Money Game: New franchises face big losses in cash-rich IPL

New Delhi: Nothing attracts like cricket in India, be it the rich or the poor. Even the wisest of strategists failed to avoid the lure.

According to a report in a cricket portal, the two new Indian Premier League franchises that won the bids on December 8 stand to lose of anywhere between Rs 100 to Rs 120 crore each in the next two years.

The report claimed that a compilation of data after speaking to existing franchises of the cash-rich league, which is also acknowledged by the Board of Control for Cricket in India (BCCI) sources, revealed that the new arrangement will result in a collective loss of Rs 200 to Rs 240 crore for the two teams.

After Chennai Super Kings (CSK) and Rajasthan Royals (RR) were suspended for two years by a Supreme Court appointed panel after the IPL spot fixing scandal, bids were called to replace the two franchises from new cities.

The BCCI adopted a reverse-bidding process to select the new teams. New Rising, a wholly new subsidiary put in place by Kolkata-based businessman Sanjiv Goenka, and Delhi-based Intex Technologies bought the Pune and Rajkot franchises for Rs minus 16 crore and Rs minus 10 crore respectively.

The report also added that the annual expenditure of any IPL franchise can be pegged at anywhere between Rs 95 to 100 crore. The expenses add up to Rs 95 crore or a little more for Pune and alternately a little less for Rajkot – considering they might not have to pay service and entertainment tax – per year.

After considering their earning capacities, including the gate fee – 37,500 for Pune and 30,000 for Pune – a break-up of of revenue deduced as follows:

Sponsorships: not exceeding Rs 22 cr; gate receipts for seven matches: Rs 21 cr (Pune) and Rs 16 cr (Rajkot); Food & Beverages along with miscellaneous income: Rs 50 lac. The entire revenue put together can be pegged at Rs 43.5 cr (Pune) and Rs 38.5 cr (Rajkot).

Since the two new franchises will not earn anything from the IPL's central revenue pool, they stand to face a loss of more than Rs 50 to Rs 55 crore each year.