Tuesday, September 1, 2009

Dark Clouds in the IPL air.

I am sure that several of you would have seen the recent news on the discontinuation of IMG as advisors to BCCI. What a tragedy! Why is it that we must discontinue "good service" based on price? and that too so abruptly.
At a time, when there are major changes in the air. We will be able to see value shifting away from the league owners (BCCI) to elsewhere in the value chain. Worldwide, it has been good for leagues wherever they have had a monopoly. But that is not to be any longer.
1. There is a 7 nation Champions league scheduled for October 2009.
2. P20, the UK version of the IPL goes on air in 2010.
3.The South league(SL) commences from 2011.
4.The US cricket board plans its version of a league before 2012.
Will it be the same clubs who will qualify for each of these tournaments?
5. 4 additional IP teams are likely to join the melee in 2011 and 2012 respectively. The total no of T20 games involving clubs will go up from 59 (IPL 1) to over 137 (in 2012).
Eyeballs will come under some strain and while there is no doubt that viewership will go up, there is also little doubt that such viewership will get pretty much divided.
Add to that, the reality that revenue share between BCCI and the franchisees, will undergo a change by 2012 and the franchisees are likely to get less than half the advertising revenue that they currently share. Against that, it is rumoured that the new franchisees that will go up for auction, are being wildly guesstimated at 250 mill$ in value, against the 100 mill $ that the existing franchisees paid. The size of the stadiums are not going to change in a hurry, so ticket pricing will be pretty much constant, if not face a downward trend as the no of tournaments increase dramatically. And last but not least, the value chain may find that power is shifting to the players who will be in short supply for such a surfeit of leagues.
This is a good point of time to have had IMG on the side of BCCI. Some of the franchisees have obviously already spotted the imminent challenges that will alter the landscape of the IPL. No wonder they are cribbing and complaining. Let us hope that wisdom prevails on the BCCI. This is a good time to have IMG on board.

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