Asad Hoosain BITW

MBA-13-007

IPL REPORT ANALYSIS

ENTERTAINMENT KA BAAP

Designed after intensive study based on primary sporting leagues around the globe like NHL,NBA,NFL & EPL.

Designed with detailed ,critical analysis and systematic evaluation of these leagues.

League structure modeled to fit the unique format of Indian context and also build the local talent.

Can be successful only if all stakeholders’ interests are safeguarded.

CONCEPT

Brain child of Mr. Lalit Modi, the then VP,BCCI.

Late June 2007-discussed with Andrew Wildblood,IMG

2008- IPL CAME TO EXISTENCE

Feb. 2008- 1ST IPL Auction was held

April 2008- 1st IPL match , Bangalore,RCB VS KKR

Schedule – 46 days 59 matches.

INCEPTION

Revenues for IPL & FRANCHISEES come from 3 streams-

1. MEDIA RIGHTS2. SPONSORSHIPS(under central or local

pool)3. GATE RECEIPTS.

Consortium incl. SONY ENTERTAINMENT TELEVISON (SET) & WORLD SPORTS GROUP bought BROADCASTING RIGHTS - $1.026 billion 10 yrs.

BUSINESS MODEL

Marketing by SONY -$108 millionRemainder ($ 918 million) – Central pool

Central Revenues

Media Rights IPL Franchisees Prize Money

2008-2013 20% 72% 8%

2013-2018 48% 62% Included in the 60%

2018-onwards increase decrease decrease

Revenues IPL Franchisee Prize Money

2008-2017 40% 54% 6%

2018 onwards 50% 45% 5%

Other revenues include selling advertising space in the stadia for home matches, licensing products for their team like T-shirts, getting sponsorship for the team uniform, advertising on tickets and so on. As already mentioned, 20% of all of this will then go to IPL.

Broadcast Rights08-13 – 80% split among franchisees13-18 – 60% split among franchisees

Gate Receipts IPL Franchisees

20% 80%

Franchisees own the teams in perpetuity, but make the payments in installments over the next 10 years

Players signed three-year contracts with the franchisee, and icon players excepted, can be traded after the first season.

Stadiums could cost up to Rs 30 lakh per match

The franchisees’ expenses include team franchising installments, player and personnel, marketing, stadium expenses, and promotion, event management and administration.

2008-2010

FRANCHISEE MODEL

Franchisee Owner(s) Price (USD)

Mumbai Indians Mukesh Ambani & RIL 111.9mn

Bangalore Royal Challengers

Dr.Vijay Mallya & UB Group 111.6mn

Deccan Chargers Deccan Chronicle 107mn

Chennai Super Kings India Cements & N Srinivasan 91mn

Delhi DareDevils GMR Holdings 84mn

Kings XI Punjab Ness Wadia,Preity Zinta,Karan Paul( Apeejay Surenera Group,Mohit Burman( Dabur)

76mn

Kolkata Knight Riders Shah Rukh Khan,Juhi Chawla,Jai Mehta 75.09mn

Rajasthan Royals Emerging Media( Manoj Badale,Lachlan Murdoch,Suresh Chellaram),Shilpa Shetty,Raj Kundra

67mn

2011

2012-2013

Franchisee Owner(s) Price (USD)

Pune Sahara Adventure Sports Group 370mn

Kochi Rendezvous Sports World Limited 333.33mn

Franchisee Owner(s) Price (USD)

Mumbai Indians Mukesh Ambani & RIL 111.9mn

Bangalore Royal Challengers

Dr.Vijay Mallya & UB Group 111.6mn

Deccan Chargers Deccan Chronicle 107mn

Chennai Super Kings India Cements & N Srinivasan 91mn

Delhi DareDevils GMR Holdings 84mn

Kings XI Punjab Ness Wadia,Preity Zinta,Karan Paul( Apeejay Surenera Group,Mohit Burman( Dabur)

76mn

Kolkata Knight Riders Shah Rukh Khan,Juhi Chawla,Jai Mehta 75.09mn

Rajasthan Royals Emerging Media( Manoj Badale,Lachlan Murdoch,Suresh Chellaram),Shilpa Shetty,Raj Kundra

67mn

Pune Warriors India Subrata Roy(Sahara Group India) 370mn

2014

Franchisee Owner(s) Price (USD)

Mumbai Indians Mukesh Ambani & RIL 452.9mn

Bangalore Royal Challengers

Dr.Vijay Mallya & UB Group 331.6mn

Sunrisers Hyderabad Sun TV Network 172 mn

Chennai Super Kings India Cements & N Srinivasan 426mn

Delhi DareDevils GMR Holdings, Muthoot Finance 302mn

Kings XI Punjab Ness Wadia,Preity Zinta,Karan Paul( Apeejay Surenera Group,Mohit Burman( Dabur)

289mn

Kolkata Knight Riders Shah Rukh Khan,Juhi Chawla,Jai Mehta 315.09mn

Rajasthan Royals Emerging Media( Manoj Badale,Lachlan Murdoch,Suresh Chellaram),Shilpa Shetty,Raj Kundra

226 mn

In the initial years, franchisee would get more part of Central Revenue.

IDEA BEHIND SUCH DISTRIBUTION? -Franchisee will start earning MORE local Revenue in later years as Brand will enhance.

Fan base is the only key behind revenue generation and making profit (long-run).

Marketing expenses each team approx. $ 3-7 mn. Growth at 12% per IPL.

Administrative ,Stadium, Travel and Stay and Event mgt. expenses –Growth at 5.2-6 %

I. ABSOLUTE VALUATION METHOD

Considers Income/Cash-flow ApproachEstimating Future cash flows (GROWTH STAGE )Discount(rate) it back to current period for intrinsic value

II. RELATIVE VALUATION METHOD

Price of any asset cant be evaluated in isolation Involves merchandising also. (MATURITY STAGE)Evaluated in what it buys in terms of earning/sales.

APPROACHES ADOPTED?

LOCAL REVENUEInitial team sponsorship amount collected

from web-sites.Growth at 15%-20%.MI rake around Rs.60-65 crore

GATE RECEIPTS5% approx. growth for each team as per

capita doesn’t increase much faster than 8-9% GDP

MERCHANDISINGKey Target.Upbringing revenue source.Still under development .Depends upon loyal Fan Base.Avg. franchise makes Rs.30-35 crore on

various spaces in their jerseys.

1. IPL goes international 2009- S.A (Expenditure 57.3% higher).2014 – DUBAI (Expenditure 33.83% higher).

2. MEGA AUCTIONS2008 –

2014 –3. CONTROVERSIES

EXCEPTIONS

OUTCOMEI.

II.

THEN-

IPL Title Sponsor –DLF ( US$ 50mn)IPL Associate Sponsor –Hero Honda(US$ 22.5)IPL Tournaments Official Beverage –Pepsi(US$

12.5mn)IPL’s Umpire Partner –Kingfisher(US$ 26.5mn)IPL Official Airline –Kingfisher AirlinesIPL’s official Website Partner- Live CurrentIPL Hospitality Sponsor –ITC WelcomgroupIPL Official Performance Partners –Citi bank 

SPONSORS

NOWWalking Billboards

PEPSI,FLY EMIRATES,KARBONN,YES BANK

TEAMS SPONSORS

MI VIDEOCON D2H,ETIHAD,BRIDGESTONE, P&G, WALT DISNEY,DDB.

CSK INDIA CEMENTS,AIRCEL,GULF,REEBOK.

RCB FLY KINGFISHER,BOLT, HUAWEI.

KKR NOKIA,MANYAVAR,USPA,ROYAL STAG,MRF.

DD IDEA,MANYAVAR,JUST DIAL,QUIKR.

RR ULTRATECH,AMITY,YEBHI,SUPERTECH,MITASHI,GARNIER.

SRH MAKE MY TRIP,LIVE IN,PUMA,RED FM.,WH SMITH.

KXIP TATA MOTORS PRIMA,TRIP FACTORY,ARISE,ACC,MCDOWELLS NO.1 .

CSK & MI- $ 72 MNKKR -$69 MNRCB – $51 MNRR- $45 MNDD - $40 MNKXIP - $32 MNSRH- $25 MN

BRAND VALUEBrand sentimental attachment.eg –SRK,MSD,ST.

YouTube Game-changerHas shown how consumption over internet is

becoming mainstream(behind-the-scenes looks etc)

Live Streaming (#1 channel worlwide,20m + viewers)

Reason also as to why IPL screenings on big screen not taking off

Fans and their peers present online for the most part of the event(2nd most dominant medium after TV)

Provides a unique community experience to these fans

SOCIAL MEDIA FACTS

TwitterIf radio commentary was 1.0 and sms alerts

2.0, then twitter is definitely is 3.0 for all those looking for updates

Players involvement and interacting with fans.

Amazon India Merchandising rights for all 8 teams.

Stadium preparationFollow-up with SponsorsSocial media engagement (YT advertising)Online Exposure (Ticket Sales, Pop-ups)TVCsMusic Setup and DJ Jingle (Themes) IPL AuctionBrand placements

PRE EVENTS

Post match Presentations.IPL Nights.Chat-shows.

POST EVENTS

MARRQUEE EVENTS PRIVATE LIMITEDIMG - EVENT MANAGEMENTCINEYUGAAGNI CAA KWANCRAFT WORLD EVENTS PVT LTDDNANETWORKSPURPLE PEOPLE ENTERTAINMENT

EVENT MANGEMENT ORGANISERS

Therichest.comFt.comFreepressjournal.inBusinesswireindia.comLivemint.com/consumerAmerican appraisalResearch paper by Pratik Shah,Patrick Smyth.Hindustan TimesNEILSENCISCO etc.

SOURCES

THANK YOU