In the IPL’s business model there are four parties involved: franchisee, IPL body, players and media. The franchisees in the business model own different teams playing in the tournament. The IPL body sold the rights of the franchisee of eight teams in the year 2008 to right different bidders through bidding process. According to the business model the bidding parties own their franchisees for next ten years by buying it on the price of their bid from IPL. This is the major earning point for the IPL body. In the year 2010, two more franchisees are added to previous lot of eight teams.
The franchisee owners are given cities or states where they can conduct their matches as home ground. The franchisee owners have all the rights of sales revenue coming the marketing, promotion, ticket sales etc. Also, they have their share of revenue from broadcasting rights for their home matches. The other source of revenues for the franchisee are advertising for home matches, team licensing deals, sponsorship deals advertising on tickets etc. All the players playing for a particular team are considered as employee for the franchisee.
The bidding of players was conducted and different franchisee bid for the players they wanted and after winning the bid for a player, the franchisee has to give the bidding amount to the player on the yearly basis for next three years. The players selected for a franchisee now represents the franchisee and the franchisee owns all the right of players. The major source of revenue of IPL comes from broadcasting of matches. The media rights of broadcasting on Indian television have been given Sony Entertainment Television and Singapore -based World Sport Group secured the global broadcasting rights of the IPL. Also in the year 2010, internet rights of broadcasting of the matches were given to YouTube. The detail of the cost and revenue sources is given below:
ü Franchisee:
o Cost
§ Cost of bidding the franchisee
§ Cost of bidding the players
o Revenue
§ Gate money of the stadium for home matches
§ Broadcasting revenue share of the home matches
§ The prize money that the team wins on the basis of its position in the tournament
§ Advertising revenues from the space in the stadia for home matches
§ Team sponsorship
§ Licensing products for their team like T-shirts
ü IPL body:
o Cost
§ IPL matches cost
§ Government body cost
o Sources of Revenue
§ The amount bid by the franchisee owners
§ Revenue share from the franchisee
§ Broadcasting revenue share for all matches
ü Players:
o Sources of Revenue
§ Annual fee contracted with the franchisee
§ Bonuses from the team owners
§ The prize money that the team wins on the basis of its position in the tournament
ü Media
o Cost
§ Broadcasting rights buying cost for the duration ten years
§ Tournament promotion
o Revenue
§ Broadcasting revenues
§ Selling some part of broadcasting rights to different companies in different countries
Lalit Modi was an excellent manager for the IPL for the last three years. He has created a brand out of it and in terms of brand management he has been spot on with his strategies. Also, as a functional manager he has done justice to the brand name of the IPL. The fact that the tournament was shifted from India to South Africa within a month after central government raised security issues was exceptional showing for a functional manager and that action speaks a volume for the great manger he has been for the IPL for the past three years. Talking about ethical point of the management, it can be said that the cricket took backseat in front the revenues and all the hoopla surrounding the tournament. For example, the introduction of advertisement in the middle of an over was an innovation if you look at the prospective of revenue generation, but as a fan it was annoying and highly unethical.
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