Nixing IPL over coronavirus may erode $1b value: Duff & Phelps

MUMBAI: As cancellation of the 13th edition of the Indian Premier League (IPL) due to Covid-19, starts looking like a real possibility, Duff & Phelps, the multinational financial consultancy firm, has estimated it will reduce the value of the entire IPL ecosystem by $700 million to $1 billion. Erosion in the value is pegged 10-15%, as per the firm’s estimates. Santosh N, managing partner, D and P Advisory LLP and external advisor, Duff & Phelps, said this does not capture a financial recession like event, which would further impact IPL’s value.
Last year, Duff & Phelps had valued the entire IPL ecosystem at $6.8 billion.

“We have assumed a high possibility of IPL 13 being canceled if the current situation persists. This scenario will have a massive impact on the IPL Ecosystem value as it will also consider larger economic and financial consequences,” Santosh said.

In case IPL is cancelled, Duff & Phelps considered two subscenarios. In one scenario, there is no impact on the next year’s edition and there is nil cash inflow from the broadcaster and other sponsors, for the 2020 season as it is assumed cancelled. Hence, franchisees will not receive their share of revenue from central pool nor will they be required to share profits with the Board of Control for Cricket in India (BCCI). However, there will be expenses incurred by BCCI, IPL franchisees and other stakeholders with respect to advertising, promotional events and other general administrative costs including salaries to their non-cricket playing staff, etc.

In the second scenario, apart from the cash flow impact, Duff & Phelps considered economic impact due to the one-year setback, anticipating sponsorship revenues may not grow at desired levels next year due to the current disruption.

Meanwhile, in case a truncated version of IPL goes on with the number of matches reduced to half (each team playing against the other only once instead of the home and away format), league value will still shrink by $200-350 million. “Impact of revenue loss on account of lack of gate receipts is negligible on the IPL value,” Santosh said.