Expecting lower premiums, BCCI lowers the base price for TV and digital rights.

Responding to the changing cricket landscape, the Board of Control for Cricket in India (BCCI) has made significant changes to its pricing strategy for media rights and title sponsorship rights.

It has also come to light that the BCCI has reduced the base price for bilateral matches by 25% compared to the previous cycle, anticipating lower premiums due to an expected decrease in the number of participating platforms in the bidding process, reduced ad spending from new age and commerce firms, and an anticipated 20-25% year-on-year decline in IPL revenue for 2023.

Furthermore, the BCCI has divided the TV and digital rights for bilateral series into two packages, each worth Rs. 200 million and Rs. 250 million per match. This package includes an 88-match cycle, comprising 25 tests, 27 ODIs, and 36 T20Is, resulting in a total cost of Rs. 39.6 billion.

The BCCI is reportedly on the defensive, expecting a minimum of Rs. 600 million per game, leading to a base price of Rs. 52.8 billion at the auction. If this target is not met, the BCCI may reconsider the e-auction process.

When compared to the 2018-2023 cycle, during which the BCCI earned Rs. 61.3 billion for 103 matches, equivalent to Rs. 600 million per international match from Star India (TV and Digital), the price this year is 25% lower per match.

According to reports, the BCCI could potentially earn 1.6-1.9 times the base price, marking a 32% increase over the previous cycle, despite a 15% reduction in the number of matches. Also with the IPL auctions, the base price per match during the CY23-27 cycle was 47% higher than the previous cycle.

The sharp growth in IPL media rights can be due to inflation in cricket pricing relative to other genres, participation from global OTT giants, and a scarcity premium, as cricket holds strategic significance for digital platform expansion.

However, a 25% lower base price than previous cycles clearly indicates low demand and a strategic effort to attract interest from alternative platforms.

Despite the reduced base price, the premium for media rights may be lower than in previous cycles due to a reduced number of bidders, lower ad expenditures from new age and commerce companies, and an anticipated 20-25% YoY decline in IPL revenue during Cycle 2023. The final bid could potentially reach around Rs. 65-75 billion, representing a premium of 77% over the base price and a 32% premium over the previous cycle's price, amounting to Rs. 0.8 billion per match.

This premium is expected to be lower, as its value is influenced by the visiting countries and the pricing differential between ODI and test matches versus T20 matches. T20 matches command the highest premium pricing due to concurrent viewership.

Similarly to the IPL, the BCCI anticipates a higher premium for digital rights compared to the base price. TV rights premiums may range from 30-40% above the base price, while digital rights premiums may reach 80-90%, resulting in Rs. 0.8 billion per match.

The BCCI also believes that this pricing is justified as it would enable platforms to either break even or achieve profitability. With the emergence of Meta, Web 3.0, and 5G, driven by profitable new-age and commerce firms, India's advertising environment may undergo transformation.

Additionally, the BCCI has reportedly reduced the base price for title sponsorship rights of international cricket matches from Rs. 3.8 crore to Rs. 2.4 crore per match. The total cost for the three-year title sponsorship, which will run from September 2023 to August 2026, will be Rs. 134.4 crore.

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