ticket sales alone! Shahrukh Khan has also managed to rope in a bunch of sponsors and co-sponsors for the team, who’ve together pitched in about Rs 32 Crores. Counting in the share of TV advertising and central sponsorships, the KnightRiders look to have turned in a neat profit of Rs 11 Crores! And they didn’t even qualify for the semis! Even the low-cost Rajasthan Royals, who have the added benefit of having a winning streak are not going to make a profit!
The Bangalore Royal Challengers, having performed really badly on the field, seem to have also disappointed financially. Mallya has spent exorbitantly, with the cheerleaders and laser shows and what not, and has no sponsors or co-sponsors for the Royal Challengers team. That is going to mean a staggering loss of 43 crores this year!
Most of the other teams are not in as bad shape as the Royal Challengers, but they’re looking good to break even in the next two-three years. This is very important, because according to the BCCI rules, after year 3, the teams are allowed to do very innovative things with their stakes. They can sell it to private equity, or even go public with an IPO!
The teams are going to have to start working on making their teams profitable if they are going to benefit in the long run. The player trading window that opens in February will give most teams a chance to rebalance their players. Plus, starting next season, the teams get a cut of profit of food and drinks sales at the stadium - Expect to see a dramatic improvement in stadium facilities starting next year.
Another winner is SONY. The television audience has been better than expected, and the ad rates on SET MAX have been rising as the tournament’s big matches - the semi finals and finals - come close. It is estimated that SONY is going to make a profit of Rs 1,000 crores over the 10-year contract period.
The IPL has created a strange monster. While teams may be winning on the field, that is no gaurantee that will mean financial success. Mallya has enough problems on field, with his team and especially with the captain, but looking at the balance sheet with a loss of 43 Crores is not going to be good for his blood pressure!
Update: Business Today has published the details of team finances here.
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[...] IPL blog talks a bit about the winners and losers of the IPL from a financial perspective: Shahrukh Khan seems to have gotten the better of [...]
Hi,
Just wondering - what is the source for the facts and figures?
Yes, I second that - could you please mention the sources for these numbers?
I wouldn’t be even be surprised if the shahrukh’s PR agency are making this up!
Business Today has an article with all the figures here…
http://businesstoday.digitaltoday.in/will-crickets-new-czars-make-money-3.html
Aditya, i am not sure saying that SRK has put up one over Ambani and Mallya is correct. This is just the first year so we might be premature in declaring winners and losers. The profitability & loss has to be sustainable before we say who is a better businessman.
Come on, higher ticket sales are not due to financial acumen, but
(1) Kolkata’s die hard sports fans who kept the stadium full
(2) Eden Gardens has the highest seating capacity, in that sense Shah Rukh made a smart decision to buy the team with highest seating capacity
(3) And as Yogi Berra has said, “It aint over till the fat lady sings” if they dont qualify for semis this year, next couple of years advertising revenues might fall
(4) Dont forget Juhi Chawla and her “Businessman Husband” Jay Mehta are also partners in the venture.
I agree Mallya has been stupid in publically blaming Dravid, but dont discount his business acumen, and as for Mukesh Ambani, this is lose pocket change the amount of loss in IPL
Lol… Told ya Shahrukh Rocks real hard…
Even If Kolkata continue to lose… because accept it or not… kolkata is definitely the most glamorous team in IPL… and also the one with most no. of fans… there fans seem to be not only in kolkata but also in other parts of India… I myself would support Kolkata above Mumbai only and solely because of srk…
So there goes the advertisements… Plus, Tag Heur, Compaq, Nokia have SRK as their brand ambassador so it’s only fair that they will sponsor kkr too…
And besides, SRK has made it a habit to make major money out of mediocre products…
See: Om Shanti Om, Paanchvi Pass, Kolkata Knight Riders…