Indian Premier League

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Presentation Transcript

Indian Premier League : 

Indian Premier League Franchise Valuations

Presentation Flow : 

Presentation Flow Introduction IPL Business Model Valuation of Franchise Tangible Valuation Intangible Valuation Summary

Introduction : 

Introduction

Introduction : 

Introduction Indian Premier League (IPL) : Twenty20 cricket competition based on double round robin format initiated by BCCI in 2008 Eight Franchise from 2008-2010, two new franchise to be introduced from 2011 onwards Second highest paid league globally based on first team salaries on pro rata basis* , next only to NBA First sporting event broadcasted live on YouTube * According to the inaugural annual review of Global Sports Salaries – Source espnstar.com, sportingintelligence.com

Slide 5: 

Source: espnstar.com; Cricinfo; Times of India

IPL Business Model : 

IPL Business Model

Why Franchisee Bids in IPL ? : 

Why Franchisee Bids in IPL ? Sports a lucrative, profitable business globally Use cricket property as publicity vehicle and promote other business Build the brand, enhance it and sell it to gain profit Sell the brand to public by listing on stock markets IPL : “ Incoming Paisa League”

The Gambling Dashboard : 

The Gambling Dashboard

Valuation of Franchise : 

Valuation of Franchise

Tangible Valuation : 

Tangible Valuation

Revenues : 

Revenues Central revenues TV Rights ( 80 % for first 5 years and 60 % for year 6-10) Central sponsorships ( 60% for 5 years) Theatrical rights Internet rights Blimp ad revenues Prize Money Local Revenues: Ads between overs @ stadium Ground sponsorships After match parties

Slide 12: 

* All figures in Rs Cr ; Source ESPNSTAR; Times of India; Financial Express

Extra Earnings : 

Extra Earnings Team Sponsorships Shirt sponsorships Merchandise sale Marketing Benefits Licensing Hospitality Gate Receipts Boundary ads

Slide 14: 

* All figures in Rs Cr; Source ESPNSTAR; Times of India; Financial Express

Costs involved : 

Costs involved Franchise Fee Player Salaries Media promotions Stadium fees Administrative costs Travel and stay

Slide 16: 

* All figures in Rs Cr; Source ESPNSTAR; Times of India; Financial Express

Slide 17: 

Profit Expected(CSK) Total Current Value = Rs 191.92 Cr Continuing Value = 71*1.05/(.12-.05) = 1065, discounted to PV = Rs 342.9 Cr Total Value = Rs 534.8 Cr Assumption: Terminal Growth rate = 5% ; Cost of capital, r = 12%; DF = 1/(1+r)^T

Intangible Valuation : 

Intangible Valuation

Factors affecting Valuation : 

Factors affecting Valuation Hard Measures: Heritage: Not very relevant currently Popularity: Website visits; Stadium occupancy; Registered members; TV viewership International appeal: Target global audience Local appeal: Indian audience Loyalty IPL record * Source MTI Consulting; Times of India; Intangible Business Ltd

Factors affecting Valuation : 

Factors affecting Valuation Soft Measures: Passion of owning a team Owner’s persona: Impact of team owner on brand Celebrity Quotient Cricket, a religion in India commands premium Newsmaker Permanent Invites to IPL functions Superstars or Icon Players * Source MTI Consulting; Times of India; Intangible Business Ltd

Summary : 

Summary

Summary : 

Summary IPL- A product of new India Risks: Political, Global, Money Laundering, Greed Based motivation Win-Win for players and Viewers Income for Government through taxes Potential upside for Franchise if they go public in future All and all IPL is truly 99% entertainment and 1 % sport and there is something

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