KPH Dream Cricket Pvt Ltd, the franchisee owners of Kings XI Punjab, have all the good reasons to be happy with their IPL investments. The company is into third year of registering annual profits. The forthcoming IPL media rights bid will further put the league in growth mode. The company co-owner Mohit Burman, based upon a feedback from his financial team, forsees a Rs 12,000 crore to 15,000 crore bid for the IPL media rights for the next five years.
Mohit also approved the idea of a five-year media rights cycle. Talking to insidesport.co at his office in New Delhi, the Dabur Group promoter opens up about various aspects of the league and his franchisee. Here are the excerpts:
Insidesport: September 4, Monday is a big day for all IPL stakeholders, how anxiously you are waiting for the media rights tender to open?
Mohit Burman: Being in this business for 10 years, I am not feeling any anxiety. However, because of the popularity of the property I am expecting the rights to be auctioned at a much higher value than before. However, only time will tell how it goes.
IS: According to you, what can we expect this time?
MB: Though, I haven’t glanced at the actual values but as our team would assess it, they can be somewhere between Rs 12 to 15 thousand crore.
IS: Are you happy with the strategy of a five-year cycle rather than 10 years for IPL media rights, as auctioned earlier?
MB: Yes, I am happy about the five-year auction plan. When we were least expecting it during the first year, it came out to be a highly successful product. So, that’s when BCCI re-auctioned it (IPL media rights) for nine years. However, the ten year gap was a little long and I believe five years is better.
In such a volatile market, the five-year cycle will make it much easier for the broadcasters to get to a figure. Assuming the five-year figure to be around 12 thousand crore then ten years figure would have made it to 24 thousand crore, which in turn would have made people wary to make a commitment. In my opinion, this will make it easy for the broadcasters to set their targets because one cannot predict what would be the media scenario in ten years.
IS: IPL title fetched absolutely crazy numbers, so will probably other associates and media rights? Can we safely say that each franchisee share from central pool may touch the 150 crore figure?
MB: All will depend on how the media bidding goes. Let us not put a figure to this. Whether it will be 150 or less or more, I can’t say at this stage.
IS: Are you happy with the way IPL has progressed in the past 10 years?
MB: IPL, being a great product, has evolved rapidly in these years that it is now counted amongst the top ten sports leagues in the world. So, of course, we are satisfied with IPL as a product and the way it has progressed year on year.
IS: Talking about your own franchisee, Kings XI Punjab, the traction from your own home city has not been up to the mark. Gate sales have been low, sponsorship values have been low in comparison to other franchisees.
MB: I guess we have had problems with the gate collection primarily because we don’t have the best of the venues. However, when it comes to sponsorship revenues, we are more or less on a par with most teams.
Outside KXIP, no-one knows the numbers, and much of these numbers floating around are speculative. We are among the few teams which consistently have had same sponsors. For example, Tata has been with us for three years. Before that we have had some great brands like Emirates (Airlines) with us. I don’t think there is too much of a variance in this.
We are trying to focus on the issue of gate sales but it has its own limitations. If you look at Delhi or Mumbai, these are big corporate cities unlike our home venue. So, these venues will obviously fetch far better gate sales. Let’s face it, if any company were to take a corporate box to entertain its dealers or business associates, they will take it at Delhi or Mumbai, rather than Mohali.
IS: In 10 years of IPL, operationally you are breakeven, but then huge investments have gone into running the franchisee during the formative years. Has KXIP been able to register any profits during this period? If yes, what?
MB: First seven years have expectedly been a loss-making exercise but that is a normal gestation period for any business. However, we have started making profits for the past three years. I will say, cumulatively we are still in the red. Even if we are registering profits on a year-on-year basis now, the consolidated deficit is much higher than what we have been able to earn since IPL Season 7. Hopefully over the next few seasons, we will wipe off all accumulated losses. That is normal for any business.
IS: There were reports that you are pushing for change in the KXIP home venue. What other options are you exploring?
MB: A full house has rarely been sold for seven matches during one IPL season. There is not enough traction. For that reason, we have been requesting to the BCCI to sanction us more games on the alternate home venue.
In the past, Dharamshala, Cuttack and Indore have been our alternate home venues. We are happy to host matches in two stadia, but it cannot be Mohali alone. We have urged BCCI to allow us more games at the second home venues.
IS: You are the biggest stakeholder in KPH Dream Cricket Pvt Ltd. Have you ever thought of exiting from the group or diluting your stakes?
MB: I have never had any intention of diluting my shares or to exit KXIP for that matter. I firmly believe that any business runs in losses in its formative years. As I already shared with you, KXIP is in profits for the past three years and now we are running a tight ship. With the new media rights, we are set to reach the growth stage.
Mohit Burman has varied interests in the business of sports leagues. Other than being a major stake holder in the KPL Cricket Private Limited, he owns the Indian Hockey League Mumbai franchisee – Dabur Mumbai Magicians – and was a stakeholder in the Indian Badminton League Pune franchisee.