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LKM Blogs
One man's ego is costing BCCI crores!
By Lalit K. Modi - 6th February, 2012

 

Years of effort went into making the BCCI the most cash rich cricket body in the world.  This helped us provide players with better infrastructure, coaches, facilities, team staff, stadiums and increased pay.
A carefully made edifice is being shattered by one man- Narayanswamy Srinivasan who is unmindful of the consequences of his actions.
During my term at the BCCI, I had concluded deals, which benefitted the Board to the tune off approximately USD 7 billion. Notable amongst these were media rights deal with Nimbus for four years of USD$612 million in 2006, team sponsorship deal with Sahara for four years of USD$103 million in 2005, team apparel sponsor deal with Nike for four years worth USD$53 in 2006, BCCI sponsorship deal with WSG for USD$46million in 2007, Indian team overseas rights with Zee TV for around USD$200 m, the Indian Premier League eight franchisees for USD$723.59 million in 2008,ESPN deal for CLT20 global rights for USD$1 billion in 2008, IPL Media Rights Deal with Sony-WSG for USD$1.26 Billion in 2008 , web media rights of BCCI for USD$50 million in 2008 , IPL title sponsorship and ground sponsors for  UDS$220 million in 2008 , Renegotiated Sony- WSG IPL Media rights from $1.26 billion to over USD$2.16 billion on in 2009, Nimbus Communications four year deal for the rights to India's home international games at USD$431 million in 2009 ,IPL Theatrical Rights Deal with ESD for over USD$ 100 million in 2009, IPL Entertainment Broadcast deal with Viacom for over USD$30 Million in 2010, the Indian Premier League two  franchises  for USD$723.59 million in 2010 .
This resulted in BCCI being able to invest in the future of cricket and in ensuring new stadiums and academies. It also ensured that existing infrastructure could be easily upgraded. Take a look at the cricket infrastructure before 2006 and after the sponsorship deals. The stadiums, the academies and the other facilities for players and fans have improved exponentially from what it was.
It has also unfortunately allowed people –with vested interest - not connected with the game to come into the game, with the single agenda to control it.
However Srinivasan’s style of functioning has been the bane for BCCI.
First Srinivasan, as treasurer, inexplicably allowed bank guarantee of US $60 million in relation to the breach of telecasting rights by Zee TV to lapse.  It allowed Zee TV to go scot free at the cost of BCCI with nothing more than an admission of mistake from him.
While, to safeguard BCCI's interests, for the two new franchises to be inducted in IPL, I had proposed bank guarantees of the full bid amount and only those companies that had a net worth of US$1 billion from potential bidders, the BCCI with Shashank Manohar and Srinivasan at the helm took the step of reducing the bank guarantee amounts to one tenth and trashing the net worth clause altogether. Consequently when the Kochi franchise defaulted due to weak financials the only recourse BCCI had was to encash the bank guarantee of USD$ 33 million as against a whopping USD$ 333 million which I had proposed resulting in a straight loss to BCCI to the tune of USD$ 300 million.
The last twenty months have seen BCCI on a termination spree. To name a few, Srinivasan terminated Rajasthan Royals franchise, Kings XI Punjab franchise, WSG contracts for IPL, IPL-GCV web and digital rights contract, IPL- ESD Theatrical Rights Deal, IPL-Viacom Entertainment Broadcast deal. Not only were important revenue streams lost in the process but also it put BCCI in a legal quagmire.
While the Rajasthan Royals and Kings XI Punjab obtained interim orders against the BCCI from Bombay High Court, WSG was granted orders by the Indian Supreme Court which secured the entire contract amount with all gains in an escrow arrangement thus effectively securing WSG with no gain to BCCI.
The only contract, which Srinivasan portrayed as enhancing BCCI’s revenue, was the revised Sony Media rights agreement of the year 2010 allegedly enhancing revenue by USD$ 80 million. What was however implicit in the said arrangement was dilution of the BCCI's bank guarantee provisions to favour Sony and put BCCI at a risk. Also giving up BCCI's right to exploit 150 seconds of FCT (FREE COMMERCIAL TIME) - which I had negotiated on behalf of the BCCI, and Sony had agreed for BCCI to exploit - had a potential revenue amount of nearly USD$ 150 million.
The scrapping of the Nimbus contract, which had been one of the best-negotiated contracts in BCCI’s favour, followed this. The decision to terminate Nimbus' contract, three years before its expiry and that to before encashing the bank guarantee leaves the Indian team without a broadcaster and at the same time cost 300 crores (INR) rupees worth of bank guarantees.
The latest in the series is Sahara severing financial ties with the BCCI and also pulling out of the IPL by withdrawing from Pune Warriors ownership just hours before the IPL 5 players' auction. According to Sahara it felt that its genuine requests were not being addressed by the current BCCI regime, which maintained a high handedness in turning down its requests. This high handedness was evident in the way Srinivasan arrogantly handled concerns raised by Sahara Sri. The first request that Sahara wanted was that it had made its bid based on a 94-match schedule that IPL had promised.
When the schedule was reduced to 74 matches, Sahara wanted some concession on the amount payable to BCCI. The second request that Sahara made was that since Yuvraj Singh was unwell and could not play IPL 5 his price be added to their auction purse.
Their first demand was reasonable and as for their second demand there have been so many changes of rules to suit some team owners it was only fair - that Sahara was asking for a level-playing field.
IPL was set up to ensure even playing field for all the teams. In that scenario rules can and should be made which benefits all or none. I have always maintained that the IPL should never go the EPL way and have a few top teams in the running for the title. That is against the very philosophy of the IPL. Only when every team has a chance of winning the title, does the league get exciting. But unfortunately now some team owners are trying to manipulate the league. This will hurt everyone. No team should become bigger than the league. 
In Champions League modification of rules was allowed for one team to field five foreign players. Why - when it was a rule that no more than four foreign players should be allowed. This was a big concession.
Trading rules too have changed in the past two years.
So Sahara had a grievance as far as their team is concerned. Keeping in mind the past year was their first year. They also had a disadvantage as previous teams were allowed to keep some of their old players.
I am not saying Sahara's demand for an extra purse is justified. But what their main frustration was that rules were being bent for one franchise - but when Sahara brought up an issue it was ignored; they cannot take decisions like this lightly. There is more than what's appeared in the press as to why they wanted to walk away.
There must have been a serious disconnect between Sahara and the current BCCI set-up.
In the end now with probably 8 teams and about 59 games in the fifth edition of the IPL will result into a loss of 2 billion USD or INR 10,000 crores with contracts being cancelled or downsized or lost by this administration.
Surprised? Don’t be. Add up the losses because of the Zee contract, Kochi contract, Sahara contract for Team India, Sahara contract for IPL team, and reduction of Sony guarantee money due to less number of teams and games and your math will fall around the same figure.
This will have direct consequences in the future on our ability to upgrade infrastructure, build new stadiums, new academies. This money would have helped us provide better coaching at grass roots level and grounds to young players.
Consequently it would mean fewer subsidies to state associations, because states survive on the grant from BCCI revenue, with 80% of the central revenues being distributed equally.
Someone needs to answer why this is being done?
BCCI will say they will replace Nimbus with another broadcaster, which I am sure they will.
But will they be able to bring in a broadcaster at the same or higher price? I think not.
Did we replace Zee? No, because there was no buyer then.
BCCI will now say they can re-auction the two new teams in the IPL. But will they get USD 700 million for two new teams and that too in such limited time? I guarantee they will not.
In the end if all stakeholders in the game are not seeing increase in their values, why will they keep investing in the game? If ratings continue to drop, why will we expect them to shell out more?
If fans keep getting disappointed and we keep changing the rules and the goal post they too will not return. Fans are critical to the game. They are the lifeline of the sport. With such massive changes in players from teams, the loyalty factor will also suffer.  
Fans want better facilities in stadiums, better production value on their screens, they want consistency and performance from our players. When I was in charge, I ensured that the interest level in the IPL began atleast 5-6 months before the event with new innovations, new partners, greater entertainment value to the fans.
They already have hundreds of channels beaming all sorts of content to them and vying for their attention. Let's not take them for granted - because we are a cricket-loving nation, lest we forget that we were once a hockey-loving nation and hockey was the national sport.
Well rest as they say is history.

Ego has a voracious appetite, the more you feed it, the hungrier it gets. And see how the ego of one man has brought BCCI to the brink of disaster.

Years of effort went into making the BCCI the most cash rich cricket body in the world.  This helped us provide players with better infrastructure, coaches, facilities, team staff, stadiums and increased pay.

A carefully made edifice is being shattered by one man- Narayanswamy Srinivasan who is unmindful of the consequences of his actions.

During my term at the BCCI, I had concluded deals, which benefitted the Board to the tune off approximately USD 7 billion. Notable amongst these were media rights deal with Nimbus for four years of USD$612 million in 2006, team sponsorship deal with Sahara for four years of USD$103 million in 2005, team apparel sponsor deal with Nike for four years worth USD$53 in 2006, BCCI sponsorship deal with WSG for USD$46million in 2007, Indian team overseas rights with Zee TV for around USD$200 m, the Indian Premier League eight franchisees for USD$723.59 million in 2008,ESPN deal for CLT20 global rights for USD$1 billion in 2008, IPL Media Rights Deal with Sony-WSG for USD$1.26 Billion in 2008 , web media rights of BCCI for USD$50 million in 2008 , IPL title sponsorship and ground sponsors for  UDS$220 million in 2008 , Renegotiated Sony- WSG IPL Media rights from $1.26 billion to over USD$2.16 billion on in 2009, Nimbus Communications four year deal for the rights to India's home international games at USD$431 million in 2009 ,IPL Theatrical Rights Deal with ESD for over USD$ 100 million in 2009, IPL Entertainment Broadcast deal with Viacom for over USD$30 Million in 2010, the Indian Premier League two  franchises  for USD$723.59 million in 2010 .

This resulted in BCCI being able to invest in the future of cricket and in ensuring new stadiums and academies. It also ensured that existing infrastructure could be easily upgraded. Take a look at the cricket infrastructure before 2006 and after the sponsorship deals. The stadiums, the academies and the other facilities for players and fans have improved exponentially from what it was.

It has also unfortunately allowed people –with vested interest - not connected with the game to come into the game, with the single agenda to control it.

However Srinivasan’s style of functioning has been the bane for BCCI.

First Srinivasan, as treasurer, inexplicably allowed bank guarantee of US $60 million in relation to the breach of telecasting rights by Zee TV to lapse.  It allowed Zee TV to go scot free at the cost of BCCI with nothing more than an admission of mistake from him.

While, to safeguard BCCI's interests, for the two new franchises to be inducted in IPL, I had proposed bank guarantees of the full bid amount and only those companies that had a net worth of US$1 billion from potential bidders, the BCCI with Shashank Manohar and Srinivasan at the helm took the step of reducing the bank guarantee amounts to one tenth and trashing the net worth clause altogether. Consequently when the Kochi franchise defaulted due to weak financials the only recourse BCCI had was to encash the bank guarantee of USD$ 33 million as against a whopping USD$ 333 million which I had proposed resulting in a straight loss to BCCI to the tune of USD$ 300 million.

The last twenty months have seen BCCI on a termination spree. To name a few, Srinivasan terminated Rajasthan Royals franchise, Kings XI Punjab franchise, WSG contracts for IPL, IPL-GCV web and digital rights contract, IPL- ESD Theatrical Rights Deal, IPL-Viacom Entertainment Broadcast deal. Not only were important revenue streams lost in the process but also it put BCCI in a legal quagmire.

While the Rajasthan Royals and Kings XI Punjab obtained interim orders against the BCCI from Bombay High Court, WSG was granted orders by the Indian Supreme Court which secured the entire contract amount with all gains in an escrow arrangement thus effectively securing WSG with no gain to BCCI.

The only contract, which Srinivasan portrayed as enhancing BCCI’s revenue, was the revised Sony Media rights agreement of the year 2010 allegedly enhancing revenue by USD$ 80 million. What was however implicit in the said arrangement was dilution of the BCCI's bank guarantee provisions to favour Sony and put BCCI at a risk. Also giving up BCCI's right to exploit 150 seconds of FCT (FREE COMMERCIAL TIME) - which I had negotiated on behalf of the BCCI, and Sony had agreed for BCCI to exploit - had a potential revenue amount of nearly USD$ 150 million.

The scrapping of the Nimbus contract, which had been one of the best-negotiated contracts in BCCI’s favour, followed this. The decision to terminate Nimbus' contract, three years before its expiry and that to before encashing the bank guarantee leaves the Indian team without a broadcaster and at the same time cost 300 crores (INR) rupees worth of bank guarantees.

The latest in the series is Sahara severing financial ties with the BCCI and also pulling out of the IPL by withdrawing from Pune Warriors ownership just hours before the IPL 5 players' auction. According to Sahara it felt that its genuine requests were not being addressed by the current BCCI regime, which maintained a high handedness in turning down its requests. This high handedness was evident in the way Srinivasan arrogantly handled concerns raised by Sahara Sri. The first request that Sahara wanted was that it had made its bid based on a 94-match schedule that IPL had promised.

When the schedule was reduced to 74 matches, Sahara wanted some concession on the amount payable to BCCI. The second request that Sahara made was that since Yuvraj Singh was unwell and could not play IPL 5 his price be added to their auction purse.

Their first demand was reasonable and as for their second demand there have been so many changes of rules to suit some team owners it was only fair - that Sahara was asking for a level-playing field.

IPL was set up to ensure even playing field for all the teams. In that scenario rules can and should be made which benefits all or none. I have always maintained that the IPL should never go the EPL way and have a few top teams in the running for the title. That is against the very philosophy of the IPL. Only when every team has a chance of winning the title, does the league get exciting. But unfortunately now some team owners are trying to manipulate the league. This will hurt everyone. No team should become bigger than the league. 

In Champions League modification of rules was allowed for one team to field five foreign players. Why - when it was a rule that no more than four foreign players should be allowed. This was a big concession.

Trading rules too have changed in the past two years.

So Sahara had a grievance as far as their team is concerned. Keeping in mind the past year was their first year. They also had a disadvantage as previous teams were allowed to keep some of their old players.

I am not saying Sahara's demand for an extra purse is justified. But what their main frustration was that rules were being bent for one franchise - but when Sahara brought up an issue it was ignored; they cannot take decisions like this lightly. There is more than what's appeared in the press as to why they wanted to walk away.

There must have been a serious disconnect between Sahara and the current BCCI set-up.

In the end now with probably 8 teams and about 59 games in the fifth edition of the IPL will result into a loss of 2 billion USD or INR 10,000 crores with contracts being cancelled or downsized or lost by this administration.

Surprised? Don’t be. Add up the losses because of the Zee contract, Kochi contract, Sahara contract for Team India, Sahara contract for IPL team, and reduction of Sony guarantee money due to less number of teams and games and your math will fall around the same figure.

This will have direct consequences in the future on our ability to upgrade infrastructure, build new stadiums, new academies. This money would have helped us provide better coaching at grass roots level and grounds to young players.

Consequently it would mean fewer subsidies to state associations, because states survive on the grant from BCCI revenue, with 80% of the central revenues being distributed equally.

Someone needs to answer why this is being done?

BCCI will say they will replace Nimbus with another broadcaster, which I am sure they will.

But will they be able to bring in a broadcaster at the same or higher price? I think not.

Did we replace Zee? No, because there was no buyer then.

BCCI will now say they can re-auction the two new teams in the IPL. But will they get USD 700 million for two new teams and that too in such limited time? I guarantee they will not. In the end if all stakeholders in the game are not seeing increase in their values, why will they keep investing in the game? If ratings continue to drop, why will we expect them to shell out more?

If fans keep getting disappointed and we keep changing the rules and the goal post they too will not return. Fans are critical to the game. They are the lifeline of the sport. With such massive changes in players from teams, the loyalty factor will also suffer.  

Fans want better facilities in stadiums, better production value on their screens, they want consistency and performance from our players. When I was in charge, I ensured that the interest level in the IPL began atleast 5-6 months before the event with new innovations, new partners, greater entertainment value to the fans.

They already have hundreds of channels beaming all sorts of content to them and vying for their attention. Let's not take them for granted - because we are a cricket-loving nation, lest we forget that we were once a hockey-loving nation and hockey was the national sport.

Well rest as they say is history.

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