Role of Lalit Modi in IPL's Business Model
IPL has turned out to be a money minting machine for the BCCI. In just three years of its existence, it is now a $4billion industry. The thing that makes the whole scenario interesting is that there has been hardly any investment on the part of BCCI. They just sold an idea, a concept which got widely accepted by the people. Now they stand to gain a large share of profit from the media rights, title sponsor, internet rights, theatre rights and auction money.
There are three main stakeholders in the IPL i.e., BCCI, Franchisee Owners and Players. Here is the business model and the sources of their revenues and expenses.
BCCI/IPL
Revenues: IPL has four major sources of revenue.
• The first is the sale of media rights for the matches which will fetch $1 billion over a 10-year period. IPL will keep 20% for itself, give out 8% as prize money for the prize money and distribute the remaining 72% evenly between the 8 franchisees (now 10). These proportions are valid till 2012, after which IPL’s share goes up in two stages by 2018, with the shares of both prize money and franchisees declining.
• The second source is title sponsorship of tournament, licensed merchandise, etc. This will be shared between IPL, prize money and franchisees in the ratio 40:6:54. This proportion is valid till 2017 after which IPL’s share will go up to 50.
• The third source is the amount received from bidding. Bidding can be for the city based franchise rights or for the players. In ‘firm agreement’ with the players, IPL can earn money, not in case of ‘basic agreement’.
• The fourth source is the 20% of all the revenues generated by a franchisee will be received by IPL.
Franchisee Owners
Revenues:
• Percentage share of revenue of media rights and title sponsorships, licensed merchandise from IPL.
• Advertising space in the stadium for home matches.
• Sponsorship on team uniform.
• Advertisement on tickets.
• Sale of stadium tickets.
• Prize money
Expenses:
• 20% of all of the
There are three main stakeholders in the IPL i.e., BCCI, Franchisee Owners and Players. Here is the business model and the sources of their revenues and expenses.
BCCI/IPL
Revenues: IPL has four major sources of revenue.
• The first is the sale of media rights for the matches which will fetch $1 billion over a 10-year period. IPL will keep 20% for itself, give out 8% as prize money for the prize money and distribute the remaining 72% evenly between the 8 franchisees (now 10). These proportions are valid till 2012, after which IPL’s share goes up in two stages by 2018, with the shares of both prize money and franchisees declining.
• The second source is title sponsorship of tournament, licensed merchandise, etc. This will be shared between IPL, prize money and franchisees in the ratio 40:6:54. This proportion is valid till 2017 after which IPL’s share will go up to 50.
• The third source is the amount received from bidding. Bidding can be for the city based franchise rights or for the players. In ‘firm agreement’ with the players, IPL can earn money, not in case of ‘basic agreement’.
• The fourth source is the 20% of all the revenues generated by a franchisee will be received by IPL.
Franchisee Owners
Revenues:
• Percentage share of revenue of media rights and title sponsorships, licensed merchandise from IPL.
• Advertising space in the stadium for home matches.
• Sponsorship on team uniform.
• Advertisement on tickets.
• Sale of stadium tickets.
• Prize money
Expenses:
• 20% of all of the