BCCI set for windfall at IPL media rights auction

As the Board of Control for Cricket in India (BCCI) is busy finalising the tender document – expected to be issued shortly – for the auction of its biggest cash cow, sports marketing experts, as well as some of the potential bidders, estimate the value of the rights will likely be more than three times what it was the last time.

Several experts told ET that the combined value of the rights for the next five-year cycle (2023-2027) will be close to ₹50,000 crore, up from the current rights holder’s bid of ₹16,347.5 crore for 2018-2022. The auction is expected in April-May.

Agencies

The executive, who didn’t want to be identified as he’s advising one of the potential bidders, said that most people had regarded Star India’s winning bid as extravagant in 2017.

“The value of the rights will be more than anything one could imagine,” said a senior executive at a consulting firm. “If you go just by the profit and loss statement, the value could not go beyond ₹30,000-32,000 crore, but it’s the strategic value that every player will attribute to the property depending on their business which will swing the overall value,” the person said.

The executive, who didn’t want to be identified as he’s advising one of the potential bidders, said that most people had regarded Star India’s winning bid as extravagant in 2017.

“It’s debatable whether Star & Disney India recovered or made money on their bid, but on the back of the property, they also built Hotstar,” he said. “For any potential bidder, the value will be new or incremental subscribers the rights will get.” Disney+Hotstar is the company’s streaming platform.

Last year, BCCI president Sourav Ganguly said that he expected the rights value to touch Rs 40,000 crore. That number will be exceeded, according to the experts.

Sports marketing firm Baseline Ventures managing director Tuhin Mishra said that it will be a case of “breaking the bank” for the bidder that gets the rights.

“Grapevine has it that, in the end, the firm loses money over the rights period, but then rights are sought after not only for profits,” he said. “A lot of times, it could be for valuation or simply existence. It’s not always rationality attached to the high numbers.”

Incidentally, BCCI was expected to float an invitation to tender (ITT) by February 10. However, it has been delayed as advisor KPMG and the board are working on the final packaging of the rights as well as taking legal opinion. There was also a section within the board that wanted a single, closed-bid auction to maximise value.

“However, in the interest of transparency and considering that there will be more than three-four, deep-pocketed players that want the rights at any cost, the board has decided on e-auction,” said the person cited above. “The final shape is being given to the packages, and in another 10 days, the ITT will be out.” Star & Disney India’s bid will be informed by the fact that the subscriber growth of Disney+Hotstar is dependent on cricket and the IPL.

Not having IPL may not immediately hurt Hotstar’s user base, but growth may slow, a sports media expert said. “We have seen how Netflix stock was hammered down due to slow subscriber growth guidance,” he said. “The same thing will happen to Disney stock in the US if they are not able to show strong subscriber growth, which is why the company will be bidding aggressively.”

K Madhavan, president of The Walt Disney Company India & Star India, told ET recently sports will remain in investment mode and it won’t shy away from investing heavily. “We are going to be bullish on all rights renewals,” he said. “We have over 60% market share in sports, which we want to continue to have.”

For SPN, which is merging with Zee Entertainment Enterprises, scaling up the sports business will depend on the IPL, a property it helped create in the initial 10 years.

In the last rights cycle, SPN had bid aggressively for the TV rights of the league. This time, it is expected to bid for both TV and digital.

After losing the media rights to the BCCI home bilateral ties, NP Singh, MD and CEO of SPN, told ET, “We were clear that either we would get the BCCI media rights at the right price or let them go at a price which would be economically unviable.”

Another bidder to watch will be Reliance Industries-controlled Viacom18, which recently entered sports broadcasting with acquisition of rights to a clutch of properties.