BUSINESS MODEL y A Business Model describes the rationale of how an organization creates, delivers, and captures value- economic,

social, or other forms of value. The process of business model design is part of business strategy. In theory and practice the term business model is used for a broad range of informal and formal descriptions to represent core aspects of a business, including purpose, offerings, strategies, infrastructure, organizational structures, trading practices, and operational processes and policies. Hence, it gives a complete picture of an organization from highlevel perspective. Whenever a business is established, it either explicitly or implicitly employs a particular business model that describes the design or architecture of the value creation, delivery, and capture mechanisms employed by the business enterprise. The essence of a business model is that it defines the manner by which the business enterprise delivers value to customers, entices customers to pay for value, and converts those payments to profit: it thus reflects managements hypothesis about what customers want, how they want it, and how an enterprise can organize to best meet those needs, get paid for doing so, and make a profit. Business models are used to describe and classify businesses (especially in an entrepreneurial setting), but they are also used by managers inside companies to explore possibilities for future development. Finally, well known business models operate as recipes for creative managers

IPL as a Business Model The Indian Premier League is a T20 cricket competition promoted by the BCCI and is modeled on the same lines as footballs EPL or basketballs NBA. It works on franchise system wherein the teams (presently 8; going up to 10 from the next season) representing different cities are auctioned and the highest bidder is awarded the rights to own and run the team for ten years. Over a span of just three years, it has become a business phenomenon, even overshadowing what it stands for, that is cricket, involving leading business groups, bollywood stars and the entire nation alike.

IPL as a business model has following major stakeholders:

BCCI Franchises Sponsors Players Spectators

Unlike its counterparts such as EPL or NBA, the major source of revenue for IPL is not stadium ticket sales but media rights. Other sources of revenue for IPL are title sponsorship, the sale of franchises and licensed merchandise and products. A part of the revenues so raised are retained by the BCCI, a part distributed as prize money and the remaining is divided equally among the franchises based on a pre agreed model. To understand the exact structure of the business model, we can break the cash flow for each of the stakeholders as inflow and outflow as follows:

BCCI inflow: The biggest source of revenue for the BCCI so far has been the proceeds from franchise bids amounting to a total of $1.42bn. Another major source of revenue is media rights that were awarded to Sony for $1bn for a period of 10 years and starting from IPL-3, an undisclosed amount for media streaming rights awarded to Youtube. Title sponsorships (DLF, Coca Cola etc.) form another big chunk of the revenues. Finally, proceeds from stadium tickets, merchandise sales etc. complete the list of major sources of revenues for IPL.

BCCI outflow: Apart from the revenues generated from the bidding of franchises, almost all other revenues are shared with the franchises in different proportions. Product Management Team bidding

Player Valuation y Cricket player valued for his on-the-field and perhaps, off-the-field performance.

Estimating the value of a player having different attributes using hedonic price equation

Where is the final bid price paid to a cricketer I for the IPL tournament and value of the attribute j of the cricket player i.

is the

FINANCE MANAGEMENT OF IPL

Media Rights Central Revenue IPL Bid Amount Franchise Rights

Player revenues y y y y y Firm v/s Basic Agreement Prize Money Bonuses w.r.t position at which the team finishes Salaries 2.5- Second only to NBA Daily Allowance by IPL- 100s per day

The Broadcasting angle The BCCI created history when it sold television rights of his yet un tested format to Sony- World sports consortium for US$ 1.02bn US$ 1.02bn

(-) US$ 108mn(promotion expences)

US$ 316mn (Broadcasting rights first 5 yrs)

US$ 608mn (Broadcasting rights 5yrs)

Ad Revenues Advertising revenues for Broad caster have seen a steady increase since inception of ipl

y y y

IPL 2008-3 Lakh for every 10 secs IPL 2009-4 Lakh for every 10 secs IPL 2010-5 Lakh for every 10 secs

IPL Sponsors y y y y y y y y Vodafone Citi Hero Honda Pepsi ITC-welcome group S-max DLFA Building india Kingfisher Airlines

IPL 20%

Media Rights

Prize money 8% BOX OFFICE y y y y y

franchise 78%

Theres a decline in the number of releases owing to IPL IPL fever has a negative rub off on the revenues of the movies at the box office Some of the movies releasing in the IPL session are, U me aur ghost, love sex aur dhoka etc. Multiplexes like Cinemax and PVR screen all the matches. Tals are also on to tele cast the semi-finals and finals in 3D.

Franchisee Revenues y y y y Media rights To be shared equally amongst franchises after removing IPLs share. Sponsorships(IPL Sponsors)- 60% of the amounted collected to be distributed equally amongst the franchises. Local sponsorships- Team sponsorships revenves Gate receipts- Are anticipated to be a mojaor source of revenues.20% of tickets are to be allocated to IPL.

Government Revenue y y y IPL season1 : 91 cr IPL season2: major loss of revenues as the IPL held in South Africa. IPL season3 : 200cr

Direct Tax: Rs 100cr Tax reducted at source(TDS) from the remunereation paid to players ,umpires,coaches and commentators.

Service Tax: Rs 100 cr Advertising, marketing and consultancy services

MARKETING MANAGEMENT Marketing Strategies: y y y y y y y y y y Auctioning of franchises. Auctioning of Players. Advertisements on various t.v. and radio channels Worldwide telecast of the matches Locations of the matches i.e. match of a particular team in its city. Timing of the matches was those when the public was generally free and at home. Rivalry with ICL. Franchisees taken by films stars and well known industrialists. Opening and closing ceremony gala. Live concerts.