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IPL 2020 suspended: Who loses how much

IPL fans from the IPL 2019
©CWM
 

With the announcement that the IPL 2020 has been suspended until further notice, we take a look at who may lose out where.

The Official BCCI statement reads - 'with the health and safety of the nation and everyone involved in our great sport remains our top priority and as such, the BCCI along with the Franchise Owners, Broadcaster, Sponsors and all the Stakeholders acknowledge that the IPL 2020 season will only commence when it is safe and appropriate to do so.'

So, what are the potential financial ramifications of this suspension?

The BCCI, each of the eight franchises, broadcasters, players, support staff, freelance technicians and writers will all take a huge hit if the suspended season of the IPL isn't rescheduled for later in the year.

 

Let's begin with the people that matter the most, the players. Players are entitled to payment by IPL franchises only when they play. Not only does less games mean less money for them, no game mean no money as well.

 

If you think that Australian pacer Pat Cummins who was picked by Kolkata Knight Riders for a whopping ?15.5 crore (USD 2.17 million), would be the worst hit player, that is not the case. Think of the budding players, both local and foreign, who were bought for their base prices and would have been excited to kick off their careers at a stage where good performances can take you far. They would have dreamt of buying homes. Some might already have bought cars, the EMIs of which they would have expected to pay through their IPL riches, which won't be possible now, at least for the time being.

 

  At the league, players are paid 15% of their salaries at the beginning of the tournament followed by 65% during the tournament and the remaining 20% afterwards within a stipulated amount of time.

 

The eight franchises will also suffer huge losses in case that the IPL sees no action. A sizeable chunk of the profit gained by the BCCI through the IPL goes to the franchises, which they will lose. They will incur losses from advertising and gate revenue, which was estimated to be in the region of Rs 450-500 crore in sponsorships for all the 8 teams along with an additional Rs 250 crore (estimated) from ticket sales.

 

Had the IPL been insured of a pandemic, all this could have been avoided. But who does that? It turns out, there are some really far-sighted people in the business of sports.

 

Wimbledon organisers will receive around $141 million from insurance for the event not taking place this year. Unlike the tennis fiesta in London, the IPL does not have cover for cancellation due to COVID-19. In fact, some of the franchises approached the insurance companies around February but the pandemic was already quite widespread by then and an insurance for it wasn't available.

 

Wimbledon’s event cancellation policy has a clause on pandemics. Organisers have reportedly been paying $2 million annually as premium since the SARS epidemic in 2003.

 

In 2017, Star India had won the TV and digital rights for the IPL. They had to shell out a whopping Rs 16,347.50 crores ($ 2.55 billion) for the worldwide rights for a 5-year period from 2018 to 2022. It is still the biggest television deal in cricket history. Thus, a cancellation of the IPL this year would mean a huge loss for Star.

 

The BCCI had also sold the title sponsorship to VIVO for Rs 2,000 crore for a period of 5 years which means a loss of Rs 400 crore in 2020 if the IPL is cancelled.

 

To add to that, Advertisers had paid anywhere in the range of Rs 18-20 crore on average for a slot in the front of the team jersey, and Rs 5-7 crore, for a space behind the jersey. Ad space in front of the helmet was sold for Rs 1.50 crore, while a position on shoulders of team jerseys went between Rs 2.50-3 crore.

 

As per an estimate, the total loss incurred upon the cancellation of the league will be Rs 3269.50 crore. Of course, a part of it would have been spent in logistics, salaries etc but still it's sad to see that such a huge amount will be potentially lost. It's even not as if the money will go to someone else, it will simply not be generated.

 

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