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BUSINESS
An economic perspective of Indian Premier League
By
Devajit Mahanta
The cancellation of the Indian Premier League (IPL) tournament in
India and its subsequent shift to South Africa due to shortage of the
security personnel, as it had clashed with the timing of the general
elections, what message has been sent out? A section holds the view that
shifting the IPL has hurt the national pride as the message has gone out
that the Government is unsure of the overall security situation. A new
controversy has been added by the revelation that the time when the second
season of the IPL matches are being played in South
Africa from April 18 to May 24, it is also the
general election time of South
Africa which would take place on April
22. If South Africa
can manage both IPL and the elections in its home land, why the Indian
Government could not do so? Is this an indication of how overstretched and
creaky the Indian Government infrastructure is?
Another section holds the view that IPL authority deliberately tried to run
away from hosting the event in India, and using the general
elections as an excuse. The Board of Cricket Control of India (BCCI)
already sanctioned an initial $10 million to the League to cover the costs
of the switch to South
Africa. Is it that the IPL authorities
knew that IPL format would not work in India as a pure business model
from the perspective of the investors? The fact is that during the
inaugural session of IPL, none of the franchise except Kolkata Knight Riders
and Rajasthan Royals was able to make returns of their investment. Sources
said that collective losses of the inaugural IPL was at around Rs 90 crore.
These schools of viewers express that IPL is going to be more of a TV
spectacle rather than a live stadium spectacle which maybe the cause for
the IPL organizers shifting the most popular sporting property of India
outside the country because they could not guarantee returns to the owners.
The BCCI launched the Indian Premier League (IPL) on September 14, 2007.
The brainchild of BCCI vice-president Lalit Modi, IPL was created along the
lines of club football in Europe,
specially the English Premier League. IPL which is now $ 2 bn property
heralded a new era of marketing sports in India and creation of club culture
would be key to its success.
There is big money involved in IPL though it’s not always clear who will
benefit. The BCCI created history by selling the television rights to Sony
World Sports for $ 1.02 bn for ten years. As far as India is
concernedm Indian media has lost the revenue between Rs 500 to 750 million
starting from small ancillary firms to local sponsors and entertainment
companies. The loss from gate receipts itself over 500 million rupees. The
eight IPL franchisees signed up 17 overseas cricketers and spent more than
$11.5 million indicating that India is slowly gaining the
driving seat of world sports economy in the 21st century. The think-tank
behind the IPL should think rather than merely be spectacle to the huge
money for auction of foreign and domestic players over methods to try
something for the Indian companies also who have announced 500,000 jobs cut
in the last quarter of 2008 due to global credit crunch. Foreign fund
inflow is still the key to India’s
GDP growth, which is also going to be dried up by shifting the IPL to South Africa.
Cricket South Africa
is said to be getting up to 90m rand as a hosting fee apart from the other
source of revenue. The economic benefit of South Africa from this mega
event could hit 60bn rand which is equal to 2.6 per cent of SA’s GDP. More
than 30,000 hotel rooms have been booked and 10,000 airline tickets to SA
have been sold for the 36-day IPL tournament. By shifting IPL from India, it almost made $100 million capital
to fly to South Africa
which come from the out of the blue for that country as a stimulus package
to kickstart their economy. Finally a major chunk of our population are
losing out this time as IPL-II could have done wonders to their livelihood.
Readers can send their feedback at devajitmahanta@gmail.com
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