COVID 19: Who loses if the money-spinning IPL gets cancelled?

IPL 2020 covid 19
With the world hit by the deadly Covid 19 (or Novel Coronavirus), it not only has disrupted the lives of the common people but has stirred up the economy in a huge way. There is no industry or avenue of income that has not felt the impact of this economic slowdown. In the world of […]

With the world hit by the deadly Covid 19 (or Novel Coronavirus), it not only has disrupted the lives of the common people but has stirred up the economy in a huge way. There is no industry or avenue of income that has not felt the impact of this economic slowdown. In the world of cricket, there is nothing bigger than the cash-rich Indian Premier League when it comes to generating revenue and garnering maximum eyeballs. With the virus disrupting the preparations of the IPL, the richest cricket body in the world, BCCI, the broadcasters, the franchises, the players and the fans are all in for a loss of revenue. With doubts looming over whether the tournament will even take place, it’s time to address the elephant in the room – what levels of losses can we expect to see if the tournament is cancelled altogether?

To better understand the situation, let us take a look at the three possible scenarios that can transpire in the coming weeks:

  1. The threat of the Covid 19 virus subsides by mid-April and the whole 60-day tournament takes place with it ending in the first week of June.
  2. A truncated IPL with fewer number of matches completed in a short span of time.
  3. This year’s tournament is completely cancelled.

The biggest issue right now is that there is no clarity over which of these three scenarios plays out. So, let us take a closer look at how the business side of things can get affected in each case.

Case 1: Covid 19 Threat Subsides by Mid-April

If the BCCI and the IPL governing body along with the franchises, players and all associated partners do manage to host a complete tournament, the losses will be minimal. The major loss incurred will be at the hands of the broadcasters as they will have to look for new slots for ads based on the new schedule. The sponsors will lose money as there will be lesser visibility, especially at the grounds as the matches won’t be able to draw in huge crowds as they usually do. However, the rest of the entities in the deal like the BCCI, franchises, players, match officials, support staff, groundsmen and others will not be affected financially.

In this case, everyone gets paid. The major broadcasters, Star India and the title sponsor Vivo along with a central pool of other sponsors together bring ₹ 4,000 cr to the table, with Star India bringing in close to ₹ 3,300cr. Vivo brings ₹ 439 cr and the rest of the sponsors bring about ₹ 250-300 cr. If the full tournament does take place, then there should not be a major disruption in the amount raised by the broadcasters and sponsors. BCCI and franchises are supposed to distribute this amount 50:50. To pay the salaries of players, each franchise gets a maximum of  ₹ 85cr. Additionally, the support staff of the franchises, match officials, groundsmen and other staff members get paid their full dues. Finally, the event management companies like IMG too get paid fully (approx. ₹ 25cr)

Case 2: Covid 19 leads to truncated IPL

In the case of a truncated IPL, the losses will be higher and it will affect every stakeholder involved, including the players. With the broadcasters already having sold close to 90% of ad slots, they will now have to recall all that and identify new slots. Both, the local and national sponsors will incur losses as they will have to look for new sponsorship slots on the available parallel entertainment sectors such as OTT platforms and other social media platforms. Since most cinema halls and public places will be shut down to avoid mass gatherings, the sponsors will lose money there too due to lesser visibility. Due to the renegotiations in the prices by the sponsors and broadcasters in accordance with the number of matches played and the number of days the tournament lasts, the BCCI will incur huge losses too.

As a direct result of this, the state associations will receive lesser money and in turn the income of the groundsmen too will get affected. When it comes to players, their salary will take a huge hit due to the fewer number of matches being played. More than the established cricketers who deal in crores of rupees, it is the lesser-known players with lower salaries who will have to bear the brunt of the losses. The same goes for match officials as well as their salary will take a hit due to the fewer number of matches that they will have to officiate. Another industry that will take a hit in this scenario is the hospitality and airlines industry as there will be a major dip in travels (which is already happening). Talking about fans, they too will suffer financial losses as they will now have fewer number of matches to support their fantasy cricket strategies on different apps that allow them to win money or other prizes.

The current revenue model will go for a toss in such a scenario, with every stakeholder having to give up a major part of their share. Everything depends on how BCCI and the IPL governing body make the schedule and how the truncated season will come out to be. The players too will have to face the brunt of it as they will be paid pro-rata.

Case 3: Covid 19 Leads to the IPL being Scrapped

The worst-case scenario is the complete tournament getting scrapped. In such an event, no one gets anything out of this cash-spinning product. Everyone sits home and just dreams of the possible money they could have earned.

In this case, Star India, Vivo and the other major central pool of sponsors will not shell out  ₹  4000cr to support the tournament. BCCI and franchises won’t have anything to share or to pay the players, match officials and other employees with. Franchises won’t be able to earn from local revenue pools such as jersey sponsorship or from advertisement revenue through the 12 boards given to each franchise in a stadium.

With the multi-billion-rupee industry taking the toll, Covid 19 can impact not just the stakeholders, but also the national economy. Already, with the concerns raised over the spread of the Covid 19 virus, most major sporting events have been cancelled or postponed indefinitely. Due to this, the only inevitable scenario at this point is that the IPL may get cancelled this year, and that will definitely take a toll on the Indian economy.

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