Restricting the duration of high-value contracts to five years and being transparent in the tendering process has proved to be a fruitful exercise for the BCCI, which has raked in close to INR 20,000 crore (approx US $3.12 billion) across three mega deals sealed in the past six months – Monday’s record-breaking IPL rights deal included.
That is the assessment of Rahul Johri, the BCCI’s chief executive officer, who agreed that the due-diligence process originally recommended by the Lodha Committee and now followed by the Committee of Administrators (CoA) has bred a healthy environment that has attracted bidders from across the globe to Indian cricket.
In March, OPPO Mobiles India, the Chinese smartphone manufacturer, won the Indian team sponsorship rights for a five-year period, starting April 1 2017, for INR 1079 crore (approx USD 162 million). In June, Vivo, another Chinese mobile manufacturer, retained the IPL title sponsorship rights paying INR 2199 crore (approx US $341 million) for a five-year deal. Along with Monday’s IPL rights deal, clinched by Star India for INR 16,347.50 crore (approx US $2.55 billion), that is a combined worth of INR 19,625.50 crore.
“In business if you have accountability, transparency and stability, that translates into numbers. And that is what has happened,” Johri told ESPNcricinfo. “These three tenders have happened under the CoA’s watch.”
In its final report, made public in January 2016, the Lodha Committee had pointed out that “no norms or procedures exist to select or engage contractors in a fair and transparent manner” when the BCCI signed new contracts, including television rights. The Supreme Court agreed and directed the BCCI to make sure all bids were passed through the due-diligence process done by lawyers and auditors before the bids were unveiled.
On Monday, the technical bids of the 14 companies that decided to enter the IPL media-rights bidding process were passed through auditors from Deloitte and the law firm Cyril Amarchand Mangaldas.
Another key change, which has proved influential, is reducing the bid duration from 10 years to five. The previous television rights deal was for 10 years, which ended in 2017. In July, the BCCI decided to set the duration for all the rights’ categories at five years.
Speaking of this decision, Johri pointed out the enthusiasm in the digital-rights segment, where Facebook, Airtel and Reliance Jio each bid INR 3000-plus crore. “You saw the excitement in digital and who knows five years from now where digital will be… It absolutely justifies [reducing the rights term]. Companies plan for five years. I don’t know of many companies that plan for ten years. There is accuracy in those [five-year] plans. These are all board-level decision companies have to take. Even the bidders have accountability, they can’t just put up an arbitrary number. There are processes. So keeping it for five years works well.”
Also, another advantage of keeping the rights cycle to five years, Johri pointed out, was “the sum of two five-year bids will definitely be bigger than one 10-year bid”.
The IPL rights deal is now the most expensive in cricket, with Star India paying virtually INR 55 crore (approx US $8.47 million) per IPL match. Johri was not surprised at the money paid by Star India, which he said was a “viable” amount. The value of the digital rights, Johri said, was a clear indicator that there was “very high growth” in this market.
Source: ESPN Crickinfo