Why everyone wants a slice of the BCCI pie

Maken says BCCI should be brought under the ambit of Right to Information because it,indirectly,derives many economic benefits from the government. All their stadiums are built on government land,the government makes the security arrangements for matches and BCCI was exempt from taxes till IPL came up,he argues. Rahul Mehra,a lawyer who has been advocating governance reforms within BCCI for long,points out that real estate is a massive cost-head in any venture. Mehra says,“If BCCI were to buy land for their stadiums,it would still be recuperating its investments,forget about any profits.”

Shukla dismisses such arguments. “The stadiums are for the people of this country,the cricket fans,not BCCI office-bearers. The government owes that much to its people. As for the security,we mostly pay for it.” Shukla and many of his BCCI colleagues argue that the Board should not be penalised for having built a profitable sporting venture and for getting India an eminent position among cricket-playing nations,something that other sports federations in the country can only aspire for.

The debate has spread among non-stakeholders as well. Cricket fans and BCCI detractors are agog on social media platforms. The overriding sentiment is,and has been for a long time,that BCCI is a bullying,opaque and corrupt organisation. “The government,with its own baggage of corruption and opaqueness,has no business regulating any sports body,” says the CEO of a leading sports channel that has close association with BCCI. “Yet I am concerned about the lack of professionalism,the arbitrariness,the absolutism with which BCCI runs the sport and the business,” he adds.

Rags to Riches

The evolution of BCCI from a nondescript organisation barely making its ends meet till early nineties to the world’s richest cricket board is well documented. “It was Jagmohan Dalmiya who envisioned cricket’s commercial potential in the early nineties and finally,got it freed from the government’s shackles in 1995 after a court case,” recalls R C Venkateish,CEO of Dish TV and former CEO of ESPN-Star Sports. “Before that,cricket was Doordarshan’s preserve,” he adds.

Incidentally,mid-nineties was also the time when cable and satellite TV were taking root and the broadcast industry was opening up in a big way. Having got permission from the courts to sell its broadcast rights to private broadcasters,BCCI struck its first media deal with Prime Sports,the erstwhile ESPN,for $5 million for the 1995-99 period. “This was also the time when the economy was opening up in a big way and several foreign brands were entering India. Even Indian companies were entering new segments and launching new products. They all needed a vehicle to reach consumers. Being a mass medium,television was emerging as a favourite platform for these brands,” remembers Shashi Kalathil,former CEO of Neo Sports and currently the CEO of Yfactor,a management advisory services provider.

Those were days when Kaun Banega Crorepati and Kyunki Saas Bhi Kabhi Bahu Thi were yet to take over televsion screens and Star Plus and Zee TV were yet to be born as independent channels. Cricket,alongside Bollywood films,and music,was the only TV property that could gather eyeballs. Incidentally,the Indian cricket team was doing well around that time and hockey had already fallen off viwers’ radar. Other sports federations probably did not have a Dalmiya on their board who could seize this opportunity.

The result was that every broadcaster was queuing outside BCCI’s doors pleading for the broadcast rights and in 2004 when TV rights came up for renewal after having gone to Prasar Bharati from 1999-2003 in the interim,BCCI itself was pleasantly surprised. Zee TV,which harboured the ambition of launching a sports channel,bid $260 million for the TV rights. Zee,however,was disqualified by the Board on allegedly flimsy grounds. A legal battle followed and when it ended and TV rights were again up for grabs in 2006,Nimbus Communications,whose promoter Harish Thawani,an old-time broadcast enthusiast who wanted to launch his own sports network,hawked them for a whopping $612 million. The contract,however,was renegotiated at a lower price after Nimbus was forced to share its exclusive rights with Prasar Bharati.

Yet having begun its commercial journey with a mere $5 million just a decade ago,BCCI had come a long way.

The story of cricket endorsements,sponsorships and advertising is similar. The BCCI’s income from sponsorships has gone up from around Rs 100 crore five years ago to Rs 231 crore in 2010-11 independently and to Rs 434 crore with IPL included. “It was the coming together of various factors that established cricket’s,and hence,BCCI’s supremacy among broadcasters and advertisers,” says Kalathil.

If on the one hand,it was Dalmiya’s foresightedness to unlock cricket’s commercial potential,on the other,it was an evolving media and advertising environment—and the absence of a rival sport—that helped cricket,and hence BCCI establish its dominance in the market. Even today,media and sponsorship rights alone contribute more than 75 per cent to BCCI’s revenues.

Like Dalmiya,Lalit Modi also turned BCCI’s fortunes at an appropriate time when the interest of fans in one-dayers was diminishing. He gave to BCCI,and also the world of cricket,one of the most successful sport-cum-entertainment products that was in sync with the changing demography and socio-economic profile of the fans.

IPL,in fact,generates more revenues than BCCI’s own matches. In 2010-11,for instance,total revenues and profits from IPL were Rs 973 crore and Rs 119 crore (excluding an outgo of Rs 200 crore on account of subventions to state associations) against BCCI’s Rs 805 crore and Rs 23 crore,respectively. According to BCCI’s annual report,in all,it generated Rs 2,026 crore in revenues and Rs 190 crore in profits (including revenues from Champions League) in 2010-11. This excludes the Rs 638 crore it gave to its state associations on various counts,including subsidies to build cricket infrastructure in their regions.

Indian cricket players are among the most handsomely paid among their global peers. The board is also building four sports academies across the country to nurture talent.

It is able to do all this thanks to its brimming coffers.

Bouquets and brickbats

While BCCI’s financial prowess has won it many friends,it is also criticised by a section of observers who feel that in its zeal to exploit the commercial potential of the sport,the board has violated many principles of good governance and also,at times,overstepped ethical boundaries.

The IPL bidding process,the teams and their controversial owners,not to forget the clear case of conflict of interest where N Srinivasan,one of the board’s senior members himself owned a team,are some of the recent instances of bad governance and abuse of power inside the board. The events following Lalit Modi’s tweet in which he divulged the ownership structure of the Kochi franchise revealed the nexus between the Board’s politician members and corporate houses. It also revealed the slapdash manner in which multi-crore contracts were awarded to entities.

Even as they bend backwards to keep BCCI in good humour,most sports broadcasters allege that they are always at the mercy of the board as it can anytime go back on its commitments,including the legal contracts it signs. What happened with Multi Screen Media (MSM) after the first year of IPL,is a case in point.

“After the spectacular success of IPL in the first year,Lalit Modi realised that the tournament had a better potential and just before the launch of the second season,it forced MSM to renegotiate the broadcast deal and raise the value of the contract by around 55 per cent to $1.6 billion for a period of nine years.”

And here is why MSM and other sports broadcasters continue to be in abusive relationship with BCCI—according to estimates,sports broadcasting is a Rs 2,500-3,000 crore industry in India and more than 80 per cent of this,the subscriptions and advertising included,is generated through cricket. Despite a hike in the contract value,MSM is happy with IPL in its kitty as it continues to bring windfalls.

“IPL’s consistently high viewership has driven our ad rates more than 400 per cent in the past four years vis-a-vis about 10 per cent increase in average non-cricket shows across channels and genres,” says Rohit Gupta,head,ad sales,Multi Screen Media Ltd,the network that airs IPL on its MAX channel.

To recoup the heavy investments made in buying the telecast rights,broadcasters are forced to extend their commercial breaks,a trend that has been criticised by observers and fans alike. In their book,The Business of Cricket,authors Shyam Balasubramanian and Vijay Santhanam lament the “excessive commercialisation of TV”.

“IPL’s greed in this regard has crossed all limits—no part of a player’s gear is left free of a brand name (this part of the revenue,incidentally,goes to franchisees); an ad is always preferred to an action replay for the viewers and nothing—not even the ground or the sight screen—is sacrosanct,” they write.

BCCI’s claims about improving the cricket infrastructure notwithstanding,the authors,both marketing experts and cricket fanatics,bemoan the “poor” facilities at most cricket stadiums. “That the richest cricket board in the world cannot even provide clean toilets is a real shame. Even the West Indies,whose board is among the poorest,has better facilities at its stadia…,” they say.

BCCI’s commercial greed and its apathy towards the fundamentals of the sport and even the business has been criticised by others too. Australian journalist and cricket writer Gideon Haigh has repeatedly pooh-pooed BCCI’s growing stature among cricket-playing nations and raised questions about the “brutish monopolist” and its “archaic and opaque” processes in his writings.

“India should dominate the cricket world,in a performance sense as well as an economic one. Indian fans shouldn’t be satisfied with anything less. They have the talent,the resources,the passion,the history. I do wonder how much of cricket’s incredible wealth in India actually goes into the enrichment of the game,as distinct from star players,commercial enterprises and political causes…,” he wrote recently.

Incidentally,Haigh’s writings suggest that the malaise of poor governance,the absence of disclosures,presence of members who bring no value to the table aren’t limited to BCCI and are a wide-spread phenomenon. In yet another article,he exhorts all the cricket boards to reconstitute their boards with members from diverse backgrounds and improve disclosure standards at all levels.

BCCI,like its other counterparts,has chosen to ignore such calls. “Our biggest asset is viewers and viewers are only interested in a good game. As long as our players continue to enthrall them,neither the viewers,nor we have anything to worry about,” says Shukla.

The Biggest Player
BCCI vs the other Boards
BCCI

* Is registered as a not-for-profit society under Tamil Nadu Societies Registration Act

* The board has 27 associations as its members

* The board members elect a president,secretary,treasurer and other officials

* The operations are run by a chief administrative officer while the secretary also has executive powers

* Is the richest cricket board. Had Rs 2,026 crore in revenues and Rs 190 crore in profits in 2010-11

Cricket South Africa

* Registered as a company CSA (Pty) Ltd and pays taxes

* The supreme policy making body is the General Council of CSA that comprises representatives of provincial unions and senior office-bearers of CSA

* The operational management is led by a CEO who reports to the General Council

* Reported an exceptionally high R 296 million (approx Rs 194 crore) in profits after taxes for 2010-11

Cricket Australia

* One of the oldest cricket boards formed in 1905,Cricket Australia is registered as a public company limited by guarantee (essentially,a non-profit entity that is allowed to make profits but the profits cannot be distributed to the members)

* Comprises six-member organisations that elect 14 directors to the governing board

* A team comprising a CEO and seven general managers is responsible for overall management. The team reports to the board

* Income for the year ended June 2010 was $133 million (approx Rs 651 crore) and profits,$22 million (approx Rs 108 crore)

England and Wales Cricket Board

* Is registered as a company limited by guarantee

* Has 40 members including around 18 counties

* Governed by a board comprising an elected chairman,deputy chairman,chairman of cricket and 11 directors

* Like all other sports governing bodies,is governed by the UK government’s Department of Culture,Media and Sport

* Had revenues of £106 million (approx Rs 787 crore) in 2010,the second highest in the group’s history though it made losses of £0.6 million (approx Rs 4.4 crore) for the first time in seven years