The IPL has been called off for now, how badly will it hit the revenue ?

 The IPL has been called off for now. Whether it resumes or gets shelved will determine how badly the revenue cycle of the league, valued at $6.2 billion by Duff and Phelps after the 2020 edition, will be affected this year.

“To put a figure and suggest that IPL will bear a loss of suchand-such figure if the season doesn’t conclude isn’t the right way to look at things,” say those in the know. Add to it the force majeure, a common clause in contracts that essentially frees both parties from liability or obligation when an extraordinary event or circumstance beyond their control occurs and takes precedence. The league runs on a unique business model and should it take a financial hit, it will affect stakeholders at multiple levels – some huge, some bearable, some negligible.

If the IPL is not held any time later this year, force majeure will come into effect, in which broadcasters and sponsors will pay the BCCI only on a pro-rata basis for the number of matches played so far.
Until Sunday, the IPL hosted 29 matches and broadcaster Star India is committed to pay the BCCI Rs 54.4 cr per match. If this IPL is shelved, Star will not pay for the remaining 31 matches (close to Rs 1600 crore) and neither will title sponsors Vivo and the remaining official partners that constitute the central pool. This means BCCI will earn only 50% of the total committed amount for this season.

BCCI and the franchises work on a 50:50 revenue sharing formula. Therefore, BCCI will share 50% of the (50%) revenue earned from the central pool with the franchises. Now, will the franchises pay the players only for the number of matches played? Contractually, yes, but franchises have been known to take care of their cricketers “handsomely” and could pay the entire fee.

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State associations earn Rs 1 cr per match hosted by them (Rs 50 lakh from franchises and rest from BCCI), alongside 20% of the topline revenue of all franchises that gets distributed among BCCI members. They will receive only 50% of that income.
Sponsors will have to wait for the next cricket season to avail visibility opportunities while advertisers, who blocked advertisement stock with the broadcasters, anyway pay view per-second rates.
This finally boils down to the question – who will bear a complete loss? It is the viewer, who has paid for the television or OTT subscription for the entire duration of the IPL but cannot watch it now

Source - TOI

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