While the BCCI takes its own time in arriving at a decision in this regard, and the apex court gears up to hear the matter yet again on June 29, the franchises wait with a good amount of curiosity to see what happens. Just like the BCCI, they believe there is a lot at stake for them too.
All existing franchises of the IPL barring the two new teams that have come in only for a period of two years will finish paying the last of their 10-year franchise fee installment this year, after which they will continue to own the team for perpetuity. When that happens, the entire business model of the league will undergo an exhaustive overhaul.
The BCCI is in for a windfall soon as the media rights of the IPL go up for renewal and so are the franchises. The contract between the BCCI and the franchises stipulates that the latter will stand to earn 48% of the revenue earned from the fresh sale of media rights, expected to take place by next month.
Going forward, the contract also stipulates that franchises will pay the cricket board 20% of their annual revenue from the tournament, regardless of the net profit or loss.
Consider this: If the media rights get a 100% boost from their current valuation and are sold anywhere close to $2b (close to Rs 16,0000 crore) based on current market speculation for a period of five years, BCCI will stand to directly pocket 52% of that money while the remaining 48% will be distributed among the existing franchises as the money over the five-year deal.
"At 48%, shouldn't the franchises be seen as equal stakeholders in the league? It's only fair that they get to have some say in the decision-making," says a franchise owner.
If the media rights are sold on market speculation, for the amount mentioned above, and if the franchises get to divide 48% of that income over a period of five years, each franchise will stand to earn Rs 200 crore each year from the central revenue pool. "Add the local revenue to it. Franchises will have to pay 20% of that collective income to the BCCI each year," he says.
The 20%, says market experts, is expected to be more than the annual installment that the costliest franchise in the IPL has been paying the last 10 years. "If the BCCI is taking care of its interests, shouldn't it also take care of the interests of its stakeholders? Isn't the Supreme Court recommending the same thing?" says a franchise executive.
The franchises strongly believe that the BCCI will try and sell the media rights only for the next five years, so as to maximise their income on the lines of how the English Premier League (EPL) has prospered, as broadcast giants Star India and Sony Pictures Network India (SPNI) gear up to shell out big money.
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