Economists believe BCCI's expected IPL broadcast fees are unreasonable

Experts from the field of economics and advertising believe that the Board of Control for Cricket in India (BCCI) have gone overboard with their valuation of the Indian Premier League (IPL), as they expressed their concerns against the Rs. 16000 crore revenue the BCCI expects to generate as broadcast fees alone, the Times of India reports.

They are firmly of the opinion that a sum of such magnitude in unreasonable for any broadcaster to match, no matter how popular the IPL might be with the cricket crazy public of India. Sony Pictures Networks India (SPN), who bagged the television rights of the IPL back in 2008 for a whopping sum of Rs 8200 crore for a period of 10 years, might be forced to back out from their earlier stance regarding rebidding for the rights in 2018 should the BCCI stick to its evaluation.

“It is clearly a property we have nurtured and built from scratch,” Prasana Krishnan, executive vice-president and business head of Channel Six and Sony ESPN, had said in an interview during the month of April. “It is something which we are extremely passionate about. There is no denying the fact that we would want to continue to be the broadcaster for IPL.”

However, with the SPN generating a revenue of just under Rs 1,000 crore from sponsorships and advertisements in the 2015 edition of the league and only a slightly improved return of Rs 1050 in 2016, business experts warn that the BCCI might just be expecting a bit too much.

“I can't see how a multi-fold jump in the licence fee is possible. It (IPL) is a good property without a doubt, but expecting a double or more than that increase is like killing the goose that lays the golden egg," said a senior executive of an integrated media agency.

Despite the heavy price tag, a close bidding war is expected to take place between SPN and its main rival, the Star India group, with the BCCI making sure to entice one to up their profits. While the former holds the right for major football tournaments like the ongoing Copa America and Euro Championships, apart from the IPL, the latter holds the rights for all major ICC tournaments up until 2023.

"This will be an interesting fight. BCCI will definitely want to milk the rights. The sense in the market is that both SPN and Star India will be looking at anywhere between $2.5 billion and $3 billion (Rs 16,750-20,100 crore)," said a top executive from a media buying agency.

“At $3 billion, it will be a huge stretch. The negotiations have just started. SPN will be making an offer with a modest increase, which then will push the BCCI look for more options and come back to SPN to see if they want to match it," he explained.