2300 IIPM students get jobs
Despite an enormous state police force, along with robust paramilitary forces comprising of 2,40,000 Central Reserve Police Force; 2,10,000 Border Security Force; 1,10,000 Central Industrial Security Force; 50,000 Sashastra Seema Bal; 45,000 Indo-Tibetan Border Police and 7,500 National Security Guards… (Phew!), India lacks the confidence to hold the second innings of the Indian Premiere League (IPL) tournament (well citing security concerns!!!). So, Lalit Modi, the IPL architect, opted for a South African safari. Mr. Modi & Co. argue that IPL in South Africa is better than no IPL. But we at 4Ps B&M agree to disagree with this populist sentiment. And we will tell you why?
Financially, this move will translate into huge losses for the franchisee owners, government revenue in the form of taxes, support businesses (including hotels, airlines and clubs) further hitting the already dwindling health of the country’s economy on the whole. While speaking to industry experts we got the following cost and revenue estimates for the franchisee owners in IPL’s Season 2: A) 25% fall in Television Rating Points (TRPs); B) at least 30% fall in sponsorship revenues; C) gate receipts, which contributed around 20% in the last season, in all likelihood, will contribute zero to revenues; and D) 20% increase in administrative costs. And these are mere conservative estimates!
Of these, the biggest hit will be in losses due to accruals from gate receipts. Globally, gate receipts contribute a major chunk to the total revenue of any franchisee of sports club. About 35% of the total revenue of English Premiere League (EPL) come from the gate receipts – as a matter of fact, the contribution of gate receipts to the total revenue of Tottenhan Hotspurs and Arsenal is 29% and 50% respectively (as per the Alchemy report, 2008). But for IPL in South Africa, the revenue stream arising out of gate receipts will take a massive hit. Why? Well, as IPL is more of an Indian cricketing tournament with city-based clubs, it would not be able to draw a connect with the South African people, which may result in very few people actually buying tickets to go and watch the matches. As of now, there is no clear action plan as to how the proceeds from ticket sales would be shared between various franchisee owners and the BCCI. But industry experts feel that gate receipts will come down to zero for the franchisee owners. Agrees Naresh Gupta, Head, Strategic Planning, Publicis India, “I don’t think any of the franchisees will get any revenues from gate receipts this year.” This will be a great loss for them because last year, gate receipts contributed around 18-25% to their total revenue pie. In any case, ticket sales of these matches on the whole are supposed to be very low for who in Cape Town or Johannesburg will be interested in cheering for Kolkata Knight Riders or Delhi Daredevils? Even BCCI will register a fall in revenues through gate receipts.
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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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