Potential bidders for the Indian Premier League media rights are in favour of e-auction. However, BCCI is reluctant.
Lot of potential bidders of the upcoming TV, mobile and internet media rights are in favour of an e-auction. However, the BCCI policy makers are not ready for the change in the auction process. They believe that the traditional sealed tender procedure will work to benefit the Board most.
The BCCI’s muscle flexing in cricket fraternity over the years has primarily been due to huge revenues it generated from the broadcast rights and the concept of e-auction in IPL can lead to a sharp dip in revenues, feel Board insiders, says a PTI report.
There is strong demand that e-auction be introduced to decide the various media rights. The last date for buying IPL media rights tender document is August 24. The bids have to be made by August 20 and the outcome will be announced on August 28.
Rajya Sabha MP and Subramanian Swamy has filed a petion in the Supreme Court seeking directives to the BCCI to conduct e-auction for the media rights. The Supreme Court of India has already given a two-week notice to the BCCI to explain their stand.
The BCCI’s fear stems from the fact that e-auction will take away the secrecy which comes with a sealed bi. The revelation of bidding amounts in e-auction will provide the bidders a fair idea about the amount which would be enough to seal the rights.It will remove the possibility of getting a higher bid for the Board.
A BCCI official explained the apprehension. “Suppose there are 10 potential bidders for IPL TV rights, the BCCI will have to set up a base price for the auction just like it happens in case of players’ auction. Let’s assume the base price for TV rights is Rs 100. “All the 10 potential bidders will be provided with the login and password. For each round of bidding, there will be a specific time-frame in which the companies will bid. After each round, the bid amounts will be revealed. “It means that the bidders will get an estimate of other quotes and that will possibly stop them from making his maximum bid,” a senior BCCI official is quoted by the PTI as saying.
The second apprehension is the concept of ‘price discovery’ not coming into play if e-auction is introduced. Like it happened a month back when Vivo and Oppo — two flagship companies under Chinese multinational BBK Electronics — bid for IPL title rights.
‘Price discovery’ is the general process used in determining spot prices. Vivo renewed IPL title rights contract with a massive 554 percent rise in sponsorship money, paying a whopping 2199 crore (2200 approx) from previous Rs 396.8 crore.
Oppo was a distant second with a bid of Rs 1430 crore — Rs 769 crore less than Vivo. Similarly for Indian team’s shirt sponsorship deal, Oppo won the rights with Rs 1079 crore bid while Vivo, the only other bidder was ready to pay Rs 768 crore.
The official then explained Board’s predicament. “Take the IPL title rights for example. Had it been e-auction, Oppo was bidding Rs 1430 crore and Vivo might have bid Rs 1500 crore at the maximum. The additional Rs 700 crore that BCCI earned was because of the current process of sealed bid,” he said.
It is expected that at least five channels will go all out for the TV broadcast deal (separate bids for mobile and internet rights) and they would want e-auction as it could potentially decrease their expenditure considerably.
“You can’t fault the big media houses favouring e-auction as that would mean less expenditure. But we have to look at BCCI’s interest and how we can maximise the revenue. We believe our current process has full transparency with our legal team and auditors monitoring the whole process,” the official said.