The Business of IPL II

Our Home Minister P Chidambaram recently called the IPL a shrewd combination of cricket and business. Politics or no politics, the bottomline surely is that the tourney has moved not just out of the country but to an another continent alltogether. 

Looking at the business part of it, I think few business have such flexibilty to move the field of action with such impunity like the IPL. Perhaps the high stakes involved demanded that the event be organized. But at what cost, remains to be seen. The main sources of revenue for any sporting event remain the ticket sales, on-ground sponsorships and telecast rights. 

• Ticket Sales: South Africa surely is a sport loving country. Unfortunately Cricket does not enjoy the same popularity in SA as in India. Rugby and Football are the country's most popular sports. Cricket comes a close third. Therefore, the attendance at the stadiums is surely going to be an issue. Another factor that could eat in to the ticket sales pie is is the match timings which are alligned to suit viewers in India. (An IST 4pm start would mean that the match starts soon after noon in SA.) It remains to be seen how much Lalit Modi's recently announced cheaper tickets initiative can help drawing crowds.  
• On-ground advertising: The ongoing India-New Zealand series has a a sizeable chunk of on-ground adertising from Indian corporate like CEAT and IndianOil. Ditto during India's recent Sri Lanka tour. This only shows how much of the Cricketing economy is dependant on India. Hence, in a recession hit scenario the on-ground advertising revenue from local South African corporate is also likely to go for a toss. Even regular sponsors would turn hard bargainers. 
• Telecast rights: This revenue channel looks the sole saviour for this year's tourney. With the new deal signed by the BCCI for a better price, the telecast money could perhaps off-set the impending loss from the other channels atleast to a certain extent. This essentially tells us how much technology has revolutionized not just conventional businees but also the emerging business of IPL. The flexibility that technology brings is amazing, quite literally!!

Adding to the already gloomy picture is cost escalation for the BCCI that has agreed to cover the additional costs of the franchisees that would result from the sudden shift of location. Surely, BCCI and its franchisees are not heading for positive cash flows this season.