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    BEST BRAND LAUNCHES OF2008

    INDIAN PREMIERLEAGUE

    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 beproven.

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

    Auto industry giants were sure that the carcant be produced.

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    Introduction

    Launched by BCCI on the line of FootballsEnglish 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.

    Indias 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 r10 years

    S o n y

    Media Rights CentralRevenues

    Money raised byFranchises

    Franchise BidMoney

    TitleTitleSponsorshipSponsorship

    of eventof event LicensedLicensed

    MerchandisedMerchandised

    ( . )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

    SellingSellingadvertisemenadvertisement fort for

    stadiumstadium LicensingLicensingproductsproducts

    MerchandiseMerchandisesalesale

    Advertising onAdvertising 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)

    CentralCentralRevenuesRevenues

    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 BidFranchise BidMoneyMoney

    Some heftySome heftyamount in theamount in thefirst yearfirst 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 10YEARS . 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 ofMukesh Ambanis 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 0Players 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 local0 2

    Total 17.69 12.75Net losses 4.94

    Approximately $ 5Million will be the firstyear losses ofMI.

    Financially, thefranchise seems to haveoverspent. Moreover,the percentage ofcentral 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 ofrevenue, 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 ofIndias 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 ofmarketing 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 ofCricket 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 ofevery 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 ofthe clubs being sold for US$67-112mn, depending on thecity.

    Besides acquiring teams, each of these franchises