How IPL's revenue cycle, valued at $6.2 billion, will be affected this year due to COVID

Add to it the force majeure, a common clause in contracts that essentially frees both parties from liability or obligation when an extraordinary event or circumstance beyond their control occurs and takes precedence. If the IPL is not held any time later this year, force majeure will come into effect, in which broadcasters and sponsors will pay the BCCI only on a pro-rata basis for the number of matches played so far.

Until May 2, the IPL hosted 29 matches and broadcaster Star India is committed to pay the BCCI Rs 54.4 cr per match. If this IPL is shelved, Star will not pay for the remaining 31 matches (close to Rs 1600 crore) and neither will title sponsors Vivo and the remaining official partners that constitute the central pool. This means BCCI will earn only 50% of the total committed amount for this season.

BCCI and the franchises work on a 50:50 revenue sharing formula. Therefore, BCCI will share 50% of the (50%) revenue earned from the central pool with the franchises. Now, will the franchises pay the players only for the number of matches played? Contractually, yes, but franchises have been known to take care of their cricketers “handsomely” and could pay the entire fee.

Sponsors will have to wait for the next cricket season to avail visibility opportunities while advertisers, who blocked advertisement stock with the broadcasters, anyway pay view per-second rates. This finally boils down to the question – who will bear a complete loss? It is the viewer, who has paid for the television or OTT subscription for the entire duration of the IPL but cannot watch it now.