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Bangalore Chinnaswamy Stadium clubhouse was looking ahead for another profitable season. But, today we can see all hapless faces in and around the stadium. “Last year we had more than Rs.20 lakh business from seven matches. We were hoping we can make it bigger this time,” says Ravikumar, Food and beverage head of the clubhouse. IPL means nearly seven matches a month and the stadium stands to lose Rs.400 crore this year.
Had there been no IPL this season, it would have been a situation of no loss no gain for the franchisees. But, IPL in South Africa will surely add more losses to their already red-smeared balance sheets. Rakesh Singh, Chief Marketing Officer, Chennai Super Kings says, “BCCI has assured us that they will take care of the escalated costs due to the venue shift.” Additionally, BCCI and Modi have also promised that they would compensate the franchisees for any loss in revenues (in the form of gate receipts, in-stadia revenues, et al). But still there is no clarity on whether BCCI will compensate the franchisees completely or partially for the losses incurred. Or could this just be a gimmick that Modi is playing (so that the franchisee owners support the event) expecting that if the season is a hit, none of the franchisee owners will ask for compensation. However, a BCCI insider revealed that the board plans to spend Rs.120-150 crore to compensate the franchisees. Even after that compensation the collective losses of the franchisee could well be over Rs.120 crore. So, both BCCI and the franchisees will eventually be losers!
And it is not just the franchisee owners and BCCI that would bear the brunt of this shift in venue, even peripheral businesses like hotel, airlines, travel companies, clubs, et al, would be hit hard. As per industry sources, last year, the hotel and travel industry got a boost of Rs.50-55 crore during IPL, which will be lost this year. Roughly 4,000 rooms per city (where the matches were held) were booked during last season. This year again the hospitality industry was looking forward to an upswing of 20-25% in their occupancies and put an end to a lull period imposed on them due to the recent terror attacks. “The IPL matches attract a lot of visitors and the teams too are accompanied by delegations and executives who require accommodation facilities. With the shift in IPL venue from India this year, this advantage will be a lost opportunity for the hospitality industry,” informs, Ajay K. Bakaya, Executive Director, Sarovar Hotels & Resorts. Even the local tourism industry, which hoped for a 15% boost in revenues due to IPL is crestfallen. Moreover, shifting IPL due to security reasons will negatively impact the country’s image as a tourism destination.
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Source : IIPM Editorial, 2009
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
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