Who gets to show the IPL spectacle to India and the world? ©BCCI/IPL
In his recent blog, Lalit Modi makes a bold prediction on the media rights value of the Indian Premier League (IPL).

"Everybody is throwing numbers on the table. But if you have to listen or believe in one number, then it is from yours truly. I predict that this new IPL media rights tender will fetch close to 8 to 10 billion dollars (between INR 60k and 75k crore). I believe this is the value of a genuinely global and world-class product," the IPL founder writes.

It could be blasphemy to question the wisdom of Modi, particularly on IPL and its valuation, but industry experts in India are not too convinced. "He is being too optimistic," says a market guru, who doesn't want to be identified so that he is not seen to be countering Modi's prognosis. "Those numbers are a little over the top." The final number is anyone's guess but there have been scaled-down expectations in the industry in view of the current market scenario.

TV versus digital

One of the major narratives that will determine the overall value is how close the value of digital rights come to the television rights. Last time the difference was humongous, INR 11,050 crore (by Sony) and INR 3900 crore (by Facebook) respecitvely. That Star walked away with the rights because of a high composite bid (INR 16,347 crore) is a different calculation. This time the difference should be much closer owing to the data boom in the country in the last five years. The switch to the digital space has grown by leaps and bounds between the two cycles of the IPL rights with perceptibly higher consumption of data bringing the television viewership down.

A key player responsible for that boom is Jio and they are a participant in the bidding war, alongside Hotstar, the ever-swelling subscription of which has been largely due to the IPL property. Reliance (Jio) would want the cheap (not in quality but in price) data it provides translated into eyeballs for the IPL, so that it can commercially exploit that through advertisements and subscriptions. They are expected to go any distance to capture the IPL digital rights.

On the other hand, the IPL is an important property for Hotstar so that it can maintain its supremacy over competitors like Netflix and Amazon Prime. It is said that Walt Disney's streaming service is seriously augmented by its Indian subsidiary Hotstar, which accounts for about one third of the California-based company's OTT subscription base. Disney is reported to be having a 135 million subscription base of which Hotstar's share is 35 million, both numbers far higher than their competitors in the OTT space. IPL is the key to its digital business and expansion.

"Whether the overall value is INR 45k cr or INR 50k cr... it doesn't shake these players. These are small numbers for the big players. In an auction, individual personalities and irrational egos can take over. Irrationalities aside, I do not see digital exceeding television and I do not see it crossing 75 percent of TV," says former Nimbus CEO Harish Thawani providing a perspective on how the bids on Sunday could proceed. He bases his argument on the fact that every subscription number cannot be absolute as every mobile service provider gives free subscriptions to many OTT Apps, as part of their wholesale purchase of subscriptions.

Just as for the digital rights, even for the linear rights, the main competitors will be Sports 18, a part of Reliance-Viacom 18 Joint Venture, and Disney Star. Sports 18 recently got a USD 1.78 billion investment boost from James Murdoch-Uday Shankar company, Bodhi Tree, and more importantly the expertise of Uday, who masterminded Star's acquisition of the property in 2017.

So Mukesh Ambai-Uday driven Sports 18, trying to make a dent into the sports broadcast market in India, could be a handful for Star, Sony and Zee, the remaining players for the television rights. They are the favourites but an upset cannot be ruled out, like in an IPL game.

Mathematics of IPL rights game

So, how far Sports 18 will go for the television rights and how determined Hotstar is to retain its hegemony will drive the overall value of the IPL rights. Their seriousness will be dictated by the business model which goes broadly this way. Normally, there would be 3000 seconds or 300 advertisement slots of 10 seconds each in an IPL game and the recent market rate is said to be INR 14 lakh for a slot.

However, taking into account the rating fluctuations, migration to digital space and external factors like concessions for bulk bookings, a T20 game could be earning, on an average, up to INR 30 crore (INR 10 lakh for a slot) from the television rights. Star did not make the Profit & Loss from the latest IPL public, but it is believed that it would have earned more than INR 50 crore -- the per game price of the last rights -- through television subscriptions, advertisements in Hotstar and distribution of Rest of the World rights.

Other factors that could influence the overall value is how serious Sony are to regain the rights they held for the first 10 years. Their executives say they are, just as Zee, whose auction strategy is driven by Rahul Johri, former CEO of the BCCI, who actually auctioned the last cycle of rights, sitting on the other side of the table. The bigger question, however, is why Zee and Sony are bidding separately given that their merger is round the corner. Is there a major business strategy?

Yet another factor is the value that the Package C will command. It is felt that the Package has no firm character because of the randomness of games to be shown. The general impression is if they had consisted of all games of one particular franchise and with different bundles like all MI, CSK, KKR games... besides the play-offs, the package would have attracted a higher value.

The withdrawal of Amazon could have a serious implication in the overall value. Also telling could be the absence of Google, Amazon, Dream 11 (Fancode), an indication that the digital rights may not be as hot as they may have been perceived to be. Their absence has been a talking point just as the presence of Fun Asia in the final list bidders. Cricbuzz understands they are a firm in Texas and could bid for the territory of the UAE. Also among the bidders is Times Internet.

Wrong numbers

The value of the rights this time will have gone up even before the proverbial first ball is bowled, given that the BCCI has increased the number of matches for the next cycle (2023-27) by about 30 per cent -- from the previous 314 (60+60+60+60+74) games to 410 (74+74+84+84+94) matches. But how far it will go is the big question.

The numbers that have been in circulation till now -- INR 32,890 crore overall combined base price comprising of INR 18,130 crore reserve price for television rights, INR 12,210 crore for the digital rights, INR 1110 crore for Rest of the World Package and INR 1440 crore for the Special non-exclusive package - have now been rendered redundant since they were calculated on the basis of 370 games for five season. Besides, a composite bid clause for the Rest of the World package has been withdrawn.

Now that the BCCI has confirmed that the number of games will be 410 and decided not to allow a composite bid for the Rest of the World, the numbers that matter are INR 49 crore (per game base price for TV rights), INR 33 crore (per game base price for digital rights), INR 16 crore (per game base price for the 18 non-exclusive games) and INR 30 lakh (per game base price for each of the five territories in the Package D). All these will have to be seen in the multiples of the big number -- 410.

On overall calculation, the BCCI has broadly fixed INR 90 crore as the combined base price per match. If it goes up to INR 100 crore, on 410 multiples, it would add up to INR 41,000 crores, more than 150 percent appreciation of existing price. But the final price could be much higher.

E-Auction Ready Reckoner

- Mjunction Services Limited will provide the bidding platform. They have conducted a workshop, virtual training sessions as well as mock auctions

- Auction shall commence at 11 AM IST for Package A and Package B on Sunday (June 12)

- Up for sale are four packages. Package A: Indian Subcontinent Television Rights; Package B: Indian Subcontinent Digital Rights; Package C: India Digital Rights 18-game non-exclusive pack; Package D: Rest of the world Television and Digital Rights.

-Package C Grouping: 18 or more consisting of opening match; Playoffs night games of double headers

- Package D groupings: Territory A: Asia, Australia, Canada, the Caribbean islands, Israel and New Zealand; Territory B: Middle East and North Africa; Territory C: South Africa and Sub-Saharan Africa; Territory D: UK, Europe & Territory E: USA

- There are 30 minutes before each bid with the auction set to close at 6 PM IST

- INR 50 lakh is for Minimum Bid Increment (MBI) but one can increase by more but they have to be in multiples of 10 (e.g INR 60L, INR 70L)

- Number of games season wise: 2023 & 2024 - 74 Matches; Season 2025 & 2026 - 84 Matches; Season 2027 - 84 or 94 Matches

- The MBI will be on the multiples of 410, the overall number of games in 5 seasons (2023-27)

- BCCI has told the bidders that each season will be tentatively between March and June

- Package A bidder has to be a Broadcaster in India; Package B bidder must either be a broadcaster, internet operator or a mobile company owner in India; Bidders qualifying for Package A and B can bid for Package C and D as well. A marketing agency and consortiums are not permitted to bid

- Bidders for Package A must have a net worth of INR 1,000 crore; it is Rs 500 crore for those bidding for other packages

- Base prices: Package A: INR. 49 crore; Package B: INR 33 crore; Package C: INR 16 crore; Package D: INR 30 lakh per territory; and each bid must be done on per game basis

- Right to challenge: Winner of Package A can challenge the highest bidder of Package B and restart rebidding for Package B, not other way round; the final winner of Package B can challenge can challenge highest bidder of Package C and Package D

- Star, Sony, Viacom18, Zee, Times Internet, Fun Asia, Sky Sports, Supersports are the bidders left in the fray

- The bidding parties will not be aware who are in participating in the e-auction till BCCI makes the announcement; however each bidder will know what is the highest prevailing bid in a category.