IPL : Will team Owners be losers ....?

Liquor baron Vijay Mallya has recently kicked out CEO of his team Royal Challengers Bangalore (RCB) Charu Sharma.

Mallya purchased Bangalore team franchisee for Rs. 446 Crore and paid Rs. 21.60 Crore for the 14 cricketers. After investing this amount, Mallya is looking for outside sponsorships to lessen his financial burden. But due to weak performance of the team, no one will come forward for the sponsorship, For one season sponsorship, the fund required is in range of 12 - 20 Crore and naturally no one will pay this sum for a weak team.

So will Vijay Mallya loser ? Right.

No wrong.

But he has to wait for more period compared to other owners.

First of all, all the owners have paid the franchisee fee for 10 years. Mallya has paid more as compared to Mohali and Jaipur teams. But as sports and business were blended for the first time in India, there was no price tag for any franchisee or any cricketer.

Second high profile franchisee is owned by Shahrukh Khan with co-promoters Juhi Chawla and her husband Jay Mehta. His team Kolkatta Knight Riders (KKR) has got 6 sponsors and two more sponsors - Airtel and Hyundai are in pipeline. King Khan has utilized his relations with international brands like Tag Heuer, Nokia etc. This is the only team which will hit break-even or may make some profit.

But other teams may incur loss during 2-3 seasons. But the franchisees are optimistic due to the response to IPL. It has created new viewers as women and children.

Most of the corporate houses didn't bid for the franchisee as they were not sure about the success of IPL. Now when the format is accepted all over the world, they are in the queue with money in hands to buy franchisee rights from the owners. Day by day, popularity of IPL will be on rise and franchisee rights can be sold at higher price.

After 3 years, franchisee can sell teams' stake. The team will be valued as per its performance. But few companies are interested in buying the rights.

So after 3 - 4 years, the owners will be earning quite a huge amount. The franchisee fees that they have paid is very negligible. But for earning good profit, performance will be must.

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