Owners of all eight franchises have signed a letter that was sent to the IPL, asking the league to put on hold the proposed changes concerning the league standing money and the hosting fee payable to the state associations that house the venues. Among the owners that signed letter, which was sent last weekend, are Shah Rukh Khan (co-owner at Kolkata Knight Riders), Akash Ambani (Mumbai Indians), Kasi Viswanathan (CEO of Chennai Super Kings) and Parth Jindal (majority owner at Delhi Capitals).
Recently the IPL told all eight franchises it was cutting the league standing money, earned by the four teams that makes the play-offs, from the existing INR 50 crore to half the amount. The league standing money, which is the same amount as the prize money, was introduced around the 2014 season when the BCCI decided to help out franchise owners who had requested funds.
As per the existing system the IPL prize money is INR 50 crore. That is split among the four teams that make the play-offs with the winner pocketing INR 20 crore, the runner-up INR 12.5 crore and the third- and fourth-placed teams getting INR 8.25 crore each. The prize money goes exclusively to the players.
However the league standing money is earned by the franchises. Going forward the IPL told franchises that although the IPL prize money pot would continue to be the same, the distribution of the league standing money would come down to INR 25 crore. As per the new distribution system for the league standing money, the franchise of the winning team would get INR 10 crore, the runner-up INR 6.25 crore and the third and fourth-placed teams would get around INR 4.12 crore approximately.
In another proposed move, the IPL also told franchises that it was increasing the hosting fee per home match, payable to the respective state association, from INR 30 lakhs per match to INR 50 lakhs. That would mean each franchise will end up paying a minimum of INR 1.4 crore over an IPL season. A similar amount – INR 50 lakhs – will be paid by BCCI to the state association, thus increasing the staging fee from INR 60 lakh per match to INR 1 crore.
The IPL reasoned that the hike in hosting fee was necessary to the state associations for the upkeep of the ground, stadium and other facilities.
However, the franchises have called the IPL’s move “arbitrary”. They are also disgruntled because despite being the primary stakeholders, they were never consulted. In the email, the owners have asked the IPL Governing Council to consider putting on hold the two proposals until the various sponsorship deals, including the current media rights deal, expires in 2022.
“We have to draw your attention to the changes which you have made with regards to the following: Increase fee by 66% payable by franchises to state associations. And reduce league standing fund which is reduced by 50% to franchises,” the email signed by the eight team owners, said. “We humbly request that the Governing Council defer the proposed changes till the end of the current media rights deal and thereafter enter into a consulting process with the various franchise owners to discuss any changes.”
One of the owners at a franchise said that the IPL could have considered various factors including COVID-19, the epidemic that has disrupted life across the board globally and forced sporting contests or tournaments to be downright cancelled, postponed or played behind closed doors.
“It should be a discussion. It shouldn’t be arbitrary,” the owner told ESPNcricinfo. “If you are going to make us pay more (to the state associations) and with the coronavirus, less people will be coming, so how are we supposed to make money? As it is we don’t make money through ticketing revenues. Secondly, why are being penalised?”
A chief executive at one other franchise said the timing of the IPL’s decision had caught everyone by surprise. This CEO said that although the amount that the franchises stood to lose was not massive, it would still affect budgets which had been projected on a five-year model immediately after the IPL’s media rights deal in 2017. That deal had ensured every franchise stood to earn anywhere between INR 150 to upwards of 200 crore per season from the central revenue pool.
“The budgets for this IPL has been frozen,” the franchise CEO said. “We all had made our projections based on the media rights for five years. It was based upon the money we would get from the central pool as well as the prize money. But all of a sudden now they are taking arbitrary decisions like increasing the hosting fee by two-thirds and reducing the prize money by 50%. That is not fair. That is the reason we are requesting them to continue with this existing arrangement till the end of the current media rights cycle in 2022. All the IPL deals including title sponsorships etc. are till 2022.”
A senior BCCI official disagreed that the IPL decision was wrong. He said that the league standing fund was introduced to lend a helping arm to the franchises financially. Now that they are self-sufficient, that aid was being revoked. “There were certain concessions given when the franchises were bleeding, when they were not in a financially good state,” the BCCI official said. “Those concessions were not part of the IPL contract with franchises. In 2014, the BCCI had decided to grant those concessions. And now that they are financially sound and everything is fine, those concessions have been withdrawn.”