Cricket’s Midas Man

AHEAD OF THE mega auction of media rights for Indian Premier League (IPL) for the 2023-2027 seasons in June 2022, Board of Control for Cricket in India (BCCI) secretary Jay Shah manoeuvred an unexpected and unprecedented shot. Shah, who took over in 2019, was confident that given the rapidly crashing data rates in the country, an additional revenue channel could be built around the evolving digital ecosystem. He engaged the big four consulting firms for the best possible solution. KPMG, EY, Deloitte and PwC provided the board with inputs on how to enhance its revenue potential and create additional revenue baskets. One of them suggested unbundling of media rights into separate TV and digital bids. BCCI promptly implemented the move.

Rest is history. Media rights for IPL 2023-2027 seasons were finally sold for an unprecedented ₹48,390.5 crore (worth $6.2 billion then) to Disney Star and Viacom 18. That catapulted IPL to among the world’s biggest and richest leagues with a valuation of $16.4 billion as of June 2024, according to global investment bank Houlihan Lokey.

“To work out the marketing model, we roped in advisors from the Big Four. Good ideas are always welcome. We split digital out of TV and the digital rights have exceeded the value of TV and we had clearly anticipated this,” Shah tells Fortune India in an exclusive interaction.

As per the new formulae, the rights were bid out under four packages: While Disney Star bagged the TV rights for India at ₹23,575 crore in the first package, Viacom 18 won the digital rights for India at ₹20,500 crore. Under the third package, Viacom 18 bagged digital broadcast rights for select matches for ₹3,258 crore. Additionally, along with Times Internet, it won the rights for the rest of the world for ₹1,057 crore in the fourth package.

To put this in perspective, the 2022 mega auction fetched BCCI almost three times of ₹16,347.5 crore it grossed from Star India in 2017 for 2018-2022 seasons. Also, it was about an eight-fold jump from the 2008 bid worth ₹8,200 crore, when Sony Pictures Network won media rights for 10 years from 2008 to 2017.

Identifying how reasonable data cost could play out in sports, especially cricket, turned into an innovative funding model. “We have the cheapest data globally. I was pretty sure that people will see matches more on the digital platforms. We were used to TV. Now the culture is changing. People are on the go most of the time. So that was the idea behind it,” says Shah.

Shah’s intervention lent the Midas touch, sending BCCI cash registers ringing. It remains a high point in his career as a cricket administrator, which began in 2009 when he joined the Central Board of Cricket (Ahmedabad). He rose to the position of joint secretary of the Gujarat Cricket Association in 2013 and joined BCCI in 2015 as an executive member of the finance and marketing board. In 2019, Shah was elected as the youngest secretary of BCCI and two years later he ascended as youngest president of the Asian Cricket Council.

In fact, former CAG Vinod Rai, who headed BCCI Committee of Administrators (COA) appointed by the Supreme Court on January 30, 2017, says his focus was “free and fair” auction with no scope for any leakage. “The trajectory has been maintained by the current BCCI leadership for the next cycles which this administration has auctioned,” says Rai.

Professor Ratnakar Shetty — the longest-serving BCCI administrator — tells Fortune India that the bidding model for broadcast rights has got refined with the digital boom. “Initially, only telecast rights were given. When the Internet era began, BCCI started moving tenders for Internet and telecast rights. Slowly Internet rights have taken over the telecast rights. So there are two channels of income now under media rights. What used to be telecast rights only are now telecast plus digital rights,” says Shetty.

As a consequence, BCCI is now a global powerhouse commanding mega heft in international cricket. As per the revenue-sharing arrangement announced by ICC for the 4-year block (2023 to 2027), BCCI is entitled to 38.4% revenue share worth $230 million annually in the earnings of International Cricket Council (ICC). The next best are being shared by England and Wales Cricket Board (ECB) and Cricket Australia, a distant second and third, with annual revenue of $41 million (6.89%) and $37.53 million (6.25%), respectively.

Shah: The Man And His Approach

Shah’s approach towards cricket administration is very simple and reflects the clarity with which he handles the Indian cricketing ecosystem. A strong proponent of performance, he stresses on a single point agenda of focusing on the players and the requisite infrastructure. “If you strengthen the game of cricket, money will be a by-product,” he tells Fortune India. In fact, from the very beginning of his career, at Central Board of Cricket (Ahmedabad) and later at GCA and BCCI, Shah’s single-point focus has been enhancing the facilities, and putting in place a player-friendly atmosphere. “At GCA, we ensured nutritious food, good infrastructure and transparent selection,” says Shah. Between 2009 and 2019, Gujarat won its maiden Ranji Trophy title; two Syed Mushtaq Ali trophies and one Vijay Hazare Trophy.

The Reign At BCCI

On BCCI pitch, apart from the successful IPL auctions, Shah’s mantra of enhancing “performace” by providing the best facilities and infrastructure has seen a meteoric rise for Indian cricket. When he took charge, India was ranked number three in ODI, fourth in T20 and second in tests. By 2022, India was number one in all formats.

From lucrative media deals during pandemic, hosting world cup at home, salary hike for domestic cricketers (2021), equal pay for men and women players (2022), Women Premier League launch in 2023, and the mega IPL media rights deal in 2022, Shah’s CV has it all.

“I was surprised at the pay disparity between men and women players when I joined the board. I decided, and people welcomed the decision, to enhance payment to women players to ₹15 lakh in Test, ₹6 lakh in ODI and ₹3 lakh in T20 from ₹1 lakh per T20/ODI match and ₹2.50 lakh per Test earlier. The match fees are now at par with men’s players. Players also receive annual contract amounts of ₹50 lakh in Grade A, ₹30 lakh in Grade B and ₹10 lakh in Grade C,” says Shah.

Women’s Premier League

Women IPL, one of Shah’s brainchild, inaugurated in September last year, has a significant revenue potential, which will further boost BCCI’s kitty, even though Shah affirms revenue is not the motive behind the league. “Fortunately, the way we created the brand and the way the girls played; we have the same sponsors in WPL and IPL. We have Tata and CEAT. We have many common sponsors. They also believe in the brand,” says Shah. Viacom 18 has bagged the WPL media rights till 2027 for ₹951 crore.

In what is a big hit for the inaugural edition, WPL logged a valuation of $150 million in 2023, which has since grown 8% to $160 million this year, according to D&P Advisory, a consulting, advisory and valuation firm.

Domestic Cricket: The Font

But at the core of everything remains domestic ground-level cricket, an agenda close to Shah. A majority 70% of the board’s revenue is shared with the states. Also, the sponsorship deal is designed as a combo package. The moment sponsors bag the bilateral, they get the Duleep Trophy, too. Ultimately, the revenues are spent on the players. As per the funding structure between BCCI and the state associations, telecast rights for bilateral matches are sold on behalf of state units and 70% of revenue from the rights is vested with the associations which are expected to deploy it on the players and the game.

IPL, The Feather In BCCI Cap

That said, IPL continues to grow in terms of both popularity among fans as well as financially. Vinod Rai prefers calling it “sportstainment” model. “It must be said that this is absolutely a fantastic model of IPL, wherein one can sit with family after a hard day’s work, and watch T20 being played over dinner. The model, which took shape in 2008, actually changed the fortunes of BCCI. Before that it was a good sporting body, but it was not rich like Cricket Australia or ECB,” adds Rai.

Under Shah, IPL has only ascended to new heights. Seen in the context of media rights, IPL dwarfs the next big league — Big Bash Australia. Against IPL’s ₹48,390.5 crore deal for 5 years (2023-2027), Big Bash Australia has sold media rights worth $1.5 billion (₹12,500 crore) for a 9-year period (2023-2031).

Numbers reveal how IPL has added to the financial muscle of BCCI. From ₹119 crore, or 13%, of BCCI’s income in FY11, surplus from IPL grew to ₹2,444 crore in FY23, comprising 37% of the board’s total income.

IPL’s business value, according to Houlihan Lokey, has grown to $16.4 billion as of June 2024 from $8.5 billion in 2022. IPL Brand Valuation Report by advisory firm Duff and Phelps in 2018 valued the IPL ecosystem at $6.3 billion. “Today, IPL commands widespread recognition, firmly entrenched as a household name with a robust brand recall among successive generations,” says Harsh Talikoti, senior vice president, corporate valuation advisory services, Houlihan Lokey, in the report.

“IPL is an advertiser’s delight and the most coveted asset in cricket. On an average, a T20 match will have around 80 to 100 ad slots strategically placed between overs, innings break, timeouts, and after fall of wickets. This year, advertisers ranging from fantasy apps to FMCG, fintech, banks, and electronics jumped on the IPL bandwagon by releasing new and innovative TV commercials,” the report says. As per BARC data, 44.8 crore tuned in to Disney Star in the first 22 days of IPL 2024 during which 26 matches were played. This translated into a total watch-time of 18,800 crore minutes on television, according to the report.

No wonder the valuation of the IPL teams is also growing. Chennai Super Kings tops the chart with a valuation of $231 million in 2024 followed by Royal Challengers Bangalore at $227 million, according to Houlihan Lokey.

The Financial Prowess

Significant strides in IPL and now WPL mean that BCCI’s financial stature has only grown. Shah’s Midas touch has added sheen to BCCI’s balance sheet. Decades back, the board would primarily depend on state-level tournaments but the entertainment-cum-revenue model of the Indian Premier League changed all that. BCCI reported a revenue of ₹6,558 crore in FY23 (the latest available), up a whopping 50% over ₹4,360 crore it earned in FY22. This is also a significant jump from the pre-IPL era when total income stood at ₹652 crore (2006-07). In fact, in CAGR terms, revenues have grown 14% annually in the last 14 years.

Grant of media rights, too, has been a major contributor in making BCCI the richest cricket body globally. Income from media rights stood at ₹2,525 crore in FY23, more than double from ₹1,138 crore in FY22. Also, the share of media rights in total revenue in FY23 stands at 38.5%.

Sporting Infra Facelift

With cash registers ringing, money is finding its way into the sports infrastructure in line with Shah’s core philosophy: Development of infrastructure and players. With his experience at GCA of constructing the Narendra Modi stadium, the world’s largest with a capacity of 1.32 lakh, Shah oversaw many other marquee projects. State-of-the-art National Cricket Academy (NCA) in Bengaluru was inaugurated a month back, which will go a long way in honing fresh cricket talent in the country. The 40-acre facility boasts of three grounds, 86 pitches (including indoor and outdoor) and 45 outdoor net practice pitches. “It is not only the skills required for the game. We need to focus on the mental health and holistic development of players, too. NCA offers a wide array of facilities to the players addressing all their needs,” Shah adds.

Next, Shah has put in place plans for smart stadiums across the country. “My vision is to build smart stadiums across the country. We have financial constraints but are working hard to implement it. We are already in discussion with all big companies like Hitachi and Cisco to start smart stadiums all over the country,” says Shah. A smart stadium is a Wifi-enabled fully connected stadium, explains Shah. The idea is to provide all the services available at a stadium viz food and beverages, sporting retail, on one platform/app for the convenience of viewers at the venue. Also, in a move that will provide a major facelift to stadiums across the country, Shah says his vision is to upgrade the existing stadiums to world-class standards. “Right now we have 57 stadiums. Out of these, 10 are world-class stadiums. I want to develop all the remaining stadiums to world-class standards,” says Shah.

Next Stop: International Cricket Council

Shah’s exploits at BCCI made him an ideal candidate for ICC. In August this year, 36-year old Jay Shah was elected unopposed as the youngest chairman in International Cricket Council’s (ICC’s) history and will assume office at ICC’s Dubai headquarters on December 1, 2024. With his election to the global cricket board, life has come full circle for Indian cricket.

Shah takes over the reins of ICC at a juncture when the international sports body needs to resolve crucial issues. Shah, who once aspired to be a cricketer, brings with him a wide spectrum of experience of over one and a half decade as an adept sports administrator. “Strengthening Test cricket and addressing governance like I did in BCCI will be key areas to begin with. I will set up a system where all the countries get an equal chance to participate and perform,” says Shah.

At ICC, three crucial issues will require Shah’s immediate attention: Media rights — Disney Star is seeking a post contractual discount on India market deal for 2024-27 — rejig of the revenue streams, and compliance issues with Cricket USA and Cricket Chile.

On the media rights front, Disney Star has sought to renegotiate its ₹24,000 crore deal with ICC for the 2024-27 men’s event cycle. Industry observers say on condition of anonymity that the move comes in the wake of losses incurred in advertisement revenues in ICC men’s T20 world cup that was held in the U.S. and West Indies in June this year. ICC’s idea of taking cricket to new vistas hurt revenues of Disney Star, as inconvenient timings with the event being held in the U.S. and West Indies impacted viewership in India, say observers. The quantum of losses incurred is not officially known. The media rights cover four tournaments in the four-year block — two T20 World Cups, the World Cup (50 over format) and the Asia cup. So the request to renegotiate a deal mid-term will indeed need a deft handling by Shah.

Second, ICC needs to brainstorm on enhancing revenue streams. The body does not earn from bilateral international cricket matches, as they are managed by ICC members.

Third, ICC served both Cricket USA and Cricket Chile with non-compliance notices on July 22, 2024 for not adhering to ICC’s membership criteria. Both bodies need to put in place governance and administrative systems within 12 months to avoid disqualification.

With Shah at the helm, ICC will benefit from a leader skilled in handling the big cricketing ecosystem of India, estimated to account for at least 80% of ICC revenue as per estimates.

BCCI: A Historical Perspective

BCCI itself has come of age over the years. The board’s journey over the last three decades from humble beginnings to financial prowess has been no less than a dream run. Rai says in the pre-media boom phase before the mid-1990s, BCCI managed only state-level tournaments such as Ranji Trophy and Duleep Trophy and international cricket. “When states play Ranji or Duleep, there is no clientele. There is no media coverage. Media coverage comes only when international games happen, whether in India or abroad. India being a large population with a huge commitment to cricket than any other game and the diaspora being spread in cricket-playing countries such as Australia and the U.K., media rights started gaining a lot of significance,” Rai tells Fortune India.

Until early ’90s, BCCI’s media rights were captive with Prasar Bharati, primarily due to lack of options as the private channel ecosystem had not come up. The board’s first brush with media rights outside Prasar Bharati came in 1994 from an unexpected quarter. In wake of repeal of South Africa’s apartheid legislation in 1990, when the country rejoined ICC, the board decided to host South Africa. ICC had banned South Africa from international cricket for 21 years beginning 1970 due to its government’s apartheid policy.

South Africa wanted to broadcast the three match series with India to be played in Kolkata. The South African broadcast company approached BCCI with a request to show these matches live in South Africa. BCCI never knew the quantum of money that accrues via broadcast rights. The view being that Prasar Bharati is helping and promoting the game. BCCI earned revenue from the South African broadcast company in lieu of rights to the matches. “That was the first time when BCCI realised the importance of telecast rights and how it could be a revenue grosser,” says Shetty.

Drawing lessons from the South Africa series, BCCI decided to tender broadcasting rights in 1994 when the Cricket Association of Bengal wanted to organise international tournaments with teams of member countries. Prasar Bharati, however, moved court challenging BCCI’s decision to bid out the rights. Supreme Court ordered that all international matches played in India fall under the jurisdiction of BCCI, which has full right to call for tenders for media rights. If Prasar Bharati wanted the rights then it should put in tenders like any other company.

“That judgment of 1994 changed the face of Indian cricket,” adds Shetty.

A Boost To Revenues

There was no looking back since then. While BCCI understood the potential of media rights, expansion of satellite television in the wake of the economic liberalisation of 1991 and the overwhelmingly passionate attachment of Indians to cricket treating star sportsmen as demi-Gods only meant that cash registers at BCCI were all set to explode.

After the 1994 SC judgment, BCCI firmed up the model with tournament fixtures for 4 years. As per the bidding model, it calls for bids for bilateral matches played in India when it prepares its itinerary for 4 years.

Going forward, the first media contract after the judgment was awarded to TWI — a foreign company, which bid for ₹100 crore and got the rights for 4 years. Subsequently, Doordarshan won the bid for the next 4 year block between 1998 and 2002.

The next cycle, however, got mired in internal differences leading to delay in issue of tenders. Hence, series-specific rights were granted, which were generally allotted to Prasar Bharati. When the bidding resumed in 2004 only two parties — Zee and ESPN — came forward and the former bagged the rights. ESPN challenged the decision in the court, leading to cancellation of the bids and issue of fresh tender in 2006. Nimbus won the bid for an amount of ₹2,000 crore.

In essence, the media rights model matured between 1994 and 2008 and simply zoomed with the IPL jetpack, which Shah drove to unprecedented highs.

Shah has firmly seated BCCI as the top cricket body in the world. Through IPL, young talent is getting a platform. The leadership has plans to put in place more innovative revenue channels for the board, which will be redeployed in development of cricketers, the game and infrastructure. Massive moves are awaited. As BCCI’s man with the Midas touch moves on to an international pitch, he leaves behind a legacy of innovative ideas and novel plan which will help the board add to its resplendent glitter.