Indian businesses to get hurt after IPL switch

The Board of Control for Cricket in India BCCI wanted to stage the event overseas after failing to get government clearance for security cover as the tournament8217;s dates clash with the country8217;s general elections.

The IPL,which involves many of the world8217;s leading players,was a huge success in its inaugural edition in cricket-crazy India last year,primarily because it is structured around city-based franchises with a fan base in home and away matches.

Some analysts feel the shift would erode sizeable value from the Indian market for the second edition,adding to the woes from the global economic downturn.

8220;It will not be the same as having the tournament at home,8221; Latika Khaneja,director of Collage Sports Management said on Wednesday.

8220;Advertisers will renegotiate their deals following the unfavourable change of venue. The market is already down because of the recession.

8220;From what I understand the BCCI is to bear the losses incurred by the franchises,8221; she added.

Owners of the franchises include a leading Bollywood actor,one of the world8217;s richest men and a Formula One team boss.

The commercial success of the first edition saw the IPL contribute close to 1 billion rupees 19.65 million to the exchequer last year,but the BCCI does not expect to make much profit this time due to huge extra costs involved.

Value For Money?

The BCCI has reportedly sanctioned an initial 10 million to the league to cover the costs of the switch and is willing to triple that sum. It is also ready to underwrite a part of the franchises8217; expenditure.

Indian media has speculated the loss of revenue to small ancillary firms,merchandising companies,local sponsors and entertainment companies alone could be between 500 million and 750 million rupees.

The loss from gate receipts is estimated at over 500 million rupees. 8220;The hospitality industry will especially suffer,8221; Lokesh Sharma of 21st Century Media,a sports management and syndication firm,told Reuters. 8220;That8217;s 10,000 rooms per night. Also the airline industry and tourism will be hit.8221;

However,the shift might actually add value to the IPL,added Sharma. 8220;It will now be viewed as a truly international tournament and that8217;s value addition. I don8217;t see the major sponsors being affected,I think they will gain from it.8221;

A spokesman for title sponsor DLF,India8217;s largest listed property firm,said the league was still value for money despite the overseas shift.

8220;It8217;s a TV event. Ninety-nine percent are TV viewers. We8217;re confident of getting as much brand visibility as last year,8221; DLF8217;s Sanjey Roy said.

The IPL has said match timings will suit prime time television in India,enjoying global cricket8217;s largest viewership and the game8217;s financial hub.