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8/8/2019 Ipl - Seminar'07

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BEST BRAND LAUNCHES OF2008

INDIAN PREMIER LEAGUE

TATA NANO

Concept developed by Lalit Modi is avery successful brand.

Concept by Ratan Tata is the mostsuccessful brand launched.

It has taken cricket to newer heights. It has become iconic name for certainthings…

It already has two very successful seasons. The commercial success is yet to be proven.

The concept was new but with proper vision it is a grand success.

Auto industry giants were sure that the car can’t be produced.

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Introduction

• Launched by BCCI on the line of Football’sEnglish Premier League and NationalBasketball League (NBA) of the US.

•• Professional Twenty20 cricket league created

and promoted by BCCI and backed by ICC.

•• 8 teams, 44 days, and 59 matches.

••  Total base price for auction was $ 400 millionand fetch $ 723.59 million.

• Most expensive franchise is owned by MukeshAmbani - $ 111.9 million.

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Contd

• DLF Universal secured exclusive rights to the IPL

title sponsorship worth Rs. 200 Cr (over $50 mn)for 5 years.

•• India’s Sony Television network and Singapore based

WSG secured broadcasting rights at a cost of $

1.026 bn for 10 years.•• Bring income of $ 1 bn to BCCI over a period of 5 to

10 years, out of which 40% will go to IPL, 54% tofranchise, and 6% as prize money until 2017.

•• Out of $ 1.026 bn, $ 918 mn to BCCI and $ 108 mn

for the promotion of the tournament.

• 20% would go to IPL, 8% as prize money, and 72%

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So where is the money comingfrom…..

 $ 1 B illio n fo r 10 years

S o n y

Media Rights CentralRevenues

Money raised byFranchises

Franchise BidMoney

►  Title Title Sponsorship Sponsorship

 of eventof event

►  Licensed LicensedMerchandisedMerchandised

► ( . )Mumbai $111 9M( . )Mumbai $111 9M► ( . )Bangalore $111 5M( . )Bangalore $111 5M► ( )Hyderabad $107M( )Hyderabad $107M► ( )Chennai $91M( )Chennai $91M► ( )Delhi $84M( )Delhi $84M► ( )Mohali $76M( )Mohali $76M► ( )Kolkata $75M( )Kolkata $75M► ( )Jaipur $67( )Jaipur $67

►  Selling Sellingadvertisemenadvertisemen t for t for

stadiumstadium►  Licensing Licensingproductsproducts

►  Merchandise Merchandisesalesale

►  Advertising on Advertising onTicketsTickets

►  Gate MoneyGate Money

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… and where is it going??MoneyMoneySourceSource

BCCIBCCI FranchisesFranchises PlayersPlayers

Media RightsMedia Rights 20%20% 72%72%(equally divided)(equally divided)

8%8%(Prize Money)(Prize Money)

Central Central RevenuesRevenues

40%40% 54%54% 6%6%Subject toSubject tofranchises wishfranchises wish

Money RaisersMoney Raisers

by Franchisesby Franchises

20%20% 80%80% 0% (Depends on0% (Depends on

the whims of thethe whims of thefranchises)franchises)

Franchise Bid Franchise Bid Money Money 

Some heftySome heftyamount in theamount in thefirst year first year 

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IPL VALUATIONS AND REVENUESTREAMS

• ACCORDING TO A BRAND FINANCE STUDYDONE DURING SEASON 2 , THE IPL AS ASTANDALONE BRAND VALUE OF OVER $

311 M AND THE ENTIRE ENTERPRISEVALUE THAT INCLUDE ITS FRANCHISES ISVALUED AT $ 2.01 BILLION. THIS ISEXPECTED TO HAVE RISEN

CONSIDERABLY WITH SOME ESTIMATINGA 50% JUMP.

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REVENUE STREAMS

• BROADCASTING RIGHTS TO MULTISCREEN MEDIAAND WSG FOR 10 YEARS FOR RS 8700 CRORE.

• GLOBAL THEATRE- SCREENING AND PUBLICVENUE RIGHTS SOLD TO ENTERTAINMEMT

SPORTS DIRECT FOR RS 330 CRORE FOR 10 YEARS . REVENUE SPLIT IN 50: 50 B/W ESD ANDIPL

• ONLINE STREAMING RIGHTS SOLD TO TO GOOGLE

/ YOUTUBE FOR AN UNDISCLOSED SUM• FRANCHISE FEES : RS 333 CRORE PER YEAR

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• Let us consider the probable balance sheet of Mukesh Ambani’s Mumbai Indians (MI). IPLteam owners

• have two channels of revenue, central and local.

• Central - Includes Media, sponsorship andsuppliers, which BCCI will sells and shares withthe teams.

• Local - Includes things like stadium ticket sales,

local sponsorship. Concessions, merchandise etal, which franchisees will be responsible forselling.

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ENTRY EXPENSES

INCOME

( .Franchise Fee $ 111 9 for)10 year

11.19 0’Players salary

4 0,Stadium leasing coaches and.other exp 1.25 0

Advertisements 1.25 0(TV rights $ 1 Billion for

) ( )10 Years central0 10

(Sponsorships $ 50 Million

)for 5 years 0 0.75,tickets food and other( )sales local

0 2Total 17.69 12.75

 Net losses 4.94

 

Approximately $ 5Million will be the firstyear losses of MI.

Financially, thefranchise seems to haveoverspent. Moreover,the percentage of central revenue, whichremains 80% for the

first two years, willsubsequently reduce to50% in year 11. If thefranchise is to makemoney, they will haveto do that from

tickets, food and othersales as well aspremium and box seats.(Mainly because the twomajor sources of revenue, TV rights and

 Title sponsorships arenot oin to chan e

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Money Matter

• Let us first look at how much money BCCI is making out of thisentire deal.

•  The auction for the team franchise, which took place on January24, 2008, and the total base price for the auction was $400million. The auction went on to fetch $723.59 million

• Television Rights: On January 14 2008, consortium consisting of India’s Sony Television network

• and Singapore-based World Sports Group secured the rights of theIPL. The record deal has duration of ten years at a cost of $1.026 billion.

• Title Sponsorship Rights: On February 13 2008, Indian real

estate developer DLF Universal secured exclusive rights to theIPL title sponsorship worth Rs 200 crore (over $50 million) forfive years.

•  The major chunk of the revenue will go to BCCI even if we factor inthe condition that some percentage of money generated fromthe auction of television rights and Title sponsorship will go tothe team owner. BCCI has played the game very smartly - head

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• Indian Premier League ushers in a new era of marketing of sports in India. We take thisopportunity to analyze

• IPL and compare it with leagues like EPL and ICL(Indian Cricket League).

• IPL- already a US$2bn property, is essentially anattempt to sell cricket as a reality show.

Creation of club culture – would be key to itssuccess. Nevertheless IPL provides a newentertainment genre which cuts across classes.

• Some of the franchisee would look at IPL as a

means to promote their brand (UB group) whilethe others would look it as a financial

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The concept is yet to evolve and revenues streams thoughdifficult to predict would be numerous. Our belief is that thethree successful teams could easily do revenues of Rs3bnper year in the next three-four years and all the teams arelikely to turn profitable after two-three years. Their OPMscould range from 15-20%. Value unlocking for teams wouldhappen through listing and P/E participation. The worldover, average teams like Tottheham Hotspurs are trading ata 1.5X sales while a successful team like Manchester havebeen sold for 2-5X sales.

• Investors looking for an exposure to IPL should look at

investing in India Cements Ltd. We believe that thecompany would be EBIDTA positive in the first year. Onconservative basis, it is likely to earn a turnover of Rs3bnfrom IPL in the next three-four years. Assuming a mcap/sales multiple of 2X, the value per share wouldbe

Rs20.

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Key features of IPL

•  The Indian Premier League or IPL is a 20-20 format crickettournament. This league was formed by the Board of Cricket Control of India (BCCI) and sanctioned by theInternational Cricket Committee (ICC).

• IPL has been conceived on the lines of the English premier

league, where local football teams with a defined fanbase (supporters) play against each other.

•  The idea behind IPL is to sell cricket as a high involvementreality show that would appeal to all audiences.

• IPL has eight teams sold to franchises for perpetuity. These

franchises can run the league in their individual stylesand can raise resources from the primary market. Theteams have been capped at 10 – with one at the end of every three years.

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Continued….

• SONY-WSG has bagged broadcasting rights for 10 years forUS$918mn, excluding marketing for US$108mn.

•  The franchise amount collected is US$724mn, with each of the clubs being sold for US$67-112mn, depending on thecity.

• Besides acquiring teams, each of these franchises hasspent US$6-7mn on acquiring players for their teams.

• A total of 59 matches, including finals and semi–finals willbe played in this season. (56 league matches plus twosemi finals and one final). 7 matches are to be played on

the home ground.

• Its final leg will be called ‘Champions Twenty20 League’ andall the finalists from across the world will play in it. Thechampion team will get US$5mn – the highest ever pricemoney in a cricket event.

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 The broadcasting angle

•  The BCCI created history when it sold television rights of this yetuntested format to Sony–World Sports consortium forUS$1.02bn.

• However, of this US$1.02bn, US$108mn is to be spent by Sony on

promoting the event over the next 10 years. This brings downthe actual cost to US$918mn.

• Of this US$918mn, Sony has to pay US316mn for rights of broadcasting for the first five years, and then pay

• US608mn – if this format has been remunerative in the first fiveyears.

• In the first year, payouts are not dependent on TRPs. However, TRPs would drive payouts from the second year.

•  The franchisee have a share of 80% in the first year decreasing to60% in the fifth year of broadcasting rights and the balancewould go to IPL.

•  There is an overall cap of US$918mn on the rights which can beshared with the franchisees.

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ICL vs. IPL: The Competitive Edge

1.Solid backing of BCCI

and ICC with almost 10huge stakeholders.

2.IPL is playing a safegame

3.attractive business modelinvolving high level risk

1.ICL has a singlepromoter Essel Group.

2. Create a new league of talent from upcomingaspirants.

3. Level of risk is

comparatively lower.

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IPL better than ICL

8%

78%

14%

Exhibit 9: Is IPL Better than ICL

To an extent Yes No

% ,78 said Yes IPL is better than ICL

% ,14 said No and

%8 said to an extent it is better than ICL

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 The gamblingdashboard

Low

High

Low High

Risk

     R    e 

     t     u     r

    n

Size of Revenues

BCCI Franchises

PlayersViewers

Sponsors

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While it is a great bonanza forplayers…

• Earn at least Rs 80 lakhs ($200000) or more perseason on average.

• Bonuses and Prize Money from Team owners.

• A great stage to show case skills and compete withthe best in the world.

•  Taxing on the already tight schedule of international cricket. Chances of injury loweringthe tenure of career.

• Conflicting commitments for the national boards.

• Neglecting other forms of cricket

The Upside - Returns

The Downside - Risks

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…the franchises are alternatingbetween grinning and grimacing….

The Upside - Returns

The Downside - Risks

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…and the sponsors are walking atight line as well

The Upside - Returns

The Downside - Risks

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IPLAggressive Marketing

or

Futuristic strategy?

anoran an a

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– anoran an abaap' 

 “If all the development programmesare put in place, it could usher in a

new chapter. I sincerely believe that the IPL is history in the making” [….]“For me, the most fascinating aspect 

of Indian cricket is the passion thecrowds have for the sport. It isamazing and it is no wonder [...] -Adam Gilchrist

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…..BIGGER ON EVERY COUNT 

••

• MATCHES TEAMS PLAYERS

FOR AUCTION

IPL BRAND

VALUATION

IPL

ENTERPRISEVALUATIO

 N

IPL3 60 8 66 $311m+ $2.01b

IPL4 94 10 300 50%

MORE

50%

MORE

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Cont…

• DLF Universal secured exclusive rights to the IPLtitle sponsorship worth Rs. 200 Cr (over $50mn) for 5 years.

• India’s Sony Television network and Singaporebased WSG secured broadcasting rights at a

cost of $ 1.026 bn for 10 years.

• Bring income of $ 1 bn to BCCI over a period of 5to 10 years, out of which 40% will go to IPL,54% to franchise, and 6% as prize money until

2017.• Out of $ 1.026 bn, $ 918 mn to BCCI and $ 108

mn for the promotion of the tournament.

• 20% would go to IPL, 8% as prize money, and

72% would be distributed to the franchisees

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Future Expansion

• Four new franchisees will join IPL in 2010-11.•  Two confirmed franchisees will be based inAhmedabad and Kanpur.

• In 2012-13, two more teams will join the IPL.

• Possibly second franchise from Delhi’s suburbs.

• Possibly second franchise from Mumbai or newfranchise from Pune.

• For 2009 season tentative dates for the IPL will beApril 10th, 2009 to May 29th, 2009 and format of 

the tournament will remain the same as that of the inaugural season.

P fit L ?

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Profit or Loss?FranchiseFranchise RevenuesRevenues

(in Crores)(in Crores)ExpensesExpenses(in Crores)(in Crores)

Profit/loss (inProfit/loss (inCrores)Crores)

PricePrice(USD)(USD)

Mumbai IndiansMumbai Indians 6969 8585 Net Loss 16Net Loss 16 $ 111.9 mn$ 111.9 mnRoyal Challengers BangloreRoyal Challengers Banglore 4545 8888 Net Loss 43Net Loss 43 $ 111.6 mn$ 111.6 mn

Hyderabad Deccan ChargersHyderabad Deccan Chargers 6464 8282 Net Loss 18Net Loss 18 $ 107 mn$ 107 mn

Chennai Super KingsChennai Super Kings 72.872.8 7373 Net Loss 0.2Net Loss 0.2 $ 91 mn$ 91 mn

Delhi DaredevilsDelhi Daredevils 70.470.4 7777 Net Loss 6.6Net Loss 6.6 $ 84 mn$ 84 mn

Kings XI PunjabKings XI Punjab 6666 68.468.4 Net Loss 2.4Net Loss 2.4 $ 76 mn$ 76 mn

Kolkata Knight RidersKolkata Knight Riders 8989 7676 Net Profit 13Net Profit 13 $ 75.09 mn$ 75.09 mn

Rajasthan RoyalsRajasthan Royals 5959 5353 Net Profit 6Net Profit 6 $ 67 mn$ 67 mn

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ICL vs. IPL: The CompetitiveEdge

• Solid backing of BCCI and ICC with almost 10huge stakeholders whereas ICL has a singlepromoter Essel Group.

• IPL is playing a safe game while ICL wants tocreate a new league of talent from upcomingaspirants.

• IPL seems to be attractive business modelinvolving high level risk while in ICL level of riskis comparatively lower.

R h A l i

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Research Analysis

• A research wasconducted across400 people in thecity of Nagpur.

• 83% said Yes and 17%No

E x h ib i t 1 : D i d Y o u F o llo w IP

1 7

8 3

N o Y e

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Cont…

• 44% did not miss asingle match, 38%favorite teams

matches only, 12%match highlights,and 6% only onholydays, sundaysand weekends

Ex h i b it 2 : M a t c h e s o n T V F r  

6 %

4 43 8

12

M at ches hig hl ig ht s o n ly A ll t he ma tc he s ( d aily )

M atches of favor i te teams o nlyonly on hol idays/Sundays/W

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• 58% found a sustained interest level

throughout the match,

34% surfed throughthe channels and 8%are not interested

Exhibit 3: Sus taine d L eve l of Int

Thr oughout

8%

58 %

34 %

To an extent Y es No

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• 63% because of crisptiming, 29% othersfactors attract them,

5% said thatBollywood starstempted them towatch, and 3%found entertainment

value

5

63

3

29

0

10

20

30

40

50

60

70

Percenta

e

Bolly w ood

stars

Entertainment

value

Factor 

Exhibit 4: Attraction Fact

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• 62% preferred 8 to 11pm, 12% no specifictime to watch TV

and equal numberpreferred to watch TV after 11 pm, 9%preferred afternoonslot of 2 to 5 pm,

and 5% preferredmorning time of 7 to9 am

5 % 9 %

6 2

1 2 1 2

0 %1 0 %2 0 %3 0 %

4 0 %5 0 %6 0 %7 0 %

P e r c e n t a

7 . 0 0 t o

9 . 0 0 a m

8 . 0 0 t o

1 1 . 0 0

p m

N o

s p e c i f i c

t ime

T im

E x h i b it 5 : P r e f e r r e d T im e

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• Only 24% did miss outon their favorite TVprograms, and 76%

answered negatively

E x h i b i t 6 : M i s s e d O u t o n

7 6

2 4

 Y e s N o

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• 38% feel that TRP of reality showsaffected the most,

30% feel newschannel would havesuffered that most,28% said familysoaps were

affected, and 4%feel that otherchannels affected

4

3 0

3 8

2 8

O t h e r s

N e w s

R e a l i t y S h o w s

F a m i l y S o a p s

E x h i b i t 8 :

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• 78% said Yes IPL isbetter than ICL, 14%said No, and 8%

said to an extent itis better than ICL

E x h i b i t 9 : I s I P L B e t t e

8 %

7 8

1 4

T o a n e x te n tY e s N o

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• 37% feel that IPL is allabout aggressivemarketing, 31% said

that great futuristicstrategy, 26% feelthat IPL is just a 45days of masala, and6% feel it is threat

to TV and cinema

E x h i b i t 1 0 : IP L f o

2 6 %

3 7 %

3 1 %

6 %

D a y 4 5 m a s a la o f p o u r r iO n ly a g g r e s s iv e m a r  

F u tu r is t ic s t r a te g y T h re a t to TV a nd C in

There’s a lot for U Me and

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 There’s a lot for U, Me andHum….

The Upside - Returns

The Downside - Risks

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s

• 37% feel that IPL is all about aggressivemarketing,

• 31% said that great futuristic strategy,• 26% feel that IPL is just a 45 days of 

masala, and

• 6% feel it is threat to TV and cinema

E x h i b i t 1 0 : I P L f  

2 6 %

3 7

3 1 %

6 %

D a y 4 5 m a s a la o f p o u r r iO n ly a g g r e s s i v e m a

F u tu r is t ic s t ra te g y Th re a t to TV a n d C i

Global Appeal

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Global Appeal

BUILDING A GLOBAL SPORTS

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BUILDING A GLOBAL SPORTSFRANCHISE

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1) LOCAL COMMUNITY 

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2) Superstars

It is clear that certain players inspiresupporters.

Sports fans will pay to see those fewsportsmen who are capable of displaying extraordinary levels of 

talent.

 These inspirational players not only help

build the club brand but can also add

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3) MEDIA EXPOSURE

THE BIGGEST BRAND

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THE BIGGEST BRANDVALUESA N K B R A N D (A LU E S E A S O

)2

(A LU E S E A S O N)

0 1  K O LK A TA K N IG H T R ID E R S .$ 4 2 1 m  $ 2 2 m

0 2  M U M B A I IN D IA N S .$ 4 1 6 m  $ 1 7 m

0 3  R A JA S T H A N R O Y A L S .$ 3 9 5 m  $ 1 4 m

04  CHENNAI SUPER KINGS .$ 39 4 m  $ 1 8 m

05  DELHI DAREDEVILS .$ 39 2 m  $ 1 9 m

06  ROYAL CHALLENGERS BANGALORE .$ 37 4 m  $ 1 4 m

07  KINGS XI PUNJAB .$ 36 3 m  $ 1 5 m

08  DECCAN CHARGERS .$ 34 8 m  $ 1 1 m

Owner: Mukesh Ambani

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Franchise Fee : $ 190.0 million

Current Value: $41.6million

New Signee : Kieron Pollard

Most expensive player : Kieron Pollard - $1.8 million

Profitability in season 2 : Rs 35.1 crore

 The team had less mileage outside India as it had less or no players representing theirnation other than Sri Lanka &

South Africa

Owner: Deccan Chronicle

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s

Current Value : $34.8 million

Most Expensive Player : Andrew Symonds - $1.35 million

New signee : Kemar Roach

Profitability in season 2 : Rs 14.8 crore

Home Ground : Secunderabad

 Owner ‘s: Bollywood actor ShahRukh Khan's Red Chillies Entertainment

in partnership with Juhi Chawla Mehta and her husband Jai Mehta

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in partnership with Juhi Chawla Mehta and her husband, Jai Mehta.

Brand Value: $42.1 million 

Icon Player : Saurav Ganguly - $1.09 million

 Profitability in season 2 : Rs 25.8 crore 

Home Ground : Eden Gardens 

Shahrukh Khan's popularity has helped in enhancing the brand image of Kolkata Knight Riders

 The fan following of the team is the highest among all the teams in IPL 

Shahrukh Khan‟ brand and the in-stadium marketing strategiesof the team have influenced the teams brand value resulting inhigher income from gate receipts, merchandising revenues and

by attracting new team sponsors”

 

CHENNAI SUPER KINGS

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CHENNAI SUPER KINGS• Owner: India Cements

• Most Expensive Player : AndrewFlintoff - $1.55 million

• Brand Value: $39.4 million

• Profitability in season 2 : Rs 21.8crore

• Home Ground : Chennai

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• Owner: Dr. Vijay Mallya( UB group)

• Most Expensive Player : KEVINPIETERSON

• Brand Value: $37.4 million

• Profitability in season 2 : Rs 8.1crore

• Home Ground : Chinnaswamistadium ( Bangalore)

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Delhi daredevils

• Current value : $ 39.4 million

• Star player : Sehwag,Gambhir,Dilshan

• New signee : Wayne parnell

• Sponsors : Hero Honda, Coco Cola ,Adidas

• Profitability in season 2:Rs 35.1 crore

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Kings 11 Punjab

• Current value : $ 36.3 million

• Star player : Yuvraj , Sangakkara,Irfan, Marsh

• Sponsors : Dabur, Reebok, Emiratesairlines

• Profitability in season 2 : Rs 26.1

crore

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Current value : $ 39.5 millionStar player : Shane Warne, Watson, Graeme SmithSponsors : Ultratech, Kingfisher, PumaProfitability in season 2 : Rs 35.1 crore

Future Expansion

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Future Expansion

• Four new franchisees will join IPL in

2010-11.•

•  Two confirmed franchisees will be based

in Ahmedabad and Kanpur.•

• In 2012-13, two more teams will join theIPL.

• Possibly second franchise from Delhi’ssuburbs.

Conclusion

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Conclusion

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Finally…

CHILL OUT

and ENJOY CRICKET WITH

FEW EYE CANDIES!!!!!

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….. ……..N O W H E R E A N Y W H E R E

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….. ……..N O W H E R E A N Y W H E R E!IP L IS O N LY H E R E