Tuesday, March 4, 2008

Economics of IPL - The Indian Premier League

While searching on Internet for the economics of IPL (the Indian Premier League, which is roughly modelled on EPL and NBA), I found this wonderful article in Deccan Herald. Read On -
How much BCCI will earn?
* The bidders pay only 10 per cent of the price they offered to buy each team, which means Mukesh Ambani’s Reliance Group needs to pay a little over Rs36 crore for the first year, with similar amounts for the next 10 years.
* Of the total Rs 2,894 crore bid amount for the eight teams, the board will get about Rs288 crore each year.
* The Board also earns money raised from the sale of TV rights (Rs 4,000 crore put up by Sony and World Sports Group). That amount is also to be paid over 10 years.
How do the franchisees make money?
* Of the amount raised as TV rights each year, approximately 60 percent is distributed among the eight franchise owners as their income from TV rights.
* The franchisee also gets gate collection money; can raise further revenue from logos on T-shirts,merchandising and other promotions.
How much do teams earn?
* The tournament, involving teams based in eight cities, will be held in eight cities under floodlights for 44 days beginning April 18. The prize money will be approximately Rs 16 crore.
* Each team will play 14 matches, seven at home and seven away.
What’s in it for the players?
* The auction money may range from a few lakhs to a few crores. For example the Icon Players -- Sachin Tendulkar, Sourav Ganguly, Rahul Dravid, Yuvraj Singh -- will get 10 to 15 per cent more than the other highest paid players.
* Minimum salary to be paid for a player around Rs 8 lakh per year with a contract of minimum of three years. The salary can shoot up to Rs 1.6 crore (Shane Warne’s reported fee).
* Even Anil Kumble, who has retired from the shorter version of the game, will get around Rs 1 crore. Harbhajan Singh too will cost around while Irfan Pathan will be cheaper by around Rs 30 lakh. The T20 stars like Robin Uthappa, Gautam Gambhir, Virender Sehwag will cost a neat Rs 80 lakh.* Players can also earn from individual endorsements deals.
Deccan Herald - On super highway to super power

Also see the details of auction of players here.
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