Coming Up: A Rs 400 Billion Auction For IPL/ICC Rights

Broadcasting and digital companies are ready to join the country's biggest ever auction of sports rights next year.

Broadcasting and digital companies are readying themselves with a war chest of Rs 40,000 crore (Rs 400 billion) to join the country's biggest ever auction of sports rights next year.

Up for grabs are two of the most coveted cricketing properties in the world. According to sources, the tender for the five-year broadcasting and digital rights which begin from 2023 for the Indian Premier League is expected to come sometime this month-end or the latest by January. The auction is expected to be held in February.

It will be followed by the auction of rights held by the International Cricket Council whose eight-year contract for broadcasting and digital rights for various World Cup championships ends in 2023. The auction is expected in March or April, say sources in the know.

According to estimates by potential bidders, the IPL winning bid could be double what Star TV paid (Rs 16,347 crore/Rs 163.47 billion) for the five years which end in 2022 because there are now two more teams and over 14 additional matches.

Star TV also won the ICC bid for Rs 11,880 crore/Rs 118 billion for eight years. But the ICC has fewer matches in which the Indian team plays -- for instance, only 28 days between 2021 to 2023 across six tournaments, although the number could increase if India hits the semi-finals and finals.

The rights include the recent ICC T20 which was delayed due to the pandemic, the ICC Men's World Cup in 2023 and yet another T20 ODI in 2022.

But the viewership of ICC tournament matches is heavily skewed in favour of the subcontinent, accounting for 60-65 per cent of the total television viewership.

In the recent World Cup T20, the India-Pakistan match registered a record number of viewers for the ICC. Around 167 million people watched India lose. Despite India's poor performance, viewers consumed 112 billion minutes on Star TV on television throughout the competition.

That is why the ICC is planning to leverage this popularity by selling the rights based on territories, rather than the entire rights, and clearly the subcontinent is by far the most lucrative territory.

For the same reason, the ICC is also looking at halving the tenure of the rights from eight to four years. It is also considering giving options to companies to bid for the rights separately. For instance, for only digital rights or only broadcasting rights or a combined bid.

"With the possibility of the ICC putting digital rights under a 'geo-lock' and also putting in territory locks, doing the sum of the parts versus the whole may get more value. Because a company making a combined bid has to add the sum of the parts and exceed that if it wants to win," said the founder of a potential bidding company.

Experts, though, say they expect the value of the rights to be around Rs 8,000 crore/rs 80 billion -- pretty close to what Star TV paid -- even if it is only for four years and the winner gets only the subcontinent rights.

The executive of an OTT platform which will take a considered view on bidding, explained why: "With the ICC bid happening after the coveted IPL, companies which don't make it will surely up the ante to get what is the second most lucrative sporting event that can bring in huge eyeballs and advertising."

"It could be the key for the success of their channels, TV or digital, as the event garners the largest chunk of advertising in such a limited period, he said.

The executive said that if Star's earlier winning ICC bid is halved to adjust for four years and 65 per cent of the value is accounted for by its rights in the subcontinent, then the sum would be around Rs 3,800 crore/Rs 38 billion. That number, he predicts, will surely double because broadcasters would want the only other big blockbuster after losing the IPL.

The upbeat mood is reflective of the fact that the competition for these lucrative rights will be much fiercer than ever before. Some of the contenders are Reliance Industries Chairman Mukesh Ambani (through Viacom 18 which is setting up a sports channel), Amazon Prime (which might bid), a more aggressive Sony (which is planning a merger with Zee), Google, and Facebook which might bid if only the digital option is opened up.

And lastly, Star will not stay on the sidelines. Its OTT platform Hotstar depends significantly on cricket through which it has notched up over 300 million viewers.