IPL-II likely to take Rs. 34 crore hit

he IPL season I in India turned out to be a money-spinner. The Board of Control for Cricket in India (BCCI) grossed Rs. 662 crore from it and met its commitments to the eight franchises paying Rs. 230 crore as their share from the central and local revenue pool and distributed Rs. 202 crore to 25 State units.

The BCCI also paid Rs. 43 crore to the International Management Group (IMG), a global sports entertainment and media company that was involved right through from the IPL foundation to executing the event.

Higher expenditure
Having received their share of the money, the State units expected an increase from the IPL season II. But the shifting of the IPL to South Africa resulted in higher expenditure and an estimated deficit of Rs. 34 crore as against a surplus of Rs. 15 crore from the first season.

According to sources, the BCCI has estimated an expenditure of Rs. 73 crore on production costs for staging the tournament in South Africa as against an actual expenditure of Rs.51 crore incurred in India last year.

The BCCI has also drawn up an estimated expenditure of Rs. 148 crore (tournament expenses) for the event in South Africa as against an actual cost of Rs.73 crore in India. The BCCI has also estimated a payment of Rs. 37 crore to IMG as agency fees and commission for season II.

After the BCCI AGM in September 2008, the IMG fee was renegotiated to Rs. 33 crore.

“It was discussed at the Working Committee and the BCCI was advised to renegotiate,” said a representative of the association who attended the Working Committee here in the second week of August.

A BCCI official said that members advised us to renegotiate with IMG because a large part of the matches are organised by State associations.

After the IPL I season in India BCCI and IMG officials met in Bangkok — all the franchises were also present — and a number of times after the IPL II in London and in Mumbai. The BCCI requested IMG to come up with a fresh proposal with regard to its remuneration. The IMG was not prepared for this.

Rival stands
On August 28, the BCCI officially informed the IMG that their services will not be required anymore, while the IMG’s senior vice-president, Andrew Wildblood has replied saying: “Since the proposed fixed fee variation (Rs. 33 crore) has not been ratified by the BCCI, the original commission-based system remuneration continue to apply.

It’s also perhaps worth pointing out that, despite the effort and commitment made by IMG to successfully relocate the tournament to South Africa in 2009, IMG has yet to be paid anything other than an amount suggested on account of our out of pocket expenses.”

Mr. Wildblood has finally told N. Srinivasan, Secretary, BCCI that that “the clarifications in this letter will lead you to reconsider your position and in the meantime we reserve all our rights and remedies at law under and in respect of the contract.”

While the BCCI-IMG tussle looks to continue and would be discussed at the IPL Governing Council meeting here on Wednesday, the BCCI has estimated a combined payment of Rs. 303 crore from the Central and Local Pool revenue to the franchises (as against their combined annual fee of Rs. 289 crore to the IPL) and Rs. 202 crore to the 25 State units from the projected Rs. 774 crore revenue earned from season II.

The contribution from media rights is put at Rs. 355 crore.