Owners of all eight franchises have signed a letter and sent it to the Indian Premier League and asked the body to put on hold the proposed changes regarding the league standing money and the hosting fee payable to the state associations that provide venues. The letter which was sent last weekend, was signed by Shah Rukh Khan (co-owner at Kolkata Knight Riders), Akash Ambani (Mumbai Indians), Kasi Viswanathan (CEO of Chennai Super Kings) and Parth Jindal (majority owner at Delhi Capitals).
According to a report in ESPNcricinfo, the objection comes following IPL intimating the eight franchises regarding the decrease of the league standing money, earned by the four teams that makes the play-offs. From the earlier sum of INR 50 crore, it has now been cut to half. The league standing money was introduced six seasons back when the franchises requested the BCCI to help out franchise owners with funds.
According to the current system, the IPL prize money is INR 50 crore and it split among the four teams that make the play-offs. The winner takes home INR 20 crore while the runner-up bags INR 12.5 crore and the third- and fourth-placed teams getting INR 8.25 crore each. This money is received by the players. However, the league standing money is earned by the franchises and going ahead,the IPL told franchises the prize money will remain the same but the standing fee would be reduced to INR 25 crore. With the new system, the winner would get INR 10 crore, the runner-up INR 6.25 crore and the third and fourth-placed teams would get around INR 4.12 crore approximately.
Another move that was proposed was the increase of the hosting fee per home match, payable to the respective state association. From INR 30 lakhs now, it has been proposed to be increased to INR 50 lakhs, which would mean a minimum of INR 1.4 crore has to be paid by the franchises to the state associations. BCCI also pays a similar amount to the state association, thus increasing the staging fee from INR 60 lakh per match to INR 1 crore.
The IPL reasoned that the hike in hosting fee was necessary to the state associations for the upkeep of the ground, stadium and other facilities.
The reason behind the hike has been deemed to be necessary for the state associations to look after the ground, stadium and other facilities.
But, various franchises have termed the move "arbitrary" and are angry with the lack of consultation despite being the primary stakeholders. In the email sent to the board, the owners have asked the IPL Governing Council to consider putting on hold the two proposals until the various sponsorship deals, including the current media rights deal, expires in 2022.
"We have to draw your attention to the changes which you have made with regards to the following: Increase fee by 66% payable by franchises to state associations. And reduce league standing fund which is reduced by 50% to franchises. We humbly request that the Governing Council defer the proposed changes till the end of the current media rights deal and thereafter enter into a consulting process with the various franchise owners to discuss any changes," the email reads according to ESPNcricinfo.
The report also adds that a franchise owner expressed his opinion regarding the IPL considering measures to stop the spread coronavirus during the staging of the cash-rich tournament.
"It should be a discussion. It shouldn't be arbitrary. If we you are going to make us pay more (to the state associations) and with the coronavirus less people will be coming, so how are we supposed to make money? As it is we don't make money through ticketing revenues. Secondly, why are being penalised?"
A chief executive at another fanchise said that the timing of IPL's decision to make the changes came as a surprise to many and it would affect budgets projected on a five-year term that wa slaid out in IPL's media rights deal in 2017.
"The budgets for this IPL has been frozen. We all had made our projections based on the media rights for five years. It was based upon the money we would get from the central pool as well as the prize money. But all of a sudden now they are taking arbitrary decisions like increasing the hosting fee by two-thirds and reducing the prize money by 50%. That is not fair. That is the reason we are requesting them to continue with this existing arrangement till the end of the current media rights cycle in 2022. All the IPL deals including title sponsorships etc. are till 2022," the franchise CEO said.
However, a senior BCCI official disagreed and said that the standing fee was introduced to help the franchises financially but now they are all stable and therefore, it is being revoked.
"There were certain concessions given when the franchises were bleeding, when they were not in a financially good state," the BCCI official said. "Those concessions were not part of the IPL contract with franchises. In 2014, the BCCI had decided to grant those concessions. And now that they are financially sound and everything is fine, those concessions have been withdrawn."